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


Supplementary written evidence submitted by million+

ABOUT MILLION+

1.  million+ is a university think-tank which provides evidence and analysis on policy and funding regimes that impact on universities, students and the services that universities and other higher education institutions provide for business, the NHS, education and the not-for-profit sectors.

INTRODUCTION

2.  Our previous oral and written evidence to the BIS Committee on The Future of Higher Education raised concerns about the impact on students of the removal of the vast majority of teaching funding from universities in England. This evidence suggests that the Government's HE reforms risk social mobility, that overall most graduates will pay more for their higher education than they do currently and that the reforms represent poor value for taxpayers.[99] In other analysis, million+ has highlighted the wider economic implications of the decision to withdraw the majority of direct public investment from higher education.[100]

3.  Following the publication of the Higher Education White Paper, Higher Education: Students at the Heart of the System on 28 June 2011, we welcome the opportunity to submit supplementary evidence to the BIS Committee. In spite of the emphasis on students in the title of the White Paper, our analysis suggests that a number of the proposals set out could undermine the investment available in universities to promote the quality of the student experience. Other proposals risk undermining the excellent national and the international reputation of England's universities. This reputation has been hard won and is dependent on the maintenance of standards and the delivery of a quality student experience.

4.  The Government now proposes to introduce more competition between universities from 2012-13 through three measures: the creation of a price-based "flexible margin" of places, unrestricted recruitment of "high achieving" students, and opening up the market to new providers of higher education. These market-based mechanisms are variously posited as a means of regulating the costs of the new system to the Treasury ("As the balance of public investment shifts from grants to loans, the government must maintain control of its financial exposure")[101] and enhancing student choice ("We want to ensure that the new student finance regime supports student choice").[102]

5.  The decision to remove student numbers from higher-charging universities and to re-offer them at lower prices raises questions about the Government's commitment to quality but also runs 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.

TIMETABLE FOR IMPLEMENTATION OF STUDENT NUMBERS MARKET: IMPACT ON STUDENTS

6.  The timeline of the White Paper and various consultation processes associated with it raise a number of issues for students. The proposals to create a "market" for students commencing in the academic year 2012-13 through unrestricted recruitment of students achieving grades of AAB and above at A-Level (or equivalent)—estimated to be 65,000 student places—and the transfer of up to 20,000 places to providers with average fees of or below £7,500, are of particular concern.

7.  Following the parliamentary votes on full-time tuition fees caps in December 2010 and the publication of guidance about Access Agreements, university Governing Boards and Councils set fees for 2012-13 which they considered would promote a high quality student experience and safeguard institutional financial sustainability. Universities were required to submit Access Agreements for 2012 full-time students to the Office for Fair Access (OFFA) by 19 April. Many of these Access Agreements were the subject of discussion with student unions prior to their submission to OFFA which published outcomes on 12 July 2011.

8.  Recruitment for the 2012-13 admissions year began in April 2011. In addition to other outreach activities, universities have been engaged in activities in schools and colleges focused on students interested in applying to study at university in 2012. University open days for the 2012 admissions year commenced in June 2011 and will continue in through the autumn. In advance of the OFFA announcement, universities published their fee levels and have been providing information to prospective students about courses and the new loan system. For its part, BIS launched its own communications campaign "Make Your Future Happen" on 6 May 2011 to promote interest in universities for the 2012 academic year and to allay concerns about the reforms to student finance.

9.  Several months down the road the publication of the White Paper on 28 June 2011 effectively changes the rules for 2012 after decisions have been made by universities. It would appear that Ministers waited until universities published their fees and then sought to inject additional elements of competition in order to reduce fees. As a result, one in four university places will be contestable in 2012-13. This will have variable impacts on universities but it will also have an impact on student choice and the investment available in institutions to deliver a high quality student experience in the short and the long term.

