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What will the Office for Students do now?

by Rob Cuthbert

SRHE News Editorial, April 2026

The Office for Students has had a significant reset, after it was heavily criticised, not just by the HE sector, but also in a coruscating report by the House of Lords Industry and Regulators Committee in 2023. That report said “the regulator had a poor relationship with both students and providers, and that it lacked independence from the government.” In January 2024 the National Audit Office produced a scathing report on student finance in franchised providers, and Sir David Behan was commissioned to produce an independent review of the Office for Students, published in July 2024 as Fit for the Future: Higher Education Regulation Towards 2035. After the general election in 2024 the new Labour Government replaced the Chair of the OfS, former Conservative MP Lord Wharton, appointing Edward Peck CBE, the widely-experienced former VC at Nottingham Trent in March 2025. Peck had been appointed by DFE as the first Higher Education Student Support Champion in 2022, so might be seen as bipartisan. OfS chief executive Susan Lapworth left at Easter 2026, and John Blake, Director for Fair Access and Participation, left in 2025 to join Wonkhe’s new venture The Post-18 Project, replaced on an interim basis by his widely-respected predecessor Chris Millward.

There are now almost 500 OfS staff, about twice as many as the Higher Education Funding Council for England had when it was disbanded. The Chief Executive has a leadership team comprising eight ‘Directors’ and another 13 ‘Senior leaders’; it is difficult for outsiders to understand exactly who is responsible for what. There are Directors for: Freedom of Speech and Academic Freedom; Quality and Access; Strategy and Delivery; Regulation, and Enabling Regulation; Resources and Finance (2); and Legal Counsel (but, mysteriously, not the Director of Fair Access and Participation). The ‘Senior Leaders’ are Heads of: Interventions; Monitoring; Student Equality and Welfare; Financial Sustainability; Enforcement; Quality and Standards; Communications; Market Entry; Chief Data Officer; Student Outcomes; Provider Governance; Consumer Protection; Pathways and Funding.

If only most problems would fit into those pigeonholes – there must be a lot of day-to-day negotiation about who leads on which issues. With 500 staff there is scope to give every one of the 424 institutions under OfS regulation a different contact person, without even troubling the 22-strong leadership team, but perhaps that would just be too easy to understand. Behan’s 25th recommendation was “That the OfS develops a more transparent style of communications to demonstrate to the sector its independence from government.” It could start with more communication about staff and how the organisation is supposed to work.

New chair Peck wasted no time in recasting the OfS strategy to take account of the many criticisms of the OfS. After the Lords inquiry the Behan review called for a narrower focus on key priorities, and the Strategy for 2025-2030 said the OfS goals were “grouped into three areas”: quality; student experience and support; and sector resilience. Equality of opportunity was “woven into everything we do”. Peck chose four phrases to capture the approach:

  • “Ambitious for all students from all backgrounds”
  • “Collaborative in pursuit of our priorities and in our stewardship of the sector”
  • “Vigilant about safeguarding public money and student fees”
  • “Vocal that higher education is a force for good, for individuals, communities and the country”

The OfS announced on 30 March that Ruth Hannant and Polly Payne had been appointed as the new CEO of the OfS, job-sharing as they did as Director-General at the Department of Culture, Media and Sport, after previously being DCMS interim Permanent Secretary during 2023. They also job-shared as Director of Higher Education in the DfE from 2014-2017. Josh Fleming, current director of strategy and delivery at the OfS, will be interim chief executive until Hannant and Payne take up their new role on 15 June 2026. How will they make the new strategy work? What will be at the top of their agenda?

Their first problem is that the Office for Students, because of its name and remit, has a Strategy which can only deal obliquely with the most pressing and interconnected problems facing English HE: finding a way to finance HE sustainably (and sorting out the student loans row) and finding a way to cope with the many failures of the statutory HE market. Issues of academic freedom, freedom of speech and the once-ubiquitous culture wars may now be receding in prominence; at least, that will be the hope on all sides. Financing and markets will be the primary concern of the DfE’s promised review of HE finance, but there is no reason to suppose it will appear soon. Chancellor Rachel Reeves recently declared that the student loans issue was not top of her agenda. This gives scope for the new brooms at the OfS to rearrange the HE furniture in ways which may guide the DfE development of workable proposals.

The NAO issued a damning report on 7 December 2017 on The higher education market. It said that, if HE had been a financial product, they would be complaining of mis-selling by universities. But the NAO’s deeper criticism was of the idea that HE could be treated as a market at all, with the report listing all the ways that the market and its regulation fell short of what was necessary and desirable. The new chief executive(s) at OfS were in charge of HE at the DfE from 2014-2017. They must have been closely involved with the NAO investigation, but even more closely involved in the passage of the Higher Education Act 2017, which created a statutory HE market and the Office for Students.

Markets, student tuition fees and higher education financing have been inextricably linked since 2017. The Labour government in 2006 raised undergraduate full-time fees from £1000pa to £3000pa and created income-contingent loans as a means of repayment. In the 2010 general election a new Coalition government faced the perennial question of how to finance mass HE. Deputy Prime Minister Nick Clegg had made a very public pre-election ‘pledge’ to abolish undergraduate fees, but instead  the government tripled them, to £9000 pa from 2012. Deciding exactly how to make it work proved to be rather tricky. David Willetts, the universities minister in BIS, repeatedly promised an HE Bill setting out new policy, but it took years to arrive, prompting scepticism if not ridicule. Willetts declared that markets would “drive up quality” in HE. The hare had been running on ‘low quality courses’ even before Labour HE minister Margaret Hodge complained about ‘Mickey Mouse courses’ in universities (so the hare was really Bugs Bunny). Willetts believed that HE institutions would choose to set fees in a range from £6000-9000, reflecting their supposed ‘competitiveness’ in the market. Every university, of course, understood that price signals quality and accordingly set fees at £9000. From that moment the HE market – as imagined by statute – was dead.

Nevertheless the 2017 Higher Education and Research Act institutionalised the economic idea that markets and regulation are the answer to effective performance of the whole HE sector, even though Willetts’ Special Adviser Nick Hillman always knew that “Straight comparisons between regular markets and educational markets don’t actually make much sense.”, as he said in response to the 2017 NAO report.  By 2017 Willetts had been replaced by Jo Johnson (later ennobled by his brother Boris), who doubled down on the script about “low-quality courses”, as did most of his many successors, with the honourable exception of Chris Skidmore.

Behan’s review said:

“I am of the view that higher education is not a ‘pure’ or ‘perfect’ market, but rather a ‘quasi-market’. Some of the reasons for this include:

• There is a complex relationship of choice between the student and the provider whereby students’ choices are dictated not solely by their preferences, but also by their expectations at being accepted/rejected by the provider.

• Government not only sets the price of a domestic undergraduate course that a provider can charge, but also heavily funds the sector through student loans.

• There are numerous and significant cross-subsidies between cohorts of students. 

• There are significant asymmetries of power and information between providers and students. Taking on a student loan and pursuing higher education is likely to be the biggest contract new undergraduate students will ever have entered.” 

With that list of deficiencies, calling HE a ‘quasi-market’ was charitable, even if – at a stretch – it reflected academic thinking. HE providers responded to the market in various ways, many eventually frowned on or outlawed. After 2010 new ‘challenger institutions’ expanded sub-degree business courses in London, exploiting the income from students able to gain £9000 tuition fee loans – money paid direct to institutions. They grew so much that in 2013 23 private colleges were suspended from student loans eligibility by the DfE. Government didn’t want that kind of response to market demand.

As universities increasingly suffered from rising cost but frozen tuition fees, many saw international student recruitment as the answer. Increasing numbers of universities outside London decided to open a London campus to exploit the overseas market, but were and still are criticised for it. The sector’s broad reliance on optimistic projections for international recruitment was deemed unsustainable and too risky. Government didn’t want that kind of response to market demand – but it decided to cash in anyway, with a levy on institutions for every international student recruited. Meanwhile some institutions thought they could still tap into new demand by expanding franchise relationships with partner colleges, but some of the largest of these have also now been discouraged or discredited. Government didn’t want that kind of response to market demand either.

Despite the downturn in franchising some people made a lot of money. Mike Ratcliffe noted on his MoreMeansBetter blog that the for-profit London School of Commerce had been “… incredibly profitable, with over £100 million paid in dividends to the family that own it.” He asked “Surely we can’t allow companies to stop being providers but to hang onto tens of millions in cash or other assets if either there have been a majority of non-genuine students or only a fraction of genuine students have completed their courses?”. It seems there were Mickey Mouse students as well as Mickey Mouse courses. Elsewhere, responsible HE institutions faced increasing financial problems as their real income fell precipitously. That line in the OfS strategy about resilience has a lot of work to do, and the OfS should look again at Behan’s recommendation “That the OfS board reviews its risk appetite framework and approach with a view to becoming more proactive in anticipating, identifying, and responding rapidly to address emerging risk.” After all, the new Strategy says; “We intervene where we have concerns that public money is not being used as intended …”

Students have repeatedly pronounced themselves largely satisfied with their course experiences in successive National Student Surveys, but this did little to quell the politicians’ and media obsession with course quality. The 2017 Act envisaged a Designated Quality Body to work with the OfS, the QAA was accordingly designated, but the OfS set increasingly restrictive conditions which the QAA ultimately deemed incompatible with its international role and credibility. The House of Lords Industry and Regulators Committee

“… expressed concern about the circumstances surrounding the QAA’s de-designation … The QAA … “blamed” this suspension on the “OfS’ regulatory approach”. The committee said it was “concerning” that England’s regulatory framework had “shifted away from European standards” because it had the potential to damage the international reputation of England’s HE sector. … it was unclear if the OfS had the capability to take on the role previously carried out by the QAA. It called on the regulator to align its framework with international standards and to appoint the QAA or another arms-length body to perform the quality assurance role.”

The OfS instead formed an apparently permanent intention to conduct quality investigations itself, defying the explicit intention of the 2017 Act. OfS now has many Senior Leaders with a finger in the pie, presumably including those for Interventions, Monitoring, Enforcement, Student Outcomes, and Consumer Protection, but most of the others might have grounds to join in.

