House of Commons - Government reform of Higher Education - Business, Innovation and Skills Committee

Government reform of Higher Education - Business, Innovation and Skills Committee Contents

4 Student numbers

Introduction

106. The starting point for the higher education funding system is what might be considered a 'typical student': an able-bodied 18-year old who studies A-levels before going away from home to study at a university for three or four years, and who will pay for their studies through a combination of loans and means-tested grants. However, not all students fit that mould. For example, students with non-standard qualifications may require additional resources or consideration during the applications process.[91] They may also require additional financial support to access higher education in the first place.[92] Once they have secured a place, they may require adjustments to accommodation or teaching facilities, or support for child-care provision or other caring responsibilities to enable them to get the most from their studies.[93] Students from families without a history of higher education may also require additional pastoral support and assistance whilst at university. They may also be more constrained in their choices of course or institution, particularly if family or employment responsibilities limit their ability to travel or stay away from home.[94] Any 'non-typical' students may also be subject to greater pressures in connection with their family, health, or work etc. which may threaten their ability to complete the course.[95]

107. Part-time students also cost more to support, pro rata, than their full-time equivalents. The Open University quoted research commissioned by the Higher Education Funding Council for England and carried out by J M Consulting, which showed that "the costs of supporting part-time students are 15-44% higher than full-time students".[96] For example, a part-time student will require the same resources (such as books, hand-outs, teaching time etc.) as a full-time student, and in some cases may require extensions to the normal opening hours of facilities such as laboratories and libraries to enable them to fit their studies around employment or family commitments.[97]

108. Students who vary from the standard profile will, in general, cost more to support during their studies, meaning that an increase in the proportion of students from under-represented groups within the total student body could result in an increased cost overall, even if total student numbers remain constant.

Government proposals

109. The previous Government had set a target of 50% participation in higher education. The present Government has removed that target, stating that:

We have no target for the "right" size of the higher education system but believe it should evolve in response to demand from students and employers, reflecting particularly the wider needs of the economy. Subject to expenditure constraints, we endorse the principle enunciated in the Robbins report that "courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and wish to do so".[98]

110. Its proposals to reform student number controls were published after the deadline had passed for universities to set their fees for the 2012-13 academic year (though before the Office for Fair Access had published details of the approved access agreements, confirming universities' fee levels).

111. In its written evidence to the Committee, the Government refers repeatedly to its policy proposals as 'maintaining' student numbers and current levels of participation, yet it also refers to the requirement on universities to "show progress" towards benchmarks, and the Government's "goal of increasing participation in further education".[99] However, as Sir Peter Lampl of the Sutton Trust highlighted, widening participation without increasing student numbers was a "very difficult thing to do".[100]

112. In a similar vein, Professor Barr argued that if overall student numbers are fixed:

Admissions are a zero-sum game. If some universities expand others must contract.
If the number of institutions increases (e.g. because of new private entrants), the average size of each must fall.[101]

Furthermore, he believed that liberalisation of student numbers was "essential to achieving the core objectives" of improving quality, widening access and increasing the size of the higher education sector to eliminate excess demand and "ensure that Britain invests sufficiently in skills".[102] The Russell Group took the view that "maintaining the quality of the student experience and the reputation of UK degrees must be a greater priority than expanding the number of places"[103] because it "did not want to see [student numbers] grow without funding, and the unit of resource drop away so that we could not do the job properly".[104]

113. Both the Russell Group and the Society of Biology cautioned against expansion of student numbers without the associated capital investment:

[I]t is not necessarily the case that increasing student numbers in a good institution will guarantee more good graduates in the absence of significant expansion of staff and facilities. Higher numbers of students in practical (laboratory and field) classes can put a significant strain on standards. In this case increased student numbers could be a penalty.[105]

114. When he gave evidence to us, the Minister acknowledged that achieving a widening of participation with limits on funding was not an easy objective to achieve:

I hope that it is not that kind of zero-sum game; you can improve the total number of people graduating by a reduction in drop-out rates. Individual universities will have to decide whether they wish to expand or not and how they expand and recruit more people.[106]