10.  Alongside the HE White Paper, Ministers published a letter inviting consultation responses (Appendix 1).[103] The consultation on the White Paper commenced on 28 June 2011 and is set to close on 20 September 2011. For this consultation is to be meaningful, universities, students and other stakeholders would reasonably expect that BIS would give full and proper consideration to the responses received by 20 September and then publish its own response and any decisions or proposals for implementation eg through primary legislation, amendments to the student finance regulations or through further consultation by Hefce.

11.  However, on the same day (28 June 2011) Ministers wrote to Hefce requiring the Funding Council to implement a market in student numbers from 2012-13—the proposals for which had only appeared in the public domain via the publication of the White Paper on the same day (Appendix 2).[104] On 30 June 2011, Hefce issued a consultation on teaching funding priorities and the market in student number controls in 2012-13 which will close on 2 September 2011. The consultation is restricted to the detail of implementation and not on the principle of the decision announced by Ministers. It appears to be designed to ensure that the market in student numbers will operate from the 2012-13 academic year. 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.

IMPACT OF STUDENT NUMBER MARKET

12.  The student number market will require universities to compete on grade for approximately 65,000 younger full-time students who achieve AAB (or above) A-level grades (or their equivalent) and on courses which will be priced primarily at £9,000 per year. Other universities, with a strong track record of creating opportunities for students from a wide-range of backgrounds and ages, enabling these students to progress to professional careers, have fewer students with AAB grades at the point of entry and are unlikely to be able to compete in this market in the same way.

13.  Once AAB students are removed from the core numbers allocated to universities, a further 20,000 student numbers will be removed. Universities can compete for these places only if they can demonstrate that their average tuition fee in 2012 will be £7,500 or less. Based on fee levels announced and Access Agreements now in place, a small number of universities could provide places at this level, especially through links with local colleges. However, there are a variety of operational and financial reasons why most universities may not wish to bid for these places and OFFA has estimated that the average tuition fee in universities is likely to be much higher. Fee levels set by universities will have taken into account:-

—  predicted student numbers;

—  future strategy and the investment required to maintain and improve the student experience for current and future students;

—  requirements in respect of Access Agreements including bursary support, outreach activities (bearing in mind the end of the Aim Higher programme worth £78 million per annum); improving retention and the match-funding for the NSP that is a requirement laid down by Ministers; and

—  the 80% reduction in teaching grant.

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.

IMPACT ON SOCIAL MOBILITY AND INVESTMENT IN THE STUDENT EXPERIENCE

14.  million+ welcomes the White Paper's recognition of higher education as a powerful engine of social mobility. The commitment to fund elements of the Widening Participation Premium for universities which teach students from non-traditional and disadvantaged backgrounds is also welcome.

15.  However, million+ remains concerned by the Government's narrow and partial understanding of social mobility. The market in student number is likely to undermine efforts to widen access and take account of the full potential of each applicant. 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.[105] The White Paper states that unrestricted recruitment of AAB students "will create the opportunity for more students to go to their first choice institution" but it is clear that this will advantage younger students from more prosperous backgrounds relatively more than students from more disadvantaged backgrounds.

16.  Furthermore, whilst privately educated pupils tend to outperform their state educated counterparts at school this situation is reversed at university. Students with lower A-level grades from state schools are known to equal or out-perform students from private schools with high A-level grades once they are at university. A five-year study co-funded by BIS, the Sutton Trust, the National Foundation for Educational Research and the College Board that tracked 8,000 A-level candidates found that a comprehensive pupil with the grades BBB is likely to perform as well at university as an independent or grammar school pupil with grades ABB or AAB.[106] High achievement in school exams is not necessarily a good predictor of achievement at university.

17.  Given the emphasis that Ministers have previously placed on the use of contextual data in university admissions,[107] the White Paper is strangely quiet on the subject. The creation of incentives for universities to focus recruitment on students gaining AAB at A-Level risks undermining the progress that has been made in the sector towards the use of contextual data to assess an applicant's full potential.