The quality investigations by OfS generally reach conclusions much too late to benefit the students whose experience prompted the investigations. The OfS strategy says: “We will help drive improvement across the sector, recognising that while much provision is already excellent, there is room to improve further. And we will hold institutions to account when they fall short.” So far the OfS investigations have focused on newer providers or universities near the bottom of the pecking order. The OfS has not, for example, investigated the very public problems with veterinary courses at Cambridge. In those as in many others it seems that institutional self-regulation can deliver better and quicker results.

Those with long memories will recall the opposition of the pre-1992 universities to any incursions by Her Majesty’s Inspectorate, as it then was, which had the run of post-1992s. But HMI were able exactly to be “proactive in anticipating, identifying, and responding rapidly to address emerging risk.” Perhaps the OfS should not only reappoint a DQB but also look around for an independent and respected cadre of, say, His Majesty’s Inspectors. Behan said: ”The OfS should develop its regulatory model to create a virtuous policy circle with the objective of driving improvements in the quality of the higher education sector, and thus acting in the interests of students. The OfS and higher education providers should regard quality improvement as their common shared goal.”

English HE continues to be highly respected and in demand worldwide, but time is running out. The ‘narrow reputational range’ acclaimed by David Watson is jeopardised by misbehaviour by some new providers, misjudgments by a handful of institutions in desperate financial straits, and cutbacks  everywhere. Nevertheless, the National Student Survey shows that students continue to be broadly satisfied, while identifying particular problems such as feedback which institutions have worked hard to address. Some in the media persist in asking “Is higher education worth it?” by highlighting graduate debt, but student demand remains doggedly high. This suggests that you really can’t buck the market, and what we need is the right kind of review to deal with the student loans row and make higher education finances sustainable. In this the OfS has a huge role to play: the new OfS Chief Executives have to transform how the OfS works, to live up to this optimistic but necessary condition for success: “We will deliver our work in collaboration with students and the institutions we regulate. Accepting there will be issues on which we disagree, we will cultivate relationships based on mutual respect, confidence and trust. We will work with student bodies, sector agencies and other partners that share responsibility for stewardship of this important sector to support a cohesive regulatory environment and foster a thriving ecosystem equipped to create opportunity and drive growth. We will champion the many benefits of higher education for society, culture and the economy and regulate in a way that enables universities and colleges to drive growth, create opportunity, champion free expression and support a flourishing society.”

Rob Cuthbert is Emeritus Professor of Higher Education Management, University of the West of England and Joint Managing Partner,Practical Academics rob.cuthbert@btinternet.com. X/Twitter @RobCuthbert. Bluesky @robcuthbert22.bsky.social.

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Weekend read: What you need to know to make sense of the row about student loans

by Rob Cuthbert

In January and February the mainstream media were full of stories about the unfairness of student loans and the burdens on graduates facing huge debts and effective tax rates of more than 50%. They cut through in a way that the long-running stories about universities’ financial problems had not, and even dominated Parliamentary questions to the Prime Minister (PMQs) on 25 February 2026. But student loan repayments and universities’ financial problems are two sides of the same coin – how to finance mass higher education. The political debate about student loans is a case study in how almost everyone who didn’t know enough got almost everything wrong at first, until more realism gradually emerged.

Under Labour governments from 1997 there was a heated but, by comparison, measured debate about the costs of higher education, and who should pay for it. As HE participation rates soared from 10% towards 40-50% the international consensus was that it was reasonable for students or graduates to bear some of the cost. Higher education benefited society but also individuals who enjoyed a ‘graduate premium’ of higher lifelong earnings. Nevertheless, when the £1000 undergraduate tuition fee was raised to £3000 in 2003 it nearly brought down the Labour government. That probably represented about half of the total cost at that time. Students were of course vehemently opposed to fees, but for some in HE it felt about right to share the costs equally between students and general taxation.

Demand for HE continued to rise but total costs were controlled because government still determined total student numbers. Then came the Coalition government of 2011 with its determination to make higher education a market. The Liberal Democrats reversed their pre-election pledge to abolish student fees, instead agreeing as part of the coalition to triple fees to £9000. And government abolished its control on total student numbers. Universities Minister David Willetts claimed that student choice would “drive up quality”, but he, almost alone, expected a spectrum of fees from £6000-9000 to emerge. Everyone else realised that price would be the loudest signal of quality, and almost every university went for £9000.

The £9000 fee probably covered most of the costs of undergraduate tuition, although some grant funding remained for specialist high-cost courses, and Oxbridge complained that for them £13000 was the break-even figure. £9000 became the highest nationwide tuition fee in the world, and England still enjoys that dubious world-leading position. To keep higher education accessible to all, in theory at least, new arrangements were needed to make HE affordable at the point of delivery, with the cost being partly paid by students after graduation.

Under the new student loan system graduates would start to make repayments once their salary was above a specified threshold. Their debt would increase at a specified rate additional to the Retail Prices Index (RPI). The total repayments each month were capped, so most graduates would never repay their total debt, but any remaining debt was wiped out after 30 years. The explicit intention was that both fees and salary thresholds would rise with inflation.

This means that student loans are not like commercial loans. The system was never designed to get all the money back. It was designed to be progressive, like income tax, so that among graduates “those with the broadest shoulders”, as the Prime Minister likes to say, should bear a greater share of the repayment burden. In 2012 it was intended that the system should deliver about 72% of the total cost in repayments. The unmet cost (government subsidy) was known as the Resource Accounting and Budgeting (RAB) charge.

Almost immediately the RAB charge began to rise above its planned level, and the government soon found it necessary to restrict enrolments in many new ‘challenger’ institutions, which were providing courses of debatable quality, mostly in business and management, mostly in London. Far from driving up quality, student choice seemed to be driving it down. But these problems paled into insignificance as the economy continued on its path of sluggish low growth. To make things worse, government had to abandon a “fiscal illusion” in government accounting, as the Office for National Statistics forced a justified change which put more costs onto current balance sheets rather than allowing them to be deferred for many years. For a while, the fact that interest rates were near zero concealed the punitive possibilities of debt levels and loan repayments, but then government – facing budgetary pressure – decided to freeze thresholds and change repayment terms. (Jim Dickinson’s Wonkhe blog on 2 February 2026 was a detailed explanation of how we got to where we are). Interest rates rose to 3-4% but government persisted with the use of RPI + 3% as the loan interest rate, even though for almost every other purpose it used the lower figure of CPI (consumer prices index). The current outcry on loans became inevitable; indeed, it had even been predicted by Nick Hillman, one of the architects of the loan system, who wrote in a 2014 Guardian article: “… come with me to the election of 2030. Those who began university when fees went up to £9,000 in 2012 will be in their mid-thirties by then. That is the average age of a first-time homebuyer and the typical age for female graduates to have their first child. By then, there will be millions of voters who owe large sums to the Student Loans Company but who need money for nappies and toys, not to mention childcare and mortgages. So, however reasonable student loans look on paper now, the graduates of tomorrow could end up a powerful electoral force.”

Meanwhile, some of the graduates of yesterday were quick to ride the coat-tails of the loans debate and cry “more means worse”, even as all the more successful world economies continue in the opposite direction. Often mentioned but never identified, ‘Mickey Mouse courses’ also took a supposed share of the blame, despite expert commentators like David Kernohan of Wonkhe pointing out the extreme difficulty of identifying them in ways that government or the regulator could operationalise. The Labour government adjusted its stance on exactly what the country needs with some vaguely quantified assertions about skills in its White Paper, and former Skills Minister Robert Halfon popped up on Times Radio on 14 February 2026 to argue, as he always did, for more apprenticeships. Acknowledging employers’ decades-long unwillingness to pay for training, he suggested they should be ‘incentivised’ with £1billion of public money. But even with public funding for employers’ costs, vocational training apprenticeships will mostly remain a great idea ‘for other people’s children’, as Alison Wolf once witheringly put it. Conservative leader Kemi Badenoch got the kind of publicity she probably hoped for as she proposed in an ITV interview to help Plan 2 graduates by reducing interest rates, even as personal finance guru Martin Lewis pointed out this would only help the richest graduates, and the way to help people was by unfreezing the salary thresholds at which the higher repayments kicked in. He apologised for gatecrashing the interview, but he was quite right, and understandably frustrated. Badenoch said this could be afforded by removing 100,000 students on ‘low quality’ courses and using the consequent savings. Shadow Education Secretary Laura Trott, under pressure from the BBC’s Laura Kuenssberg, waxed lyrical about LEO data on graduate salaries and suggested that Creative Arts courses were low quality and should feature in the 100,000 reduction. She refused to say that university closures could be ruled out, but there was, of course, no coherent plan for the supposed reductions and their effects on local economies, especially in regions where salaries are lower.

Conservative leader Kemi Badenoch was unabashed and led with the topic at PMQs on 25 February 2026 and Jim Dickinson blogged the same day for Wonkhe, pointing out the problems with most of the interventions from backbenchers of all parties, and noting that things will soon get worse with barely-noticed measures affecting postgraduate student support in the previous budget. Prime Minister Keir Starmer committed to a review of the loans problem, but in Times Higher Education on 27 February 2026 Helen Packer had experts queueing up to point out that: “Quick tweaks to the terms of English student loans are unlikely to satisfy disgruntled graduates and may conflict with wider plans to reform post-16 education.”

The major problems with HE finance have still not yet had equivalent mainstream recognition. In recent years the tuition fee income of universities fell from £12billion to £10billion simply through inflation and the freezing of tuition fees. 40 % of universities are reporting deficits and the majority are making staff redundant. Government has unfrozen tuition fees but then hit universities with a levy on international student fees which more than wiped out the extra income from fee increases. Visa restrictions have also hit international student enrolment and severely reduced some universities’ opportunity to compensate for the losses on home students. In 2011 Universities UK hoped that accepting the £9000 fee would rescue the HE sector from the coming austerity, but the rescue was short-lived, as fees failed to rise with inflation. Now another government faces the challenge of finding a long-term sustainable solution to the problem of funding higher education. It seems far from the top of the agenda for the embattled Starmer administration, but the media outrage over student loans might push it higher.

Successive cohorts of students have experienced various Plans for repayment. The main problem is Plan 2, affecting students who started their courses from 2012-2013 to 2022-2023. The numbers rapidly become hugely confusing, and some commentators fail to recognise even such basic issues as the need to ensure that all costs and prices are on the same base. But almost all agree that Plan 2 is unfair and should be changed.