Excess demand

115. In the Impact Assessment published alongside the White Paper, the Government estimated the underlying unmet demand within the system to be approximately 38% of the total number of 'unplaced' applicants each year.[107] This assumption was based on data from 2006-10, which the Government acknowledges includes a year (2006) where there was no cap on total student numbers. Bahram Bekhradnia, director of the Higher Education Policy Institute (HEPI) identified improvements in participation in recent years as "one of the great success stories", but cautioned that the potential for increased demand was huge:

Add to that the fact that the last Government introduced, and this Government has not reversed, an effective increase in the school leaving age, so all those students that left at 16 in the past—10% of students with 10 or more GCSEs left school at 16 and were never seen again—that will stop. They will have to stay on in education into the future. That will itself necessarily give rise to increase.[108]

Government proposals to increase demand

116. Currently, each higher institution is allocated a fixed number of student places each year by the Higher Education Funding Council for England, which also determines how much direct public funding they receive through the teaching grant. This means that institutions have a high degree of certainty from year to year about their likely income from teaching grant and tuition fees (as long as they can fill their allocation of places). It also means that some popular institutions are oversubscribed but cannot expand and have to turn away qualified applicants. At the same time, less popular institutions are still able to fill their allocation and collect their expected fee and grant income by mopping up the students unable to get into the more popular institutions and courses.[109]

117. The White Paper makes two immediate proposals for creating some flexibility in student number allocations and creating competition for student places. The first measure is to allow unrestrained recruitment of high-achieving applicants (those achieving grades AAB or above at A-level or equivalent) which is expected to affect around 65,000 places. The second proposal is to enable institutions to compete for a "margin" of a further 20,000 places "to support expansion by providers who combine good quality with value for money, and whose average charge (after waivers have been taken into account) is at or below £7,500". The White Paper notes that "this will make it easier for further education colleges, new entrants and other non-traditional providers that can attract students, to expand to meet demand".[110]

118. To create this "flexible margin" within a static total student population, institutions' current allocation of student places will be reduced, first by their expected number of high-achieving applicants (plus an element for the expected annual rise in the number of high-achieving candidates), then a further percentage cut of around 8% to create the "margin". Institutions which have not submitted access agreements to OFFA, and which therefore cannot charge fees of more than £6,000 (largely Further Education colleges which offer some Higher Education courses) will not be subject to the 8% reduction to "avoid creating a burdensome exercise whereby institutions lose numbers that are then likely to be returned to them".[111] The Higher Education Funding Council for England then proposes to allocate the remaining 'low-cost, high-quality' places through "a competitive bidding process".[112]

119. The Government's intention is that the academic achievement threshold for unrestricted recruitment will gradually be lowered in future years so that it applies to more students, and the number of "marginal" places for which institutions compete will also increase. The Higher Education Funding Council for England will run two separate consultations over the next 12 months on how to implement these proposals.

120. In oral evidence before the publication of the White Paper, Sir Alan Langlands, the Chief Executive of the Higher Education Funding Council for England said:

It is a very static system at the moment because we operate institutionally based student number controls to keep control of the money, but if student numbers start moving around the system, that will increase volatility in the system, because clearly the money from the Student Loans Company will follow these students.[113]

121. The Government's additional proposals on student number controls, which were announced after universities had had to make decisions on their fee levels for 2012-13, will result in around one in four student places for the 2012-13 intake being contestable and/or freed from student number controls.[114] The new regime of fee waivers will mean that, in future, institutions' fee income is more closely linked to the individual financial circumstances of the students they take in: institutions will not know what income they will receive from tuition fees until applicants' exam results are known and the new intake of students arrives to take up their places at the beginning of the academic year.[115] This creates even greater uncertainty for higher education institutions about how many students places they will have available to offer in September 2012, and at what fee levels.