18.  Once AAB numbers are removed from the core allocations of universities, 20,000 further numbers will be removed on a pro-rata basis in 2012. An example of how this is intended to work is outlined using two "case-studies":

UNIVERSITY CASE-STUDIES (2012)

University A has 2,000 students with AAB grades removed from its core numbers and has set its full-time fee at £9,000. University A is allowed to compete for these 2,000 places at the full-time fee and can also compete for additional AAB students. University A is left with 200 numbers in its core allocation i.e. students admitted without high A-level grades or their equivalent. This core allocation of 200 numbers is reduced by 8% as a pro-rata contribution towards the 20,000 numbers which the Government wishes to remove and offer to lower cost providers. As a result University A loses 16 students from the core—a potential loss of £144,000 in year one (2012) rising to £432,000 by 2014-15. It is unlikely to lower its average fee price but can seek to recruit an additional 16 AAB grade students (or more) at full price.

University B has 100 students with AAB grades or their equivalent and has set a full-time tuition fee of £9,000. Once these students are removed it has a core allocation of 2,000. This number is reduced by 8% as a pro-rata contribution to the 20,000 numbers for lower cost providers. As a result University B loses 160 students. Unless it reduces its average tuition fee to £7,500 or less, University B cannot compete for any of the 20,000 student numbers. Unless it also chases AAB students, University B stands to lose £1.44 million in year one (2012) rising to £4.32 million per annum by 2014-15. If Ministers remove even more numbers by price from the core in future years ie in 2013 and beyond, University B will incur a significant reduction in income from UK domiciled students. This is in spite of University B's long tradition of creating opportunities for older students and students from non-traditional backgrounds as well as investing in a high quality student experience.

19.  The new student market "conditions" applied by Ministers have implications for financial sustainability and planning and will have an impact on current and future students. As illustrated in the university case-studies, the reduction in core numbers, combined with a limitation on price, raises the prospect that universities will have no means of recovering this income from other sources over a short timescale (bearing in mind that Ministers want the changes to operate from 2012-13).

20.  Instability will be made worse by the detail of the timetable for 2012-13 flexible margin proposals. The Hefce consultation suggests that universities will not know how many students they will lose into the "flexible margin" at the point at which they would be required to submit bids for this pool. Moreover, universities will only receive confirmation of their core allocation for 2012-13 in March 2012 when the admissions process for 2012-13 is well-advanced. This is likely to lead to delays and uncertainties for students or, in the alternative, universities being cautious about the number of offers and conditional offers that they make.

21.  The proposal to allow unrestricted recruitment of AAB students and to re-allocate 20,000 places to lower costs providers also has implications for the range of subjects offered by universities. It is well known that pupils studying arts and humanities subjects at A-Level or equivalent tend to achieve higher grades than those studying science subjects and mathematics in preparation for degrees in STEM subjects. As a result, STEM courses tend to have lower grade or tariff requirements. Funding drivers which incentivise the recruitment of arts and humanities students may lead to a reduction in the provision of strategically important STEM subjects.

22.  Ministers have also indicated that they want to increase the number of places re-allocated to providers charging less than £7,500 in future years. The primary objective seems to be to cut the costs of the student loan book for the Government. This is only likely to increase instability in the early years of the new funding arrangements.

23.  Above all, the decision by Ministers reveals a lack of understanding about quality and what students really want. As repayments of tuition and maintenance loans are based on the earnings of graduates rather than the sum of their debt, there is no immediate financial advantage to students in studying at a provider that charges £6,000 vis-à -vis one that charges £9,000. A graduate with a debt of £35,000 who is earning an annual salary of £24,000 will repay at the same rate as a graduate with a debt of £50,000 who is also earning £24,000. The assumption that low cost courses are the priority for prospective 2012-13 students is misplaced and belies the fact that many institutions set fees in consultation with their student unions.