American students have more orthodox commercial loans to pay for their tuition and in the USA the growing scale of student debt also became a major political problem. However Americans are much more accustomed to the high costs of HE: the culture encourages parents to save from birth to pay for tuition, and the taxation system rewards both savings and loan repayments. In addition, a ‘borrower defense’ program, created in 1994, allows students to get loans cancelled if they are misled by their colleges about their future employment prospects. The Obama administration began to penalise institutions, mostly for-profit institutions, which did not adequately prepare students for gainful employment which would enable them to repay their loans. Student debt rose to about $1.6trillion; by January 2025 President Biden had forgiven $183.6billion of debt, before President Trump set out to turn the clock back. In the USA the ‘graduate premium’, the advantage for graduates who earn on average higher pay than non-graduates, has continued to rise despite continuing HE expansion, whereas in the UK, almost uniquely, the premium has declined. This suggests, as Jim Dickinson has argued on Wonkhe, that the problem is one of supply rather than demand – employers will not or cannot pay more in the sluggish UK economy. Graeme Atherton (West London) pointed out in Times Higher Education on 26 February 2026 that despite Trump’s changes the US system is still more progressive than Plan 2. John Burn-Murdoch had a telling chart in his Financial Times article on 16 February 2026, ‘Is higher education still worth it is the wrong question’, showing that in the UK the graduate premium had decreased from 1997-2022 as HE numbers increased, contrary to the trends in the USA, Canada, Netherlands, France and Spain.

The problem of financing UK HE remains unsolved and the clamour of vested interests has become almost deafening. The main architect of the fees regime, David Willetts, who wrote a book about intergenerational unfairness, tried hard on Conservative Home to blame someone else while defending progressive expansion rather than reduction in HE student numbers. Alternative solutions abound, but have not yet penetrated the mainstream media debate about HE policy. Nick Barr (LSE), a longstanding expert commentator on HE finance, wrote in July 2023 about ‘A fairer way to finance tertiary education’.  There was detailed and expert analysis in Financial modelling by London Economics in March 2024. In September 2024 Tim Leunig, a former Chief Analyst at the Department for Education wrote a HEPI blog on ‘Undergraduate fees revisited’ alongside his HEPI debate paper, which promised that “Highest earners would pay the most, as is appropriate in a social insurance scheme”. The Higher Education Policy Institute (HEPI) in April 2025 published a report asking ‘How should undergraduate degrees be funded? A collection of essays’. Mike Larkin (emeritus, Queen’s University Belfast) posted on his Total Equality for Students blog on 13 January 2025 a detailed and plausible set of proposals for reform of the present system, summarising many of the attempts to initiate debate.

Yet it is only now that the financing of HE might creep into the mainstream debate, entering through the back door of unfair student loan repayments and threatening to deliver results that may help some graduates but damage higher education even more. Nick Hillman has argued persuasively that of the three main proposed solutions to the student loans furore, one is unwise, one unaffordable, one unpalatable, and all are unfair. Nevertheless, something must be done. Former Director of Fair Access John Blake, interviewed by Nicola Woolcock in The Times on 4 February 2026, said;“…  a system that feels so suffocating to so many is fundamentally broken, no matter how many graphs about average graduate salaries we make…. I think we may need to move to a formal graduate tax. There are no popular options here, it’s not just people saying I’m in debt and it’s going up every year. Even if the system computes, it has a sense of being ridiculous when you’re in it. This system has run out of road.” Blake is Director of the new think tank The Post-18 Project. ‘The walls are closing in on our doomed student loans system’, as Jim Dickinson wrote for Wonkhe on 11 February 2026.

When it started, the student loan system was perhaps financially logical, if you accepted its progressive premise of redistribution. Repeated government tinkering in the face of extreme budgetary pressure, especially the freezing of thresholds, made it successively more and more unfair, and has now exposed the underlying psychological and emotional illogicality. The oppressive psychological impact of the loan system on graduates facing a difficult job market makes it unsustainable. So what is to be done?

If  higher education is free, poor people who don’t go to university pay for the education of rich people who do. If students pay all the cost of their higher education, as is now being widely proposed, then everyone suffers because economic growth and incentives are diminished. We need to find a halfway house which shares the cost of higher education between graduates and the wider society which benefits from HE. The immediate challenge is to find a sustainable way to preserve the progressive and redistributive nature of student finance, which is not experienced by successive cohorts of graduates as oppressive and demotivating.

The Labour government has accepted the need for a comprehensive review of how HE should be financed, but it remains a work in progress, promised but not near the top of the agenda. Short-term budget fixes like the international students’ fees levy suggest that there is limited sympathy in government for the financial plight of many universities. Previous governments of various stripes have resorted to bipartisan national inquiries (Dearing, Browne) which straddle general elections to reduce their electoral risk, and such a device cannot be ruled out this time. The danger is that, under the short-term pressure of finding a fix for the student loans problem, government will lurch into a ‘solution’ with possibly massive collateral damage to the whole HE sector, and to local economies. Government is desperate not to increase its spending and borrowing any further, and in any case has other higher priorities than HE. But a solution to student loan repayments which requires HE to contain the cost of improving the system may force the closure of a significant number of universities, with long-term and possibly irreparable damage to their local communities and economies – probably mostly in the Midlands and the North, not London and the South East. Brian Bell (King’s College London) has just been appointed principal adviser to both the PM and the Chancellor on macroeconomics and fiscal policy. He spoke at an LSE event in February about migration, where he said, discouragingly: “I’m sure we’d all like for there to be a complete rethinking of university financing, and perhaps even the university model across the UK – perhaps we shouldn’t all be teaching three-year degrees in X and Y – perhaps we should have different universities doing different things. But I see no realistic prospect of that happening.” These are hard questions with no easy answers, but too many people are getting too many things wrong about both the costs and the benefits of higher education. Let us at least start by understanding what the problem is.

Rob Cuthbert is editor of SRHE News and the SRHE Blog, Emeritus Professor of Higher Education Management, University of the West of England and Joint Managing Partner, Practical Academics. Email rob.cuthbert@uwe.ac.uk. Twitter/X @RobCuthbert. Bluesky @robcuthbert22.bsky.social.

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A review of HE policy? It’s déjà vu all over again

by Rob Cuthbert

Higher education in England is in financial trouble, and maybe more. If former NUS President Wes Streeting were Education Secretary, no doubt he would be proclaiming that, like the National Health Service, ‘higher education is broken’. It may not be, yet, but many think that the higher education funding system, at least, is broken. So, there is talk of (yet another) review; those with long enough memories will feel that we’ve been here before. More than once a review of HE has been conveniently timed to straddle a general election, to ensure that any or all hard decisions fall to the incoming government. That was how, after the Dearing Report, we got student tuition fees in the first place. There was no review straddling the July 2024 general election, perhaps because the last government was too obsessed with culture wars and fighting amongst themselves. Probably not because they thought that overseas student visa restrictions and the Higher Education (Freedom of Speech) Act 2023 were all that was needed to fix HE.

Consequently the new Labour government must deal with HE’s problems, and some of them are too urgent to wait for any kind of review. It is said that the Prime Minister’s former chief of staff Sue Gray had prepared a number of ‘disaster scenarios’ which need contingency plans, one of which involves a large university going out of business. More than half of all England’s universities are facing financial problems which have driven them to declare voluntary or compulsory redundancies; the situation is desperate. In such times we look for guidance where we can; this blog’s headings take inspiration from Yogi Berra, the legendary baseball player and manager, renowned for saying things that are somehow meaningful without making any sense. Another HE review? It’s déjà vu, all over again.

You can observe a lot by watching

Education Secretary Bridget Phillipson told universities in July they should not expect a government bailout, despite many being in financial difficulty, as Sally Weale reported for The Guardian on 22 July 2024. New HE Minister Baroness Smith of Malvern said, in effect, that “We’ll let universities go bust” in a Channel 4 News interview, as reported by Chris Havergal for Times Higher Education on 16 August 2024. However just after the Labour Party Conference The Times reported on 28 September 2024 that the government would index-link tuition fees and restore maintenance grants for the poorest students, so that fees would rise to £10,500 over the next five years. Still some £billions a year less than three years ago, but a welcome sign of change – if it is  realised. Keep watching.

Predictions are hard, especially about the future

Sisyphus might have sympathised with HE about previous attempts to solve the HE funding problem. After the Dearing Review and New Labour’s election in 1997 it seemed that there might be a mutually acceptable halfway house, with tuition fees paying first some and then during the Blair/Brown government’s tenure about half of the costs of undergraduate teaching. The boulder was slipping down the mountain in 2010 as the money and faith in the government ran out and the Browne Report was commissioned. The Lib Dems made an election ‘pledge’ to abolish fees but reneged as soon as they were in coalition with the Conservatives: instead fees were trebled to cover most undergraduate costs. The Willetts-led progressive student loan scheme might even have been broadly acceptable, but index-linking of fees stopped after just one year. University finances became increasingly precarious, especially after the government conceded to pressure from the Office for National Statistics and accepted that student loans should appear on the balance sheet this year rather than many years in the future, ending the ‘fiscal illusion’. 

At first universities escaped the worst of Chancellor George Osborne’s austerity for public services. Osborne even agreed to take the cap off student numbers, in the interests of market forces ‘driving up quality’, as Willetts, Jo Johnson and too many others wrongly believed they would, leading to the institutionalisation of a wrong-headed pseudo-market in the Higher Education and Research Act 2017 (HERA). The student loan scheme was working in theory but not in practice – too many critics could easily win headlines about ‘students who will never repay’. The boulder might have seemed near the top of the mountain but now it has rolled back down again.

When you come to a fork in the road, take it

Many universities did their best to behave as if they were in a HERA kind of market. They recruited international students in ever-greater numbers, for undergraduate and postgraduate programmes, charging fees which would cross-subsidise both teaching and research. Several universities not based in London opened London campuses, recognising the appeal off the capital for their target overseas market. Some opened campuses overseas. Those less able to attract overseas students looked to ‘sub-contractual arrangements’, previously better known as franchising, to shore up their student recruitment. Each initiative was kicked back. Government restricted visas for the families of students, hitting postgraduate recruitment hard in 2024. This jeopardised the availability of and access to many subjects in large areas of the country, without making any meaningful contribution to reducing immigration. The Office for Students cracked down on sub-contractual arrangements as they took over all regulatory responsibilities for quality and standards. They even tackled the more egregious ‘successes’ of ‘alternative providers’, the new entrants to HE. So what is to be done?

