Supplementary written evidence submitted
by Lord Browne of Madingley
THE WHITE PAPER HIGHER EDUCATION: STUDENTS
AT THE HEART OF THE SYSTEM
INTRODUCTION
I am grateful to the Committee for inviting me to
submit supplementary written evidence on the Government's proposals
for Higher Education.
My role in leading the Independent Review of Higher
Education Funding and Student Finance expired on 12 October 2010
when our review was published. Consequently, I submit this evidence
only as an interested citizen.
SUPPORT
I am pleased to note that the Government has accepted
the vast majority of specific measures recommend in our review.
Where it has deviated from our recommendations or added to them,
the proposals are generally sensible.
I applaud in particular four proposals made in the
White Paper:
— The
changes to the repayment system, especially the increase in the
income threshold to £21,000 and the increase in the maximum
payment period to 30 years. These measures will ensure that no
graduate is required to pay more than they can afford and will
create a truly progressive repayment system.
— The
extension of support for the costs of learning to part-time students
and distance learners. Higher education will be free at the point
of entry for all students, regardless of the mode of study - a
vital step in widening participation.
— The
provision of better information for students, though Key Information
Sets and improved careers guidance. Properly informed students
will be able to effectively exercise choice: improving their own
prospects, and driving up quality through competition.
— The
extension of degree-awarding powers, student support and the title
"university" to a broader range of institutions.
Traditional universities, further education colleges and private
providers each have a vital role to play in our higher education
system.
PRINCIPLES
Many of the proposals in the White Paper remain unclear.
As the Government refines its proposals and develops the detail,
there are some general principles that should be kept in mind.
First, the Government should retain a focus on the
three overarching policy goals, which were set out in our review
and supported by the Government:
— Quality:
institutions should grow and adapt to
meet students' demands.
— Participation:
no student should have to forego higher
education for financial reasons.
— Sustainability:
the system should have the funding and
flexibility to survive in the long-term.
Any proposals should be judged against these three
objectives.
Second, as I emphasised last time I spoke to this
Committee, Higher Education requires systemic reform. Changes
to any particular aspect (for example fee levels, repayment mechanisms,
number controls, access requirements or information provision)
have consequences for the operation of the system as a whole.
Reform will only be successful if designed with an appreciation
of these complex interrelations.
Third, simplicity is a virtue. One of the greatest
threats to participation by students, particularly those from
disadvantaged backgrounds, is misconceptions about the higher
education system, especially about the availability of student
loans, the nature of the debt incurred and the arrangements for
repayment. Ensuring that the system remains as simple as possible
reduces the likelihood of damaging misconceptions among students.
CONCERNS
To my mind, there are four specific proposals in
the White Paper which require refinement or clarification:
— Control of student numbers (4.18-4.21)
As the title of the White
Paper suggests, the Government aims to place students at the heart
of the higher education system.
In my view, that ambition
should be applauded. As we set out in our review, a higher education
system in which institutions respond to the demands of students
will be one that delivers a high-quality education. The review
saw competition in a controlled market as the only way to deliver
consistent improvements in the quality of higher education.
Competition of this kind depends
on liberalising number controls. Institutions that provide a good
service must be able to grow to welcome more students and institutions
that provide a bad service must face the prospect of improving
their offering or potentially closing.
The Government recognises
this but faces a countervailing pressure to retain control on
numbers in order to limit costs. Given this pressure, the opening
up of places for those getting AAB or higher at A-level is a reasonable
starting point for liberalisation.
But in the long-run, it cannot
be satisfactory to exclude 80% of students from the benefits of
competition. Those who do not get AAB should not be consigned
to a separate system in which successful universities cannot expand
to accommodate them, and in which the pressures of competition
are absent.
The goal must be to liberalise
the vast majority of places by bringing down the AAB threshold
as quickly as possible. The White Paper articulates an intention
to move in this direction, but gives no commitment. The Government
should make a firmer statement of its ambition in this regard,
and detail by what criteria HEFCE will determine the speed of
liberalisation.
The margin of places for institutions
charging less than £7,500 does not strike me as a meaningful
liberalisation of number controls. The White Paper is not clear
but suggests these places will be "competed for on the basis
of agreed criteria": ie centrally distributed rather than
responding to student demand.
— Fee cap (1.8)
In our review we proposed
that there be no cap on fees, but instead a levy on fees above
£6,000 to cover the cost to Government of providing finance.
This seemed the best mechanism to incentivise institutions to
provide good value for money courses, keep control on costs, and
dynamically respond to changes in student demand.
The Government's last year
announced that it would not be removing the cap or instituting
a levy, but would instead increase the cap to £9,000.
This is a system with no inherent
flexibility and it will not deliver sustainability. Costs in higher
education will continue to rise and the spend on higher education
by our international competitors will continue to increase. If
we want to provide world-class education on the best courses then
more money will have to be found.
The Government will inevitably
have to revisit this issue, perhaps within the next five years.
It would be helpful at this stage—for both students and
universities - if the Government were to outline its thinking
in this regard.
— Indexation of earnings threshold (1.15)
The White Paper does not state
how the earnings threshold above which graduates are required
to make repayments will rise over time.
In our review we noted that
the 2006 reforms had not included a mechanism for increasing the
earnings threshold. As a result, the threshold has remained constant
at £15,000, even though earnings and prices have increased.
This has had three damaging consequences:
— Graduates earning the lowest wages, who
were originally not required to make payments (because they could
not afford to do so) are now required to make payments;
— The contributions of graduates earning
lower wages have increased more rapidly than the contributions
of graduates earning higher wages;
— All graduates are required to contribute
more as a proportion of their salary than when the system was
introduced.
In sum, the failure of the
last reforms to index the earnings threshold steadily eroded the
progressive nature of the repayment system. In order to avoid
a repetition of this situation our report recommended the earnings
threshold be linked to average earnings.
On 8 December 2010 the Secretary
of State for Business Innovation and Skills put a written statement
to the House in which he endorsed this recommendation. I do not
know whether the absence of this detail from the White Paper is
an omission or a change in policy, but in my view the success
of these reforms depends on its inclusion.
— HEFCE (6.10)
The White Paper is right to
recognise that HEFCE must undergo a "major change of emphasis
as the reforms take hold, requiring different power and appropriate
remodelling as it evolves from being primarily a funding council
to also being the lead regulator for one of our most important
sectors."
HEFCE will have a new purpose,
and it must be fit for that purpose. The effective functioning
of the higher education market depends on having a strong and
independent regulator. HEFCE should be established as such, along
the lines of Ofcom or Ofgem.
In particular it must be set
up to have:
— Purpose: HEFCE's central mission must
be to serve the interests of students.
— Independence: The Board should be composed
of independent members, not (as presently) senior employees of
the higher education industry that HEFCE is established to regulate.
— Bite: HEFCE must be equipped with adequate
powers to address failings in quality or competition.
7 July 2011
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