ACCESS AGREEMENTS AND OFFA'S "AVERAGE" FEE

24.  On 12 July OFFA published its estimate of the average tuition fee in 2012-13 once fee waivers have been taken into account. This is the figure which is of interest to Government Ministers because it gives a very clear indication of how much more students will have to borrow from the Government to pay their fees. BIS has consistently estimated that the average tuition fee for the sector would be £7,500. According to OFFA's calculations, 106 out of 129 universities and colleges are likely to have an average tuition fee above £7,500 in 2012. The average tuition fee across all of these institutions once estimates about fee waivers are taken into account is £8,161. These fees reflect the impact of the policy of cutting the public investment in teaching by 80%.

25.  The OFFA estimates throw up some interesting differences in approach and a number of universities have chosen not to use fee waivers at all. For example, the average estimated fee for the University of Bradford and the University of Durham is £9,000. Similarly, the University of the Creative Arts appears not to be offering any fee waivers because its maximum fee and estimated average fee remains a constant £8,500. Meanwhile, the estimated average fee at Cambridge and Oxford are £8,748 and £8,355 respectively. These universities have deployed fee waivers as part of their access strategies but they can also draw on very large endowment funds to help fund large fee waivers for a relatively small number of students from disadvantaged backgrounds. In spite of these large endowment funds, Cambridge and Oxford will also benefit from government funding for the National Scholarship Programme.

26.  The actual average fee across the sector and for individual universities will not be known until December 2012 at the earliest. The "estimates" published by OFFA are just that—they are based on assumptions about how many students from different household incomes will be recruited to each institution. Universities recruit students on a needs-blind basis and pay no regard to household income. Neither universities nor OFFA will know what the average tuition fee is until students have enrolled on courses and confirmed their household income. Only then will universities be able to calculate how many students are actually entitled to fee waivers and / or bursary support. Some universities also recruit students on more than one semester i.e. some students may commence courses in January. This will further delay calculations of an average fee in some institutions.

27.  OFFA has also published figures on what it says will be the estimated average "costs" to students once bursary support is taken into account. This is potentially misleading. Bursary support covers a wide range of support for students, often to cover living costs and other costs associated with studying at university. The provision of bursaries will not reduce the fees charged and it is very unlikely to reduce what students borrow from the Government in terms of fee loans and maintenance loans and grants. (Maintenance is means-tested according to household income).

28.  Bursaries are known to be highly valued by students and universities provide bursaries to try and ensure that students have the support they need while they are studying. This is a particular concern for universities which provide opportunities for students from lower income backgrounds whose families are simply unable to provide additional financial support however much they might like to do so. The OFFA figures confirm that universities which teach the majority of students from lower income backgrounds have sought to ensure that their students are supported with bursaries in addition to any maintenance loans and grants to which they may be entitled. These universities are investing in university bursaries precisely because they understand that support for students while they are studying is much more crucial than a fee waiver because graduates can pay back fee loans over 30 years.

29.  There is a further reason why universities have not offered significant numbers of the fee waivers which bring down the average tuition fee price. EU students studying at English universities are entitled to access fee loans on the same basis as UK students ie they are not means-tested. Maintenance loans and grants are different as they are considered a "benefit" and are subject to the conditions laid down by the Member State. EU students have to demonstrate three years residency in the UK before the can apply for means-tested maintenance loans and grants. It is more than likely that EU students will be entitled to fee waivers on the same means-tested basis as UK students. The Government's policy of promoting fee waivers, including in the National Scholarship Programme, therefore creates an additional financial liability for EU students which universities would have to meet.

PRIVATE AND LOW-COST PROVIDERS

30.  Encouraging the entry of low-cost providers into the higher education sector may be in the interests of the Treasury but it is not necessarily in the interest of students. The creation of a flexible margin of contestable places, based primarily on price, will inevitably result in the removal of places from universities with a strong record of quality. Given the price constraints it seems likely that the flexible margin places will tend to support the provision of subjects that can be run at lower cost rather than higher cost subjects that are in greater demand. Far from enhancing student choice, the Government's proposals may well lead to less choice for students.