Richard Adams reported for The Guardian on 5 September 2024 that Shitij Kapur, the vice-chancellor of King’s College London, had told the annual UUK conference that HE needed £12500 fees – but would seem completely out of touch if it asked for them. On 30 September 2024 Universities UK issued a punchy report – Opportunity, growth and partnership: a blueprint for change – by a senior and influential group of politicians, vice-chancellors and others. In it Kapur and John Rushforth (Executive Secretary, Committee of University Chairs) said: “UK universities have been remarkably entrepreneurial and successful in the last decade. Despite a fixed and shrinking domestic resource, they have managed to engage internationally and generate the revenues to support research and domestic education of the highest quality. However, that innings has run its course. If universities are forced to play the same game for longer, we jeopardise the sector and its international reputation and success. It is time for universities and government to sit down together and agree a new financial model for the system that works for students, serves all our regions and ensures the future growth and prosperity of the UK.”

The UUK report was tuned to the new government agenda and asserted the crucial role of universities and other HE providers in helping to achieve growth and success. The wide-ranging blueprint was nevertheless fairly narrowly focused on demonstrating the instrumental value of HE in promoting economic and social growth, unsurprisingly given its target audience. Many in universities will still regret that the idea of HE as a public good is now more narrowly confined than in, for example, the 1963 Robbins Report, which suggested four main “objectives essential to any properly balanced system: instruction in skills; the promotion of the general powers of the mind so as to produce not mere specialists but rather cultivated men and women; to maintain research in balance with teaching, since teaching should not be separated from the advancement of learning and the search for truth; and to transmit a common culture and common standards of citizenship”. But we live in different times, and must be thankful for smaller mercies on this fork in the road.

Bridget Phillipson also said in July “The culture war on university campuses ends here”, as she announced a pause in implementation of the Higher Education (Freedom of Speech) Act (2023). HEPI’s Nick Hillman said: “I think it is now time for the Conservative Party – if they are serious about showing they’ve changed – to say the war on universities is over.” Judging by the leadership contenders’ speeches at the Conservative Party conference in October, we fear not.

If people don’t want to come to the ballpark, how the hell are you gonna stop them?

Anti-university sentiment is widespread in Brazil, China, Russia, and parts of Eastern Europe. In the USA, Republican Vice-Presidential nominee JD Vance has spoken approvingly of Hungarian Prime Minister Viktor Orbán, who forced the Central European University to relocate from Budapest to Vienna. Vance said that Orbán has made “some smart decisions … [on campus dissent] that we could learn from in the United States”, but already several high-profile university presidents have stepped down after failing to navigate a course between student protest, staff, boards of trustees and politicians in Senate hearings.

The fork in the road might mean a choice between anti-university sentiment leading to a smaller student population, and continuing growth and development of an expanding HE sector. Despite right wing rhetoric there is no evidence that demand for HE is declining: people still want to come to the ballpark and they still enjoy the game, as the National Student Survey continues to demonstrate. But there are nevertheless understandable reports of student dissatisfaction about some aspects of what can be an impersonal student experience on account of large student numbers. More pressing is the continuing student dissatisfaction with debts after student loans. However many times it is explained that ‘student debt is not like other debts’, graduates continue in reality to see large and depressing numbers in red on their student loan account, and there is no wider public understanding of how repayments work.

Nobody goes there anymore, it’s too crowded

In a blog for HEPI on 5 September 2024, Peter Scott (UCL) outlined some of the current problems of English HE and argued that the best solution would be the reintroduction of a student numbers cap: “Imposing an overall student number cap would restore a stronger sense of stability and predictability into the future, which might just reassure the Treasury as it contemplates an inevitably unpopular decision to allow the maximum fee to be (modestly?) increased. It might also reassure politicians more generally that higher education, and universities in particular, will not be allowed continuously to ‘crowd out’ other forms of tertiary education and training. Similarly it is difficult to see how far down the road of realising its new financial sustainability remit the Office for Students can go without at least considering reinventing institution-by-institution student number controls, within broad tolerance bands like the former maximum aggregate student numbers, to reduce turbulence and damagingly unpredictable consequences.”

The old HEFCE regime of managed growth and change involved student number controls with some marginal tolerance for expansion and the possibility from time to time of bidding for more. The danger of an overall student number cap in the present environment is that it might freeze some undesirable aspects of the status quo. We now have a regulator not a funding council, and it is a regulator which – as required by HERA – is bound to treat potential university closures as a natural consequence of market forces. The problem with university closures is they can easily drag down a whole local economy as well as creating huge gaps in locally or regionally accessible HE provision.

It ain’t over til it’s over

HEPI published Debate Paper 39 on 25 September 2024, in which Tim Leunig (LSE), a former very senior civil servant, argued for a fiscally-neutral set of changes to restore university finances. Employer contributions was a repeated theme of HE discussions at the Labour Party Conference in September, and a significant part of Leunig’s argument was for a 1% surcharge on employers of graduates. His ten-point package of proposals was for:

“1. A 20-year, rather than 40-year, repayment term on student loans.

2. No increase, even in nominal terms, of the amount owed.

3. A minimum student loan repayment of £10 a week after graduation.

4. An additional repayment of 3% of income between the income tax and student loan repayment thresholds.

5. Letting graduates reduce their pension contributions in order to make higher student loan repayments more affordable.

6. Reintroduction of an interest rate supplement for graduates earning over £40,000 a year, set at a maximum of 4% for those earning over £60,000.

7. A new 1% National Insurance surcharge for employers that recruit graduates.

8. New maintenance grants for students with parental incomes up to £65,000, with full grants of around £11,000 for those with household incomes below £25,000.

9. Provision of maintenance loans for all students not receiving a full grant, provided their parents’ income is below £100,000 a year.

10. Additional teaching grant averaging £2,000 per student.”

English HE needs a rescue package right now, and in the slightly but not much longer term the funding system needs an overhaul. It remains to be seen whether something like Leunig’s package of proposals might be adopted. At this stage no-one knows: it ain’t over ‘til it’s over.

SRHE News Editor Rob Cuthbert is Emeritus Professor of Higher Education Management, University of the West of England and Joint Managing Partner, Practical Academics rob.cuthbert@btinternet.com. Twitter @RobCuthbert


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Debt and doubt: a graduate’s frustrations with the current higher education loans regime

by Josh Patel

And I am a weapon of massive consumption,
And it’s not my fault, it’s how I’m programmed to function.

When I was asked to speak about my experiences of graduate indebtedness at the recent SRHE event in June, I was initially enthusiastic. I was a member of the first cohort of school-leavers expected to take out the government loans to pay the then new £9000 university fees in 2012-13. I took a gap year, completed an undergraduate degree, and subsequently received funding for a Master’s and a PhD. I believe I am one of the first of this new generation of highly indebted graduates to have been afforded the time and space to develop expertise around and reflect on the HE system I was a part of. Few graduate voices on their indebtedness are heard in research or policy discourse. 

However, figuring out my contribution became frustrating. Firstly, any perspective I would bring would be unrepresentative. I am a mixed-race male from the home counties. I attended a Russell Group university, and had far too much fun in the sandbox of further academic study, sheltered from having to think seriously about entering the external labour market. Secondly, I had conducted no research myself on graduate experiences. I am also not an economist. I would be exposing my feelings about the current student finance regime (albeit informed by my related research) to the potentially sharp questioning of experts. This felt epistemically precarious. 

Graduate indebtedness

My frustrations around the legitimacy of my voice and my disenfranchisement from the conversation around indebtedness are part of a broader series of doubts and tensions. It’s hard to avoid a sense of resentment every time I check (mainly to satisfy a grim curiosity) my rapidly ballooning student debt total on the Student Loans Company website. I will likely be making payments that have a negligible impact on that total until 2047. It is Sisyphean. At the same time, I had heard for many years hear policymakers and academics like Nick Barr talk about the inherent fairness of income-contingent loans. Given that individuals receive a substantial return from their investment in higher education (HE), it is right that the balance of costs should be shared between students and the state. 

In Claire Callender and Steve Jones’ work on student experiences of indebtedness, the complaints of students and graduates are primarily centred around the slight delays of a few years to the privileges of an expected middle-class lifestyle, like buying a first house or having a family. Are these frustrations really valid, or are they just the mewlings of the demanding children of the late welfare state, now that democratic due diligence has found the public investment in our education was not providing an effective social return?

Thinking through these doubts was hard. Like the students in Claire’s and Steve’s research, I had internalised a certain logic. My failure to shed the shameful label of indebtedness lay in my regrettable choice to pursue history, my (apparently?) poor work ethic, and my subconscious suspicion of Big Four consultancy grad schemes. But I came to think about my frustrations with indebtedness through the work I’d done during my PhD. My frustration with the current loans regime is a frustration with ‘the whole way in which a society selects its priorities and orders itself’, to redeploy EP Thompson’s phrase from 1970. Our current politics has de-prioritised investments in the future, which undermines the realisation of a good society. Indebtedness serves as a sharp and recurring reminder of all of this.

The balance of freedoms

The axiom that those that benefit most from HE should bear proportionately more of the cost derives somewhat surprisingly from the 1960s. The story of post-war massification in the UK is a familiar one; participation in HE grew from less than 5% prior to 1939 to approaching 50% today. In 1962 a mandatory grant was introduced to pay for the education of ‘all those qualified by ability and attainment and who wished to do so’, in the words of the Robbins Report (1963). While this public-mindedness feels inevitable in the spirit of post-war optimism, at the time it was not uncontested. As one economist put it, in a system of grants, resources of the ‘poor and stupid’ in the general population who would not benefit from HE are used to fund the privileged lifestyles of the few ‘rich and intelligent’ who attended universities. While the Robbins Report advocated expansion based on grants, the chairman of the Robbins Report, Lionel Robbins (himself a neoliberal economist, as I have explored) thought the argument for loans and grants was delicately balanced.

Robbins considered the problem one of what he called the ‘balance of freedoms’. There was an important balance to strike between preserving freedoms in the present, and enabling future freedoms in the pursuit of social prosperity. For Robbins, prosperity was a consequence of the inherent tendency of individuals to pursue their own self-betterment in conditions of freedom. This included generating individual returns on the labour market and broader social returns. University education would increase young people’s productivity and ingenuity, while enhancing their understanding of their responsibilities to society.

