UK HE funding fixed in 1,300 words (kinda)

This post represents my personal opinions, and not those of my employers, projects, or programmes I am or have been responsible for. This post is available under a CC-BY license.
It seems that we still haven’t sorted this higher education funding nonsense out, and time is ticking away for the Rt Hon David Willetts to pull something out of his, er, hat. So before piling in with suggestions, here are some home truths:

1. The Browne-Willetts model is basically a graduate tax. No-one pays anything until after they graduate, payment is linked to actual earnings and is deducted at source via the tax system. That to me (and I’m the offspring of a love affair hatched within the Inland Revenue, so this stuff is in my very life force) pretty tax-ish. The difficulties are all caused by the decision to try really hard to make it not look like a graduate tax – firstly it is linked to a specific amount, which is generally perceived as “too much” by pretty much everyone, and secondly it is very narrow – I could be working next to a graduate of the new system at the same job at the same pay and they would be paying more “tax” than me. Which is clearly unfair.

2. The £9,000 maximum is pretty close to what it actually costs to teach a student currently. It’s a bit more, but this extra is scant compensation for the uncertain levels of investment, need for radical restructuring and a grossly extended marketing push. I think we’ve mostly all spotted this by now, but it’s worth restating.

3. Discounting the student “fees” for students coming from a disadvantaged background is not “progressive”. Meeting their living costs would be far more immediately helpful, and much more likely to support widening access. By the time they are earning enough to pay back fees they are earning at least as much as everyone else that is paying student fees. Tax is based entirely on an ability to pay at the point of payment, fee repayments are based on someone’s parents (or whatever) being able to pay for the “fees” 3+ years ago.

4. If you’ve got a system where fees are not coming in until graduates are earning a certain amount, you have a hole in your recurrent budget. This is the hole in the plan which costs the government billions each year. You’ve got a return (of only part of the initial loan) coming in at the very least four years after the spend (and trickling in for years after that). Which has the deliciously ironic impact of massively pushing up government borrowing, given that David Cameron and his team reel off the “labour’s excessive deficit” nonsense as a justification for this system.

5. A market with variable and uncompensated returns is not a good way to drive up quality in a system that needs sustained, long-term investment in infrastructure and staff. The smart thing to do in such a market is to lower ongoing costs (less full-time staff, less ongoing commitments) and bash unexpected surpluses into cheap shiny things that look impressive. It’s to cut choice by concentrating on renumerative areas of provision. We’ve seen the same thing happen in the privatisation of the rail network – to watch it happen again to another once-proud national system is pure stupidity. Pure markets don’t work. And David Willetts knows this, which is why he is intervening in pretty much every aspect of this planned new one.

6. Allowing systemic growth by letting the ultra-rich do whatever they want is obviously not a good idea. Didn’t do the economy much good either. It’s allowing expansion based on prestige rather than quality, disadvantaging students who can’t afford to pay the premium, and would only have led to elite institutions basically leaving the mainstream undergraduate market altogether. The fact that that an ex-member of the Bullingdon Club had to step in to point this out does not fill me with with confident that Willetts and BIS know what they are doing.

7. Students are not consumers. Education is work, and a student in any decent form of education is working on their own capacity. This is student as labourer-consumer and is basically a separate blog post.

OK, so that’s where we are. Students want an affordable education that meets their needs, universities want stable funding streams and the chance to invest in staff and infrastructure, academics would prefer to be valued and remunerated as skilled professionals if it’s all the same, employers need staff who can look beyond current assumptions and the government would like to be borrowing less. And with the current proposals, no-one is getting what they want.

To coin a phrase, “We can’t go on like this”.

Here’s the proposed Followers of the Apocalypse solution. Pragmatic, un-ideological and meeting the needs identified above:

(note this isn’t my – personal – dream solution. It’s just me exasperatedly trying to sort out all the problems identified above so that everyone is happy. So it’s not endorsed by anyone – even me)

A: Graduate tax, not fees. On all graduates, not just the new ones. This means that everyone is contributing to the cost of their university education (for those that have already paid fees – basically for 1998-99 and onward commencements – there could be a small lowering of the general rate) Such would be the additional take for this tax that the threshold of repayment commencement could be raised – a genuinely progressive move – or more of the living costs of non-traditional students could be covered.

B: Employer tax. Browne shied away from this, but I’m not going to. Employers getting the benefit of UK graduates should be contributing to the costs of producing them. Period. Whether this is through direct payment for the training of specific graduates (sponsorship), or indirectly through a small increase in corporation tax, should be left up to the employers in question.

C: Keep as much of the current model of HE funding distribution as can be kept. It’s mostly good, it mostly works, and offers the stability that institutions need. It supports a world-class system that actually runs a small profit, whilst educating a record number of students. There are tweaks that could be made around the edges, there could be a nicer method to sustainably support institutional growth and contraction for instance, but these are matters for the experts in HEFCE ASG who actually understand this stuff, rather than public policy.

D; Penalise institutions using large numbers of temporary teaching staff. PhD students should not be taking on large amounts of teaching, and bright graduates should be encouraged to consider academia as a career. It only works as a career (and such is the nature of academia you really need careers to build up the required level of knowledge) if the terms and conditions are such that you don’t need to take another job to make ends meet. For post-graduates and recent entrants to HE, this is very often not the case. The current model basically requires that you have private means to enter HE teaching or research, which cannot be a positive development.

E: Be up-front about what HE is. It’s hard work, with no guarantee of benefit. Rather than change HE to do something it isn’t designed to do, scale up alternatives (and there’s no reason HEIs couldn’t participate in these markets too if they have the resources and skills).

F: More central planning. It’s a truism that in Higher Education Conservative governments add constraints in the name of encouraging innovation, and Labour governments remove constraints in the name of system-wide efficiency. Work with this. Use additional student numbers more intelligently, with employers and analysts, to get what we need out of HE. Me, I’d be investing in paying for people to learn how to design and support a society with a vastly reduced energy availability and reduced levels of global economic activity – but your mileage may vary here.

Maybe this is a little tongue in cheek, but what I am trying to get at is that what is on the table at the moment is a bad deal (and in many cases the worst possible deal) for everyone. Pretty much *anything* would be better than the Browne-Willetts model.

3 thoughts on “UK HE funding fixed in 1,300 words (kinda)

  1. It would appear from your link to theuniversityblog’s “How real is the graduate earning premium?” article that you’re somewhat skeptical (as am I) about the lifetime personal economic advantage of being a graduate.That being so, how do you reconcile that with your prescription for a graduate tax, rather than just increasing income tax? Surely if society as a whole benefits from having graduates, and the personal benefits are unpredictable and/or marginal, the costs should be shared?

  2. @Alex – first up I’m not prescribing anything… to paraphrase Sir Humphrey Appleby I’m saying “if we must do this damn foolish thing, let’s not do it in this damn foolish way”.Policy is the art of the compromise… if there must “politically” be a way of linking personal benefits to contributions to educational comments then this is the fairest one I can think of. I’m not saying it’s the right thing to do, I’m saying that this is the least harmful way of doing it.

  3. Fair enough, but I think conceding the argument that the societal gains are greater and more predictable than the personal gains is a strategic error. I don’t think I’ve even heard politicians *explicitly* doing so, and only a few members of the non-unversity-educated public.Maybe I hang out with the wrong people, though; perhaps the previous government was hearing it more from their voting base before they introduced fees?!

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