122. In its first consultation document on how to implement the changes to student number controls for 2012-13, the Higher Education Funding Council for England makes clear that "the funding method for 2012-13 described in this consultation document is an interim solution, intended to maximise predictability for institutions during the first year of the transition".[116]

123. When we took evidence from the Minister after the publication of the White Paper, he also acknowledged the destabilising effect of the reforms:

I recognise that we are asking universities to go through a big set of changes with big uncertainties. I fully understand that. […] That was why, with the Secretary of State, the PM and the DPM, we took a view that having one in four places contestable in 2012 was about right. Some people would have argued that we should have gone even further, but I thought that then universities would just be handling too much uncertainty; with less, it would not have been a big reform.[117]

124. The consultation to be run by HEFCE on how the new student number controls should operate in practice is to run alongside the Government's own consultation on its White Paper. As million+ notes:

[It is] difficult to see how the decision of Ministers to require HEFCE to implement this market in 2012-13 while at the same time inviting consultation on the BIS White Paper, provides for proper consideration and full and meaningful consultation of the impact of the student number market on students and universities.[118]

125. University Alliance also expressed concern about the timing for implementation of the various reforms, and recommended a delay to the implementation of student number controls until after the "tectonic shift in student finance system and [the] market settles down".[119]

126. If a market model is to be effective in the higher education sector, we agree that restrictions on supply must be removed. However, this cannot be achieved overnight. The Minister is right to acknowledge that the Government's proposals to change student number controls will add to the uncertainty currently experienced by universities. We therefore recommend that changes to student number controls be deferred for at least 12 months after the reforms to the student finance system have been implemented to enable the sector to be consulted on whether reforms to reduce control of student numbers should be phased in over several years, or introduced in a single measure.

CREATING A MARKET: THE EFFECT OF THE PROPOSALS

127. A year-on-year increase in the number of marginal places for "low-cost high-quality" courses seems likely, over time, to channel an increasing number of people (particularly those without A-levels or those with average rather than high grades) into a low-cost model of higher education. The Minister told us that:

A lot will depend on what alternative provision develops and what level of demand for it there is. If we find that there are some FE colleges and new providers that can deliver cost-effectively a significant amount of provision that people are choosing and that comes in at under £7,500—perhaps even at under £6,000—and that gets them the vocational qualifications that they want in an efficient, brisk way, with a high-quality teaching experience, and if people are happy to choose it, then, yes, we would want to see that expand. However, we will take a view when we have seen how we do on the cost-effectiveness and what patterns of student demand emerge.[120]

128. According to Professor Barr a potential risk of the Government's proposals are that they may create a market with three parts:

'Top' universities accept mainly AAB students and can expand. Competition within the group is a zero-sum game. For the group as a whole, expansion is by bidding AAB students away from 'middle' universities.

'Middle' universities: for the group as a whole, student numbers are reduced by the size of the margin and, because they charge more than £7,500, these universities cannot bid for margin students.

'Low price' universities have an average net fee of less than £7,500, so the group as a whole can expand by the size of the margin. An institution can combine a fee of £9,000, if it has a top department, with lower fees in other subjects, together with fee waivers calibrated to bring the average to below £7,500 . The group includes three types of institution: new private providers, further education colleges, and access universities.[121]

He predicted that the 'middle' universities would face the greatest difficulties because "there is no mechanism for the average university in [this] group […] to increase student numbers by improving quality (i.e. shifting its demand curve to the right); its only lever is to reduce price (i.e. moving down the demand curve)".[122]

129. This view was shared by the University Alliance, which suggested that "many of our most successful universities could expect to see their provision cut in half over the next six years and that there will be very few highly resourced courses available for students below AAB […] [if] you roll these proposals forward over a few years, you quite quickly reach a stage where there is no market between £9,000 and £7,500".[123]

130. There is therefore a risk that the proposals could polarise the higher education sector into 'traditional' universities versus a 'low cost' alternative. This could have undesirable consequences for social mobility if able candidates from lower socio-economic backgrounds felt constrained to choose lower-cost provision. Further education colleges (and other providers) are capable of offering excellent low-cost and high-quality provision, but they may not offer the same experience as a student might receive in a traditional university.[124]

131. Rebecca Watson, a recent graduate and student member of Quality Assurance Agency audit teams, explained:

Obviously a lot of people go to university for the graduate employability side, but also from a personal perspective, people, particularly those from lower socio-economic backgrounds, go to university for social and cultural enhancement as well as for employability. They see university as a place where they can understand citizenship, interact with people from different backgrounds that under normal circumstances they would not have had access to in their home town.[125]