Taxation (a substantial transgression of personal freedoms by the state) was only justified when it could be shown to enhance future freedoms. In the context of proportionately low attendance of HE in the UK in the post-war period, grants were a state investment in removing structural and psychosocial barriers to self-betterment in the population, particularly for women and others from underprivileged backgrounds. When a greater proportion of the population were empowered to pursue those opportunities, both individual and social prosperity would follow. 

As a greater proportion of the population attended HE habitually, the justification for increased taxation would fall. It would no longer be justified to take poor people’s money to pay for the continued elevation of the gifted. When this happened, it would be more just for the burden of HE cost to fall back to young people so they could make an informed decision about the relative costs and returns of them attending HE. 

The question of the balance of costs of HE was never as simple as stating that: because attending HE generates both a social return and a large individual return, students should be expected to take on some burden of the cost of their education.

As Robbins understood it, the question is: on the balance of how far future freedoms are enabled by the reduction of freedoms in the present, how far is it right that resources should be redistributed from the general population to fund HE? 

Three frustrations

Revisiting the question of the balance of freedoms in the twenty-first century leads you to a different place than in the twentieth century. The burden of the costs of education is now tipped towards graduates far in excess of a good faith balance of freedoms. It serves a regime which has played politics, fetishised austerity, and sought short-term returns above sustainability and long-term economic prosperity. Reflecting on my indebtedness, I identified three rough frustrations:

Short-termism

Because we live in a democratic society, the assessment of our collective capacity to engender future freedoms is, rightly, subject to accountability through our political system. But the downward pressure this exerts on public expenditure is not inevitable (as it is sometimes presented) but a consequence of political culture. Public and policy discourse seems to have completely lost sight of the capacity of collective action to advance future freedoms. Austerity has led to an underinvestment in social infrastructure, ducked the costs of maintenance, and eviscerated our national capacities. The burden of the costs of repairing this damage has been shifted to our future. There is limited research as to the economic and social consequences of this debt. Both Labour and the Conservatives’ commitments to avoiding raises in tax feels like a failure to have an honest conversation with the electorate about our national priorities in the face of serious national and international challenges. 

Poor redistributive justice

Recent London Economics modelling demonstrated that, for those taking new loans from August 2023, lower income female graduates will subsidise high-earning males’ education. Or, as James Purnell put it recently in publications for HEPI, ‘a nurse must now pay back more than a banker’. This is deeply unjust. It is completely antithetical to the progressive income tax regime we all abide by. It violently severs one route this generation can mutually support one another in our pursuit of human flourishing. And it is pointless. As Barr has argued, ‘The argument that tax cuts lead to growth is mistaken; lower taxes are not always better. Productive private investment needs to be complemented by productive public investment’. Job forecasts from other advanced economies expect more than 80% of the workforce will require some tertiary accreditation by 2050. Skills shortages even today are calculated to cost the UK economy up to £39 billion a year from 2024 through to 2027. Investment in education and training by employers and the state has deteriorated and productivity is stagnant. Redistribution is imperative. 

Deterioration of HE

The deterioration of the unit cost following from the political deadlock around loans makes HE an unappealing place to plan a career. The transition period at the end of the PhD consists of a ridiculous juggling act of multiple contracts for everything from research to teaching to administrative roles. Despite all the hard work, remuneration is comparatively poor. All the delays to adult life that indebtedness inflict are compounded. Even permanent academic roles do not seem particularly secure given the redundancies sweeping over the sector. Add on top of all that the expected workload, bullying managerial cultures, artificial ED&I strategies, it is a wonder HEIs are able to attract qualified and ambitious candidates at all. During my time as a PhD and Fellow, I was paid more per hour as head coach of the university swim team than I was to deliver seminars.[1] Why bother?

The next sixty years

Robbins was arguing for expansion just after the Cuban Missile Crisis. The wars of the first half of the twentieth century were raw, living memories. HE was implicated in this in a complicated way – the powerful knowledge of modern societies taught through HE had the potential to both to raise living standards to unparalleled heights but also enable mass atrocities. A proper education cultivated the wisdom in students to wield modern technologies with responsibility. 

Obviously freedom is diminished after a nuclear holocaust. But the existential crises I fear – everything from crises in teaching and healthcare, gender and social inequality, to the climate change and the resurgence of fascism across the world – if they are not tackled are also equally non-conducive to overall freedom. They require exponentially more of my generation and later generations to be part of the solution. Indebtedness is a constant reminder that our contribution to solving these problems is not worth collective support. 

Josh Patel is a Researcher at the Edge Foundation. There, he has contributed to research on Degree Apprenticeships, New HEIs, and T levels, and is currently leading research on student experiences of tertiary pathways between HE and FE. He was previously a Fellow at the University of Warwick and completed his PhD on the justifications for the massification of higher education in liberal thought. He is writing a monograph on this topic for SRHE’s Research into Higher Education book series with Routledge. Here, Josh writes in a personal capacity. The views contained within do not necessarily reflect the views of the Edge Foundation.

[1] I have to qualify this by stressing that participation in student-led communities was central in my and (as I saw as a coach, tutor, and researcher) others’ personal development. My point is that there is a social maldistribution of resources that permits this circumstance.


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Interest rate changes could challenge universities, student loans and post 16 and vocational education

by Sir Adrian Webb

The publication on 13 September 2023 of the House of Lords Industry and Regulators Committee report on the Office for Students drew attention to the financial challenges facing universities in the UK and to the challenges associated with regulating and overseeing these risks.  

This week we look set to see these challenges increase with the possible increase in the  base interest rates by the Bank of England (the “Bank Rate”) to 5.5% when the Monetary Policy Committee next meets on Thursday 21st September (Guardian, Financial Times, 24 August 2023 ). If there is another 0.25% increase in the base rate, as is widely anticipated, this will place government and university finances under further pressure over the next few years with significant negative implications for HE students, the UK Government’s education budget in general and the further education college budget in particular. Furthermore, this anticipated rise in the Bank Rate may not be the last of these increases if Government spending remains high and inflationary pressures persist through the winter months. 

The most immediate and direct effect will be on the interest payments that universities need to pay on short term loans. According to HESA, average HE provider debt as a proportion of turnover stands at 0.16%, but with highs of 454% and lows of 0%, with unrestricted reserves of 204% of income (HESA, 2023). Of course, financial indicators expressed as a percentage of income for institutions of very variable sizes give no feel for the absolute amount of cash owed, or the annual cost of repayments.  

The top 13 higher education providers by percentage of debt are all small private institutions; most have recorded deficits in recent years and appear to have low levels of cash available to cover running costs. The next 35 institutions by scale of debt all have debt levels of over 50% of turnover. Among these institutions there are 22 large pre- and post-92 universities in all parts of the UK.  

The challenges presented by potential increases in interest payments will be exacerbated over the next two years by the continued decline in the real value of student tuition fees, limitations on the recruitment of overseas students with dependants and a decline in the proportion of students applying to low and mid-tariff universities.  

When student tuition fees were first introduced, HE providers were encouraged to set fees at between £6,000 and £9,000 per annum. Some price competition between institutions was expected but in practice the vast majority set their fees at the higher level. Recent analysis by Mark Corver of DataHE, an independent higher education consultancy, indicates that the real level of fees that higher education providers charge students as tuition fees has dropped below £6,000 if the value is deflated by the Retail Prices Index (RPI), slightly higher if other measures of inflation are used.

Over the last five years, many HE providers have been attempting to cover the reduced value of undergraduate home tuition fee income by recruiting larger number of international students, particularly from China, India and Nigeria. This approach has attracted large numbers of students to the most selective universities and those in major cities; many universities now have more than 25% of their students recruited from these sources. The announcement of restrictions on the release of temporary visas to support the dependents of international students has already had an impact on the recruitment of people from overseas who want to study at UK universities.. This impact looks set to continue and increase in 2024. 

To illustrate the issues faced by the more highly indebted institutions with a significant number of international students, consider the composite case of the University of Camberwick Green, with net debt of circa £200m and current loans with a weighted average debt cost of 3.5%. If this institution needed to renew all of its existing debt obligations this would likely double the costs of debt servicing from £7million to at least £14million. This would mean an additional annual outlay as a proportion of turnover in excess of 5%, dependent on the interest rates agreed with lenders and the term of their loan (e.g. revolving credit facility, private placement, bond or bank lending).  For a university like Camberwick Green, which has also recorded large operating deficits in recent years, additional debt is likely to be more expensive and so the short-term options are likely to focus on selling assets or laying off staff; these are not easy or attractive options. Changes to course portfolios and/or increased international student recruitment and transnational operations are unlikely to produce the necessary returns quickly and without undue financial or reputational risk.  

The more prestigious and selective universities in the more affluent parts of the UK are unlikely to face pressures that are likely to bear down hard on those which are, by conventional measures, less prestigious and less selective, in parts of the UK that engaged in levelling up activities with significant HE involvement. The impacts of high indebtedness, declining student recruitment and operating deficits are already being felt with significant redundancies planned at ten universities. 

The next most significant impact of higher interest rates will be on student loan repayments and the arrangements for funding this activity. The student loan book currently stands at £206bn with an additional £20bn of loans being issued each year. The internal real interest rate charged on these loan arrangements by HM Treasury, i.e. the real discount rate (excluding inflation), was set at -0.7% in 2021 at the height of the Covid crisis and remains the rate proposed in the Plan 5 changes scheduled to come into place during 2024. The nominal discount rate taking account of inflation is 1.9%. If Bank of England interest rates and by consequence HM Treasury bond/gilt rates move to 6.25% in 2024, as has been forecast, and the student loan rate is changed as a consequence, this will create an adverse upward movement in real interest rate charges on the loan book of circa 5%. Dependent on the scheduling of the loans this will then feed through into the calculation of the principal debt students are required to repay and also the Resource Allocation Budget (RAB) charge paid by the UK Government on loans that are forecast not to be repaid. Under revised accounting rules introduced in 2021, a proportion of this increased RAB charge will need to be accounted for in the national deficit in the year it is incurred and cannot be delayed until the loan matures. With forecast increases in the scale of the student loan book through to the next decade there are likely to be powerful voices in the Treasury wishing to pay down this debt or reduce the scale of its growth. This in turn is likely to mean a need to revisit the current arrangements in advance of the next HM Treasury Comprehensive Spending Review (CSR) in 2025. 