UNIVERSITY TITLE AND DEGREE AWARDING POWERS: IMPACT ON STUDENTS

31.  The White Paper sets out the Government's intention to relax the criteria for obtaining university status and to decouple the link between degree awarding powers and teaching students. At present, the right to use the prestigious university title is conditional on prior obtainment of taught degree-awarding powers, the presence of at least 4,000 full-time students and being able to demonstrate robust systems of governance. An organisation which does not meet the numbers threshold for "university" title may be eligible for "university college" title via the same process. BIS will now consult on changes to the criteria and process for university or university college status with the intention of relaxing the existing criteria.

32.  BIS will also consult on relaxing the criteria and process for granting and renewing degree-awarding powers at undergraduate level. This includes reviewing the need for institutions to demonstrate a track record of delivering quality higher education programmes for at least four consecutive years and whether an overseas track record and reputation should be taken into account by the QAA. BIS will also propose legislation to allow institutions that do not teach, to award degrees.

33.  The current system for granting university title and degree awarding powers has, as BIS acknowledges, been effective in maintaining standards within universities and delivering confidence in the quality of UK higher education and graduates of British universities. The primary reason why the UK remains second only to the United States in terms of the provision of higher education to foreign nationals—despite growing levels of international competition for international students—is that UK universities and graduates of UK universities are highly regarded within the international community.[108]

34.  In the UK, university title is a mark of quality and reputation which denotes adherence to the highest possible standards and commitment to rigorous academic governance to students and employers. Any move to relax the criteria for university title and degree awarding powers risks damaging both the quality of the student experience and the strength of the UK higher education brand. Once lost or diluted, this reputation may never be regained and graduates of UK universities will lose currency in the international market.

35.  The proposal to grant degree awarding powers to institutions that neither teach nor carry out research indicates a lack of understanding of the nature and purpose of higher education—a form of education that is at the cutting edge of an academic subject and which demands high levels of research-informed scholarship from staff and students. It also puts the UK seriously at odds with the Bologna Process which clearly defines universities in terms of teaching and research.

STUDENTS STUDYING PART-TIME

36.  million+ has previously welcomed the extension of fee loans to part-time undergraduates studying at the rate of at least 25% of a full time degree course. Part-time students are not confined to "part-time" institutions such as the Open University and Birkbeck. In many modern universities more than a third of students study on a part-time and flexible basis and it is right and proper that part-time students should have access to fee loans. million+ also believes that part-time students should be subject to the same repayment regime as their full-time counterparts rather than being forced, if their earnings rise above £21,000 whilst studying, to start repaying loans three years after they start studying.

37.  The Education Bill includes a clause that will enable Ministers to table statutory regulations to introduce fee loans for part-time students. The explanation provided by BIS in respect of this clause suggests that maximum fee caps of £6,750 and £4,500 will operate, reflecting 75% of a £9,000 full-time fee and 75% of a £6,000 full-time fee respectively. This proposal is predicated on the assumption that part-time students do not study at more than 75% intensity. This represents a fundamental misunderstanding of how part-time students study. In practice there is a good deal of flexibility which reflects the differing circumstances of part-time students (for instance in terms of work and family commitments) and the number of modules that students have been able to study in previous years.

38.  Part-time and full-time study alike is based on modules and credits rather than on percentage "intensity". Accordingly it would be greatly to the benefit of part-time students if part-time fees operated on a pro-rata basis linked to the credits undertaken and the full-time fee set by the university for the course in question (with an eligibility floor of 25% intensity).This would provide much more flexibility for part-time students and would be no more costly overall in respect of tuition fee loans.

STUDENTS STUDYING ON ACCELERATED DEGREE PROGRAMMES

39.  The Government is keen to foster the provision of more flexible forms of undergraduate study including two-year accelerated honours degrees. However, BIS has not yet resolved issues around the funding of accelerated degrees from 2012-13. The full-time fee regulations limit the fees that universities can charge even though students have to be taught proportionately more each year than a "standard" full-time student. If a university offers a three year degree course at £9,000 per annum, the university will receive £27,000 in fee income. However, if the three year course is taught under an accelerated programme in two years, the university will only be able to charge £9,000 pa ie £18,000 for the whole course. This idiosyncrasy of the funding system belies the fact that the Exchequer benefits because accelerated degree students would only be eligible to claim two rather than three years of maintenance loans and grants.