132. This effect may even be compounded by the inevitable difference in income between an institution recruiting large numbers of high-achieving students, each paying fees of close to £9,000 per year, which is able to offer generous bursaries or fee waivers, and one which focuses its provision on providing low-cost provision for fees of less than £7,500. The second institution will have far less scope to invest in facilities and other means to enhance the 'student experience' and perhaps find it more difficult to attract high-achieving students or those from wealthier backgrounds, regardless of the quality of its teaching. million+ said:

The removal of core numbers and/or price restrictions will reduce the unit of resource in those universities with strong track records in widening participation. This will impact not only on the number of places available for students from more diverse backgrounds but also on the income that institutions had anticipated would be available to invest in the quality of the student experience for their students.[126]

133. As Professor Stefan Collini says:

The actual effect of the changes will be to make the distribution of resources for institution match more closely the distribution of A-level scores. Just on fee income alone, students at institutions with an AAB offer or better will be better resourced … than students at institutions with lower entry requirements. […] All the research shows that children at private schools have dramatically better chances of obtaining AAB at A-level than those at state schools. Now the universities they get into will be better resourced as well.[127]

134. Even before the announcement of the Government's proposals on student number controls, a number of witnesses expressed concern to us that the Government's proposed removal of teaching grant for arts and humanities subjects, combined with a focus on tuition fees and graduate employment prospects could reduce demand for certain subjects, particularly arts and humanities, and foreign languages.[128] We believe that this could be exacerbated by a polarisation of the higher education sector into 'traditional' universities and lower-cost providers focussing on more vocational courses. Professor Simon Gaskell, representing the 1994 Group of 19 'research intensive' universities expressed his anxiety that there was a "real risk" that certain subjects could become "white middle-class student subjects".[129] Mike Robinson of UNITE the Union summarised this concern by asking the following question "What is wrong with a council house kid doing classics? Why should education as enlightenment not be a worthy cause rather than just education for occupational need?"[130]

135. million+ also suggested to us that the promotion of 'cheap' places ran "counter to the communications strategy of Ministers who have sought to emphasise (correctly) that no matter how much students borrow in fee and maintenance loans, graduate repayments above the earnings threshold will be based on actual earnings rather than the size of the loan. These payments will therefore be the same each month whether or not students have borrowed fee loans for a £9,000 a year course or a course priced at £7,500 or less."[131]

136. Speaking to the Universities UK annual conference on 8 September 2011, the Secretary of State for Business, Innovation and Skills acknowledged these concerns, stating that:

I am aware there will be some concerns about unintended consequences. There have been suggestions that [the reforms] will reintroduce some sort of two-tier higher education system; this is absolutely not the case—our aim is diversity, not division.[132]

137. While the Department's aim of "diversity, not division" is laudable, we have yet to be convinced that the access agreement mechanism will be sufficiently robust to counteract polarisation within the sector. It would help if the Government was to provide evidence on this issue in its response to this Report. For that reason, we recommend that the Government monitor very closely any changes in the social mix at English higher education institutions, and take swift action should any polarisation of the sector begin to emerge.

Fair access

138. A key factor in the success the Government's proposals is that institutions ensure that the 65,000 places for high-achieving candidates do not go disproportionately to candidates from selective schools. In evidence to us, Universities Alliance set out the current breakdown of these candidates: "a quarter of the richest 20% of students get top A-level grades (BBB and above) in comparison to just 3% of the poorest 20% of students".[133] This view was supported by million+ who told us that

There is significant tension between the Government's professed commitment to increase social mobility and the proposals to allow unrestricted recruitment of the approximately 65,000 students who achieve AAB or above at A-Level or in equivalent qualifications. A wealth of research has shown that students from more prosperous backgrounds and at private schools tend to perform better in standard examinations. Out of the 54,600 students in England aged 16-18 who achieved AAB or better in A-Levels and AVCEs in 2010, 16,100 (29%) were from private schools even though only around 6% of all pupils study at private schools. A further 5,420 (10%) of those achieving AAB were at selective state schools.[134]