The current loan book is financed in part by the spread (difference) between the notional interest rate charged to students on loans they have taken out, which is currently set with some reference to the Prevailing Market Rate (PMR) for commercial loans, and the lower rate paid by the Treasury for its borrowings. The PMR was set at 7.3% in February 2023 and confirmed at this level for the period between September and November 2023 on 11th August. . At present the Bank of England Bank Rate is 5.3% and so the spread between the student loan rate and the Bank Rate was 2%. If a similar spread is expected if  the base rate rises further to 6.25% the PMR could be 8.25% or even higher. Interest rates at this level would make almost all student loans un-repayable, effectively converting the loan system into a graduate tax confined to new students and also potentially introducing a significant element of “moral hazard” as many students would face little incentive to do anything other than maximise their student loans. Given that they will never repay them; they will face an additional marginal loan repayment (tax) rate of 9% on undergraduate loans and 6% on postgraduate loans, so why not take out as much loan as possible and complete a postgraduate taught or research degree, even when the economic returns to them individually and to the public purse are negative. Beyond this “moral hazard” argument there is also arguably a “moral outrage” argument to be had about imposing an age-related differential income tax rate on younger people who are recent graduates. 

The problems outlined above are then likely to be heightened by forecast increases in the number of prospective undergraduate students entering the system over the next seven years.  In 2021/2022 there were 2.16 million U.K. domiciled students in UK HE institutions and a further 0.68 million students from the EU and other overseas countries. By 2030 the number of UK domiciled students is expected to increase by between 200,000 and 400,000 as a consequence of increases in the number of people in the relevant age groups. This would be at an average additional cost per student of at least £60,000 per three-year undergraduate degree, based on loans for tuition fees of 3 x £9,250 and for maintenance of 3 x up to £13,022 for students living away from home in London. Many students study for longer than three years on foundation and/or masters programmes, hence the forecast of £60,000 per student. This is an additional annual cost of loan outlay of £12bn or more. This seems unlikely to be fundable. 

The implication of these cost pressures would be serious enough if they were confined to HE, but they are not. Far from it. At present the growing costs of HE are being paid for by other parts of the UK Government’s education budget, resulting in real terms cuts to the further education budget, consequent low rates of pay for FE college staff, and cuts to the adult education budget. In adult education, FE and apprenticeship provision pay rates are set locally rather than nationally and so reductions in institutional budgets in this part of the education sector have tended to be accommodated by falling wages and unfilled vacancies rather than through redundancies as has been the case in the university sector. These different parts of the post-school education system are making greater use of part-time and temporary contracts and precarious jobs. This at a time when the need for more and better vocational education is increasingly widely recognised and the need for “industry standard” staff capable of delivering the new and upgraded skills required by rapid technological change has never been greater.  

Across the UK 70% of adults have not been to university, but like many older graduates they would benefit from the opportunity to take a course at a local college or other adult education provider. With 20% of the adult working age population (5 million people) currently economically inactive and with chronic skills shortages in all parts of economy it is very worrying that the pay of college lecturers in catering, construction, digital, engineering, health and social care is considerably below the rates paid to comparably skilled people working in the private sector. Employers in the UK spend on average 50% less than their counterparts in mainland Europe on workforce education and training. The combination of reductions in employer spending on training and cuts in UK Government funding for FE and apprenticeships has led to a reduction of over 1 million student places in adult education, apprenticeships and FE per year in the last ten years. This is not the position the UK needs to be in to improve productivity. Indeed, it is the very opposite of what is required to support such mission – let alone to promote inclusive and sustainable economic growth.  

Who is responsible for monitoring and governing this system? At the moment the financial position of individual universities is overseen by their governing bodies, aided by internal and external auditors predominantly drawn in combinations of two of the big four audit firms. The Office for Students (OfS) monitors the financial position of individual higher education providers as part of its regulatory function, but it is not formally required to intervene financially at an early stage to support institutions in difficulties. It may issue a requirement to improve the plans for protecting students, but it is not required to prevent an institution from failing. The Student Loan Company (SLC) is overseen by an independent board and supported by a representative from the sponsoring departments in the UK’s national governments (i.e. Department for Education, Scottish Government, Welsh Government and Northern Ireland Office in the absence of the Northern Ireland Executive). Whether the OfS, national regulators in the devolved nations or the SLC have modelled the scenarios outlined in this note is a moot point. Indeed, it is more of a mute point because no one is publicly talking about these issues and the problems that go with them in a joined-up way with a long-term perspective. It would be helpful if they did, and if there was a debate about the consequences for higher and further education providers and student loans of the return to real interest rates more in-keeping with the long run historical average. Given the commitment of central banks around the world to move in this direction after 15 years of ultra-low interest rates there is a pressing need for a comprehensive review of where we are heading and what needs to be done about it. 

As we approach a General Election in 2024, now is the time for the major political parties in the UK to commit to the appointment of a Royal Commission or equivalent to look at these issues with an impartial, sector neutral and critical eye.  Over the last hundred years all major changes of this type have proceeded in this way (i.e. Smith Report 1919, White Paper on Education 1943, Robbins Review 1964, Dearing Review 1997 and Browne Review 2011). Indeed, in 1997 Gillian Sheppard (Conservative minister) and David Blunkett (prospective Labour minister) agreed in the run up to the General election to respect the Dearing Committee proposals. A similar arrangement was reached regarding the Browne Review between Peter Mandelson (Labour Minister) and George Osborne (prospective Conservative Minister) in the run up to the general election in 2010.  The settlements in 1944 and 1963 were similarly effectively cross-party. This is a fundamental issue for the future of the UK and deserves to be made non-political with recommendations for the long term. Previous reviews have produced long term plans which have been implemented when they had cross-party support and straddled a General election. 

Sir Adrian Webb was an academic at the London School of Economics and Loughborough University; he was Deputy Vice Chancellor at Loughborough and Vice Chancellor at the University of Glamorgan. As well as holding a number of senior management positions and a wide range of public service/consultancy roles in local and central government (including HM Treasury, DHSS, Home Office, DFES, and the Ministry of Justice) and in Wales, he has also held many roles in the Third Sector. Sir Adrian was a member of the Dearing Review committee in the late 1990s and chaired a review of further education colleges and funding in Wales in 2007. 

The views expressed in this article are those of the author and do not necessarily represent the views of any organisation with which the author is affiliated.  


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What do students think about value for money?

by Kristina Gruzdeva

In 2022, the cost of living crisis meant communities across the UK had to adjust their behaviours and their spending. Many needed to learn to navigate within a complex energy market. Prospective university students were in a similar position, being expected to make a cost-conscious decision about their degree education with limited understanding of their options. In research conducted for my PhD, I invited first-year students to participate in focus groups to explore their orientations to their degree. Students were recruited through online and on-campus campaigns that were run in the autumn of 2019/20. The overall sample consisted of 51 participants (39 female, 10 male and 2 non-binary; 28 from ethnic minority groups; 14 were ‘first in family’ students). All participants were first-year students who started their degree at a Russell Group University, with a balance across all five faculty groupings in the university. I developed a typology to show how students perceive their degree, their beliefs about the financial implications of going to university and how they define value for money. In England, undergraduate fees of £1000 were introduced more than 20 years ago, raised to £3000 in 2006, and to £9000 more than ten years ago. My findings suggest that even now, five years after the Higher Education and Research Act legislated for an HE market, it is problematic to rely on informed student choice as a basis for the market’s operation.

Students in the first category of the typology view their degree as an essential requirement for their career. Students in this category are enrolled in STEM or Medicine courses and have a clear idea of what they would like to do upon graduation. Their family background is diverse, with some choosing to follow their parents’ footsteps, and others being first in their family to go to university. Students in this category hold shared views on employability, graduate salaries, and value for money. The data show that employability and career aspirations are important to first-year students transitioning into HE (Mullen et al, 2019). Metrics of graduate employability gave these students some reassurance and helped them to narrow down their options in choosing courses. These students did not look for information about graduate salaries and explained this by studying for a degree that leads to in-demand jobs. They comment that information about graduate salaries was “already there” when they looked for other kinds of information about their degree. Students who view their degree as an essential requirement report that their degree provides good value for money.

The second category of students described their degree as an investment. These students also had a career-oriented approach to their education, but their career plans were less defined compared with the plans of students in the first category. They studied a wide range of degree courses and came from diverse backgrounds. When asked about their awareness around employability, some students reported that they had come across information about it, whereas others said that they did not know much. When prompted to explain why they did not search for such information, these students suggested their career plans had not crystallised yet, so they were not sure how to interpret such information and to what extent it would be relevant to them. As in the first category, these students reported that they did not look for information about graduate salaries. They assumed such information would not be relevant because they had not yet decided what to do upon graduation. They had a mix of views on value for money. Some believed that their degree would offer good value for money because it would open doors to many opportunities, whereas others had a different opinion. Perceptions of poor value for money were related to instances when students’ expectations had not been met. For example, a few students had expected more contact hours. Others had expected that their maintenance loan would cover the costs of their accommodation.

The third category of students described their degree as a desirable experience. These students were enrolled in Social Sciences and Humanities courses. Importantly, these students came from families where at least one parent holds a degree. Their decision to study at university was driven by their academic interests or a belief that getting accepted onto a course would be easy. When asked about whether they considered employability metrics, these students said that they did not. They also did not look for information related to graduate salaries. One student, reflecting on her decision to study at university, suggested that prospective students had tunnel vision and were not concerned about their career prospects. Two individuals commented that education is not about jobs and appeared to look down on the other members of their discussion groups, who shared the view that their education offered knowledge and skills for work. There was a mix of views on value for money. The social and wider personal benefits of studying for a degree were attributed to good value for money. In this category it was rare to find perceptions of poor value for money; such perceptions came from unfulfilled expectations related to contact hours.

Student career aspirations, or lack thereof, played a dominant role in shaping students’ views on their education and how they perceived value for money. Most students in my study did not actively search for information related to employability or graduate salaries; rather, they assumed the economic value of their degrees. These findings challenge the consumer-oriented approach to HE because focus group participants did not appear to act as informed consumers, which is problematic in an HE sector supposedly driven by market imperatives.