INITIAL TEACHER TRAINING, MPET FUNDING AND STUDENT VISA CHANGES

40.  The future of the Department for Education's Initial Teacher Training (ITT) and the Department of Health's Multi-Professional Education and Training (MPET) funding streams, coupled with the changes to Student Visa Regulations have all added to financial uncertainty as universities make preparations for 2012-13. This has been acknowledged by BIS and Ministers.[109]

41.  Overall there has been a 14% reduction in ITT places for 2011-12 and there is evidence that some ITT student numbers have been transferred to lower quality non-university providers. In addition, the abolition of the Training and Development Agency for Schools (TDA) appears to be linked with the Teaching Quality White Paper published in November 2010 and signal a move from university-based ITT to "Teaching Schools". The DfE's response to the Teaching Quality White Paper consultation (27 June 2011) recognises that university-school partnerships have value, but DfE still appears to regard teaching as a "craft" to be learnt on the job ie teaching is about the acquisition of skills and not also about the acquisition and development of knowledge. The DfE's response also fails to pay proper regard to the fact that students overwhelmingly value ITT which is university-led and to the evidence available from Ofsted inspections of ITT provision. This direction of travel will have consequences not just for the future training of teachers and the future supply of teachers, but will also inevitably impact on universities and student choice.

42.  Funding for nursing, midwifery and allied health professional education (NMET) is one component of the "Multi-Professional Education and Training" (MPET) budget which is included in DoH funding of the SHAs. Other components provide funding for postgraduate medical and dental education (MADEL) and support for the practice teaching of medical students (SIFT). The current budget is around £4.5 billion. The DoH in England has signalled that the MPET budget will be cut by up to 15% over three years commencing in 2011-12. Universities in England have confirmed that the number of commissions is likely to decrease by around 10-15%. Some universities receive approximately 25% of their total income from NHS-funded health professional courses. Uncertainty about the arrangements for the commissioning and award of these contracts from 2012-13 is creating a financial risk which will coincide with the introduction of the new fees and funding regime. It could result in universities having no option but to consider making well-qualified and experienced staff redundant. This poses an obvious risk to future NHS education and training provision and again to universities and student choice.

CONCLUSION

43.  million+ welcomes the emphasis on the student experience in the Higher Education White Paper, Students at the Heart of the System. However in spite of the proposals to provide more information to students, as it stands the White Paper is unlikely to improve student choice or investment in the student experience and has the potential to create significant risks for the domestic and international reputation of England's universities.

14 July 2011


99   million+ (2011) Evidence to BIS Committee Inquiry-The Future of Higher Education. Back

100   million+ (2011) Has the Treasury done the sums? The economic implications of the coalition government's withdrawal from the public funding of higher education. Back

101   BIS (28 June 2011) Higher Education White Paper-Students at the Heart of the System. Page 67. Back

102   BIS (28 June 2011) Higher Education White Paper-Students at the Heart of the System. Page 19. Back

103   Ev not printed Back

104   Ev not printed Back

105   House of Common Library (2011) Back

106   Kirkup et al (2010) Use of an aptitude test in university entrance: a validity study: Final Report. National Foundation for Educational Research. Back

107   BBC News (9 February 2011) 'Nick Clegg attacks Oxbridge £9,000 tuition fees plans' http://www.bbc.co.uk/news/uk-politics-12409419. Back

108   The presence of international students is vital to the United Kingdom for social, cultural and economic reasons. See Middlehurst, Woodfield and Hjerde 'International Higher Education Missing an Opportunity' (million+ 2011). Back

109   Guardian (14 March 2011) http://www.guardian.co.uk/education/2011/mar/14/high-tuition-fees-university-fine. Back


 
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Prepared 10 November 2011