139. The Government acknowledged this risk in its Impact Assessment, but asserted that its proposal "does not favour [candidates from independent schools] any more than the current system".[135] It went on to state that:

For as long as universities choose to consider high grades as a proxy for ability and potential […] it is reasonable to expect that this cohort of students will continue to have high participation rates, higher than those with lower grades, regardless of the number control system. This model is therefore not expected to impact on their forecast prediction rates.[136]

140. To address this concern, the National Union of Students suggested that there should be a means for "institutions to declare an applicant as an AAB applicant if they have lower grades but are admitted under a contextual data policy".[137]

141. We note the proposals for additional flexibility for students achieving AAB grades or above. However, the Government will need to demonstrate that its policy encourages bright candidates from all backgrounds to aspire to achieve high grades at A-level. In its response we will expect to see more detail on how the Government will deliver equality of opportunity through this policy.

"Off-quota" students

142. The White Paper also contained a third "longer-term proposal" to enable institutions to take in additional students above their allocation who are sponsored by employers or charities, as long as they do not create any cost-liability for the Government.[138] On 10 May 2011, it was reported in the media that the Government was considering allowing universities to offer "off quota" places (i.e. places outside the HEFCE quota of student numbers, but without access to public loans or grants) to home students who were willing to pay up-front tuition fees at the same rate as international students.[139]

143. The suggestion provoked concern that it would enable rich families to 'buy' university places, or that charities, schools in the independent sector or employers could buy university places.[140] Responding to an Urgent Question on the matter, the Minister was keen to make clear that:

The principles of fair access must apply; there would need to be genuine additional places; there would be no reduction in entrance standards; and, of course, rich individuals should not be able to buy their way into university.[141]

He also made it clear that "it is not our intention that schools should be able to buy places at university" and insisted "it is the university that will decide who is admitted, and it is essential that we do not compromise on that principle."[142]

144. In a later press release the Minister also stated that:

We will only consider allowing off-quota places where it contributes to the coalition commitment to improve social mobility and increase fair access.

There is no question of wealthy students being able to buy a place at university. Access to a university must be based on ability to learn not ability to pay.[143]

145. The lack of detail in the initial announcement, and its timing towards the end of our oral evidence sessions, meant that we were unable to question many witnesses about these proposals. The White Paper itself provides little additional detail, meaning there are still a great many uncertainties about how the proposal would work in practice, not least who would make decisions on admissions to sponsored places.[144] The Minister conceded that the Government "are going to have to do a lot more work on this".[145]

146. The White Paper also stated that these places "must be genuinely additional", which the Minister explained was to avoid institutions trying to "reduce their publicly financed offering".[146] However, we are unsure as to how additional students could be accommodated by an institution without them taking up teaching time and resources within an institution's finite capacity. NUS argued that at its extreme, this could lead to a two-tier system "where non-traditional students must seek out sponsorship and shoehorn their own ambitions into what business and charities are willing to offer, whereas students from more affluent backgrounds retain greater choice".[147] That said, if the "off-quota" proposal delivered additional places based on merit rather than ability to pay, Professor Nicholas Barr believed that the effect on overall capacity within the system would be "small but beneficial".[148]

147. Without detailed proposals we are unable to see how the Government will ensure that admissions to "off-quota" places are "based on ability to learn not ability to pay". The Minister rightly acknowledges that there is a lot more work to do on this proposal, and we recommend that the Government proceed with extreme caution to ensure that the system is not open to abuse. In its Response, the Government will need to set out in much greater detail, how this policy will provide additional places while protecting the integrity of the admissions system.

91 Qq 143 and 145 Back

92 For example, Educational Maintenance Allowance/ Discretionary Learner Fund - see Unite the Union (HE09) paragraph 33 Back

93 For example, Ev w78. Specific additional grants are available from Student Finance England for students with disabilities, children or adult dependents. Back

94 Ev 196 Back

95 Q 145 and Q 278 [Sir Peter Lampl] Back

96 Ev 238 Back

97 Q 261 Back

98 Cm 8122, (June 2011) Back

99 Ev 157 Back

100 Q 277 Back

101 Ev 186 Back

102 Ev 175 Back