Kristina Gruzdeva is a Research Facilitator at the University of Birmingham. Kristina’s research interests are in higher education policy, mainly in relation to student finance, student choices, and marketisation. This blog is based on a chapter from her recently completed PhD. Email: k.gruzdeva@bham.ac.uk

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A period of reflection

By Ian McNay

At the beginning of what some people mistakenly think of as the beginning of a new decade – who counts to ten by starting at zero and finishing at nine? – the pressure is to reflect on the past and project for the future. I am going to mainly eschew the former, but do have concerns for the next five or ten years. In other countries where a populist government has been elected, and moved to authoritarianism, such as Hungary, Turkey, or even the USA, the auguries are not good for higher education. I am not claiming that the new UK administration is as extreme as those examples, but the indications are there about its attitude to dissenting voices – the BBC and Channel 4 coverage of the election, elected parliamentarians defying the party whip, and even the supreme court, to whose rulings the government has twice had to conform, reluctantly, in the interests of constitutional democracy. The manifesto commitment to reviewing the organs of government and the judiciary has been seen by some as ominous.

Whatever the politics, there are other reasons to be concerned for HE. The eight years since fees were last tripled, to £9,000, have been fairly comfortable, financially, for most universities, if not their staff at the sharp end of operations. Marginal costs per student will often be low, especially in non-STEM subjects, so surpluses expand with every expansion of numbers. The Augar Report recommendations, if accepted, may lower fees with little guarantee that government will cover the loss of income. The cost of student loans, some of which now comes within current public spending, will increase dramatically with the demographic bulge in 18-year-olds, starting now, unless the cap on numbers in England is re-imposed, as seems likely, given views on ‘useless’ degrees, unnecessary experts, and pressure to prefer apprenticeships and FE recovery over investing in people who, on graduation, are less likely to vote Conservative than those without a university education. Graduates move to cities where there are jobs, leaving their home communities to an ageing population with different political predilections, made evident in December, and considerable resentment against what they see as graduate elitists in Westminster disregarding their needs and views. That may then convert to resentment against the universities that produce them and whose students affect the availability of property to rent and ‘studentify’ sections of a community. If the low rate of HE access of white working class males, and ‘over-representation’ of British BAME students is added to the mix, there is a base for Powellite stirring in a search for somebody to blame.

HE will not, then, be a high priority among competing, vote-winning, initiatives. Savings from not having to give EU students access to UK loans may not be re-invested. Even for research, where specific protective commitments have been made, the loss of EU funding and the greater difficulty in recruiting and partnering internationally because of visa restrictions, the prospects are not good. UK universities have already begun to drop down international league tables, and there is little reason to believe that that trend will stop. If income becomes tight, consider where funds might come from and the political risks of dependence on Chinese students and partnerships, or grants from oil rich regimes in the Middle East, or big pharma to a greater extent than now. Governors and senior managers will be faced with moral issues, testing the robustness of asserted values.

If universities are to overcome being seen as part of the problem, what has to change? Over the end of year break, I have been reading a collection of essays arising from an event 50 years after Chomsky published ‘The responsibility of intellectuals’. . That is the book’s title; it is edited by Nicholas Allott, Chris Knight, and Neil Smith, published by UCL Press. For us, as individuals who might be regarded as intellectuals, the three responsibilities set out by Chomsky remain: ‘to speak truth and expose lies; to provide historical context, and to lift the veil of ideology’ (Allott et al, 2019:7). The context has changed in 50 years: we ‘speak’, as do others, on social media, where regulation is lax; truth must be told to the powerless as well as the powerful, needing a different level of discourse; there is recognition that ‘the elite need to have an accurate idea of what is going on’ (p10) which means listening to others’ legitimate and valid truths derived from an experience, a background and axioms that differ from those of the people in power; and there is need for active engagement with that alternative reality, not just commentary from a distance, however sympathetic. This may lead to a better informed and value-oriented set of intellectuals.

At institutional level, that applies within universities, too. The gap between the governors, including the senior managers, and the governed is dysfunctional – can you name, say, three lay governors? When did you last speak with one? Some years ago, I reviewed the work of the Greenwich governing body, as recommended in the Dearing Report. It was clear that there was no communication with the governed, either up or down, no communication with ‘constituencies’, since governors could not identify their constituency. There was only an oral report on Academic Board meetings, by the VC, with all other information for the governors coming from the SMT, sometimes incomplete, at times misleading. SMT/staff communication has improved, but is still poor and unsystematic, avoiding anything that might highlight negatives.

As with many modern universities, there are two seats on Academic Board for professors elected by and from the professoriate; this year, as too often in the past, there were no nominations, nobody willing to stand, for a body that has no power beyond ‘advising’ the CEO and where the 1988/92 laws require there to be a majority of people with management responsibilities … on an academic board. My work with staff in many universities suggests that disengagement is widespread: academics have reverted to being what Hoyle labelled ‘restricted professionals’ – classroom based and classroom bound, by choice, since there is a fear of repercussions/reprisals if there is any expression of dissent. So compliance produces conformity, not the creative diversity essential to a healthy academic community. That may also develop at corporate level with the increasingly intrusive regulation by the Office for Students. Interviewing vice chancellors some years ago, even then there was a fear of speaking against ministerial policy, which might result in financial discrimination against their university. There might also be targeted supplementary ‘regulation’ (=control) from the Office for Students. Only in England, of course, which already has more surveillance from government and its agencies than other parts of the UK, as shown by Michael Shattock and Aniko Horvath in their 2019 book The Governance of British Higher Education. Possibly as a factor of size, but only partly, I suspect, transferring Chomsky’s concern over ideology to this context, there is also – Shattock and Horvath, again – less solidarity among the different mission groups, who act like ideological factions in a political party. Perhaps some reflections on common values (echoing urgings in one such party) might bring them together. I recommend reading chapter 5 of the Dearing Report as a basis for a period of reflection on values in an academic (and political) community.

I wish you a good new year, with hope that my concerns prove to be unfounded.

SRHE Fellow Ian McNay is emeritus professor at the University of Greenwich

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Augar and augury

By Rob Cuthbert

This is written just as Boris Johnson is declared the new leader of the Conservative Party and therefore the new occupant of No 10 Downing Street. All of the jockeying for prime ministerial position has made our national Brexit-obsessed politics even more bizarre than before but, not far below the surface, some semblance of normal policymaking struggles to carry on, not least in higher education. When the much-delayed Augar report finally appeared on 30 May 2019 it had even more than the usual treatment from the policy wonks.

The good news was that at least the Report aimed to take in the whole of post-18 education, and it started by setting out eight principles:

  1. Post-18 education benefits society, the economy, and individuals.
  2. Everyone should have the opportunity to be educated after the age of 18.
  3. The decline in numbers of those getting post-18 education needs to be reversed.
  4. The cost of post-18 education should be shared between taxpayers, employers and learners.
  5. Organisations providing education and training must be accountable for the public subsidy they receive.
  6. Government has a responsibility to ensure that its investment in tertiary education is appropriately spent and directed.
  7. Post-18 education cannot be left entirely to market forces.
  8. Post-18 education needs to be forward looking.

It seems to be a rule that national reports identify a steadily increasing number of purposes for post-18 education. Robbins needed only four; Dearing had five. Augar has six:

  • Promote citizens’ ability to realise their full potential, economically and more broadly.
  • Provision of a suitably skilled workforce.
  • Support innovation through research and development, commercial ideas and global talent.
  • Contribute scholarship and debate that sustain and enrich society through knowledge, ideas, culture and creativity.
  • Contribute to growth by virtue of post-18 institutions’ direct contributions to the economy.
  • Play a core civic role in the regeneration, culture, sustainability, and heritage of the communities in which they are based.

So far so good; then the bunfighting begins: “We make recommendations intended to encourage universities to bear down on low value degrees and to incentivise them to increase the provision of courses better aligned with the economy’s needs … Universities should find further efficiency savings over the coming years, maximum fees for students should be reduced to £7,500 a year, and more of the taxpayer funding should come through grants directed to disadvantaged students and to high value and high cost subjects. “ (p10) ‘Low value’ degrees?! How shall we define them? Augar seemed to identify value only (for students) with graduate earnings, and (for everyone else) with ‘courses better aligned with the economy’s needs’.

The traditionalists were quickly into the fray. Indeed, the Russell Group got its retaliation in first (20 March 2019) – “Reports suggest the Prime Minister’s review of post-18 education and funding could recommend cutting tuition fees from £9,250 to £7,500 or even lower. We are concerned such a cut would not be fully compensated and could have a devastating impact on our universities.” It was therefore ready to cut and paste its response on the day of publication: “It is imperative the next Prime Minister provides students, businesses and universities with a cast-iron guarantee that, in the event of a fee cut, teaching grants will fully cover the funding shortfall and meet future demand for higher education places.”

Nick Hillman of HEPI blogged on the same day with ‘ten points to note’ as ‘lunchtime takeaways’. Debbie McVitty on 29 May 2019 offered the ‘essential overview’ of Augar, and her WonkHE colleagues followed up with their usual assiduity. David Kernohan argued for WonkHE on 3 June that the underpinning evidence for a £7500 fee level was weak, and he was back on 6 June 2019 “unable to find the evidence that backs up Augar’s rationale for recommending the end of the foundation year.” “Whether or not there is any evidence that providers are seeing the foundation year as a cash cow, or that it offers a poor deal for students, we are not getting to see it. The data that does exist does not support the Augar conclusions, even when it is directly cited as doing so.” Mark Corney (independent) pointed out the logical errors in the Augar proposal to end support for Foundation Years in his blog for HEPI on 21 June 2019, saying that abolishing Foundation Years would not lead to a surge in Access to HE course enrolments.

David Midgley (Cambridge) supplied a balanced précis on the CDBU website on 5 June 2019; Lizzy Woodfield (Aston) provided a useful analysis for WonkHE on 3 June 2019 of the impact on widening participation for her university, but slowly the economists and the accountants took over. Gavin Conlon and Maike Halterbeck of London Economics had already blogged for WonkHE on 30 May 2019 about winners and losers from the Augar Review. Andrew Bush (KPMG) wrote about how Augar analysed costs, for WonkHE on 10 June 2019. An Institute for Fiscal Studies Note on 30 May 2019 argued that the “Augar Review aims to rebalance funding to FE and give government more control over HE funding”, authored by IFS regulars Jack Britton, Laura van der Erve and Paul Johnson.

The financial arguments were subject to increasing critique, with Greg Walker of MillionPlus supplying a well-considered analysis on the HEPI blog on 15 July 2019 – ‘Does Augar present evidence-based policy or policy-based evidence?’ – suggesting that the HE fees cut was intended and inevitable. Tim Blackman (Middlesex) then argued (for WonkHE on 4 June 2019) that Augar is technocratic rather than visionary: “Augar navigates awkwardly between the pros and cons of planning or market forces as the drivers of tertiary education … I get the impression the authors would have liked to have gone further with reintroducing more planning. They point out that some of the most problematic features of how universities behave are a product of marketisation, and make recommendations for rejuvenating further education colleges that amount to national planning of the sector. Why not the same planning paradigm for higher education? The answer would appear to be that sticking with the market conveniently allows Augar to claim that academic autonomy has been protected despite an agenda of major change and austerity.”

In similar vein, Mark Leach of WonkHE, arguing on 3 June that the true challenge in Augar was bridging the gulf between FE and HE, identified the chasm between the two: “One way to read the underlying narrative of the Augar report is that it represents an indictment of two parallel education policy approaches, pursued by multiple, and politically different, governments over the last fifteen or so years. These parallel approaches have treated higher education and further education in radically divergent and – the report implies – radically incompatible ways. In short, the parallel policy approaches can be summed up as follows: The government has pushed higher education towards a more market-like system, which Augar says has gone so far as to become dysfunctional (with symptoms ranging from the total lack of price competition to grade inflation, unconditional offers and other much-discussed system problems). But he also says that, in parallel, further education has been subjected by governments to a policy of intense, highly bureaucratic central planning, tinkering and micro-management, which has also become dysfunctional.”

Thus the commentariat has already supplied analyses an order of magnitude beyond the Review’s 200 pages. So far, so much like normal policymaking – a Review based on considerable thought and analysis, by a significant group, taking positions and making proposals which have properly been subject to much comment and counter-analysis. But in our current abnormal times we can have no confidence that the Review will even be taken into consideration by the about-to-be-formed new administration. Secretary of State for Education Damian Hinds and Universities minister Chris Skidmore have perhaps done better than most at trying to maintain some kind of business as usual, with a comparatively low profile in the choose-your-side battles to become the next prime minister. However there can be no certainty that either will still be in post even by the end of the week, and the Augar Review itself was very much a creation of No 10 during Theresa May’s tenure.

No doubt this encouraged Liz Morrish on her Academic Irregularities blog on 11 June 2019 to pronounce that Augar was ‘dead on arrival’, concluding that “Augar has thrown universities to the wolves of a rather rigged market at this point. Nobody – neither staff nor student – can enter a university with any certainty that their career or course of study will be fulfilled without interruption or derailment.” For Morrish, Augar is likely to be no more than background mood music, while the new Johnson administration decides anew what to do with post-18 education – although we can expect, as usual with national reviews, that the government will choose the proposals that suit its purpose, while ignoring the rest of what is, as usual, presented as a package deal. No-one will be betting against a £7500 fee, but no-one will expect the Treasury to stump up the balance lost in the fees cut, especially since so many spending promises have already been made by prime ministerial contenders in recent weeks – none of them for post-18 education.

John Morgan reported on 11 July 2019 for Times Higher Education that former education secretary Justine Greening had said it was “inconceivable” that the new Prime Minister would adopt the Augar review plans. She “believes that the model she explored in government of funding English universities through a graduate contribution plus a “skills levy” on employers could be taken up by the next prime minister.” Her plan would abolish tuition fees and loans: “I think it’s probably the only higher education bill that could get through Parliament.” This is because she says the Augar review’s recommendations were “hugely regressive” in increasing the burden on low- and middle-earning graduates, while lowering it for those on higher incomes: “I find it inconceivable that any future Conservative government that cares about … progressive funding of higher education and social mobility could take that kind of proposal forward”. It is possible to take a very different perspective on Augar, as Nick Barr (LSE) did in declaring it progressive rather than regressive, simply because it proposed to redress the balance between FE and HE. But Greening’s comments are directed more towards heading off the Labour Party’s putative promises on tuition fees, returning to a pre-Augar position which re-institutionalises the chasm between the HE market and the micromanagement and planning of FE. An augur was “a priest and official in the classical Roman world. His main role was the practice of augury: interpreting the will of the gods by studying the flight of birds – whether they were flying in groups or alone, what noises they made as they flew, direction of flight, and what kind of birds they were”. (Wikipedia) The media’s augurs have for months been studying the noises Boris Johnson has made, the groups he is travelling in, his direction of flight, and what kind of bird he will turn out to be. The Tory press will announce the eagle has landed; he may of course turn out to be a different bird. A cuckoo, temporarily occupying a place where he doesn’t belong? A swallow who cannot make the summer on his own? Or a parrot, saying only what it has heard someone say before? We may hope that a bird in No 10 is worth two in the prime ministerial hustings, but no-one in HE should be counting chickens before a new policy hatches.

SRHE News Editor:  Professor Rob Cuthbert
rob.cuthbert@uwe.ac.uk  

Rob Cuthbert is Emeritus Professor of Higher Education Management, University of the West of England and Joint Managing Partner,Practical Academics rob.cuthbert@btinternet.com.

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What’s wrong with politicians in HE?

By Rob Cuthbert

The June general election disrupted normal business at Westminster in almost every sense: the summer silly season may be suspended altogether, despite the annual three-month holiday for Parliament. The unexpected election result had something to do with the mobilisation of the student and young persons’ vote by the Labour Party, probably connected to their promise to abolish tuition fees and even cancel all student debt. The storm brewing since the election was sparked into life by the intervention of Lord Adonis, self-styled architect of the fees policy and director of the No 10 Policy Unit under Tony Blair. It captured all the worst features of politicians in HE in one episode: selective attention to issues; pursuing personal interests in the guise of caring about the issue; selective memory; rewriting history; not taking advice from people who actually know how a policy might work; and – worst of all to academics – contempt for evidence.

Andrew Adonis, returning to comment on HE after some years away, wrote a scathing but completely misguided piece about fees for The Times on 28 June 2017. ‘Goodbye tuition fees. They were a sensible idea wrecked by David Cameron and Nick Clegg’s decision to treble them overnight, and by the greed and complacency of vice-chancellors who thought they were a licence to print money’. His motive was apparently to protect his ‘legacy’ as ‘the moving force behind Tony Blair’s decision in 2004 to introduce … top-up fees … The intention was that fees would vary between £1000 and £3000 depending on the cost and benefit of each course. But the VCs formed a cartel and almost universally charged £3000.’

Adonis and most other politicians in the Westminster bubble have conveniently forgotten that it was always obvious, well before the vote on £3000 fees back in 2004, that virtually all universities would be charging the maximum £3000, as a Guardian report from 13 January 2004 makes clear: ‘Today’s survey of 53 of the 89 university vice-chancellors in England, carried out by EducationGuardian.co.uk, reveals that, in practice, variability will be minimal while the fee ceiling remains at £3,000, though elite universities are already lobbying for that cap to be swiftly lifted.’ But Adonis is clearly a man who harbours grudges over the long term, predicting that fees would soon be abolished and ‘VCs need to start planning for real austerity. The flow of money from £9000 fees will soon dry up. They could set an example and halve their salaries.

Adonis had stamped his foot and ‘thcreamed and thcreamed until he made himthelf thick’, in the style of Violet-Elizabeth Bott. Despite knowledgeable HE commentators pointing out how wrong he was about almost everything, his ideas ‘gained traction’, as they say in the Westminster bubble. Pretty soon Damian Green, the Deputy Prime Minister, was having to backtrack from an ill-advised response in a wide-ranging interview when he suggested that the whole fees policy needed review.

Conservative commentator George Trefgarne on 26 June 2017 blogged for Reaction, asking ‘Why is nobody in the Conservative Party talking about the broken student loan system?’ Then on 5 July the Institute for Fiscal Studies put out their Briefing Note (BN211), Higher Education funding in England: past, present and options for the future, seized on by the media with front page headlines blaring that three-quarters of graduates will never repay their debt. Steve Jones (Manchester) blogged for WonkHE on 6 July 2017 ‘Are headline writers getting it wrong on fees?’. The answer was mostly yes, but his argument was much too sensible to ‘gain traction’ when Westminster was already in full-blown panic mode.

Mark Leach of WonkHE had offered a primer on 22 May 2017: ‘The Pros and Cons of Abolishing Tuition fees’ after Andrew McGettigan gave his own version on 12 May 2017, in the run-up to the general election, ‘The cost of abolishing tuition fees’. McGettigan got back on the case with his Critical Education blog on 5 July 2017, ‘IFS on tuition fees’, pointing out that the IFS arguments were sound, but inconvenient for Minister Jo Johnson, who had spent most of the previous few days arguing that the HE finance system was not broke and therefore he shouldn’t fix it. SRHE Vice-President Peter Scott wrote in The Guardian on 4 July 2017: ‘why are we not taking seriously a key message that came out of the campaign? Labour’s manifesto promise to abolish tuition fees in England, initially seen as off-the-wall, gained enormous traction. This is hardly surprising given the prospects faced by graduates – escalating debt, doubtful job prospects in a declining post-Brexit economy and decent homes out of reach.’ His piece was titled ‘The end of tuition fees is on the horizon – universities must get ready’.

Adonis wasn’t finished – indeed, he was hardly getting started. He wrote in The Guardian on 7 July 2017 under the headline ‘I put up tuition fees. It’s now clear they have to be scrapped’, saying ‘Debts of £50,000 are far more than I envisaged, and make the system unworkable’. Martin Harris (former director of the Office for Fair Access) weighed in, writing to The Guardian on 9 July 2017:

‘Andrew Adonis is right that the current fee regime cannot survive, but he understates the success of the £3k fee which he devised and which Charles Clarke introduced after the 2003 election … Adonis is unfair in attributing to vice-chancellors the decision to raise fees to £9k. This was a political diktat …  Ministers were clearly told how universities would behave when presented with a fee regime which would in effect label their courses first, second or third class by price. … Since then, a series of decisions by Conservative ministers have made matters worse, especially the abandonment of the categorical promise that tuition fee debt would never increase in real terms. The current regime certainly has to go. But we need to revisit something like the Adonis/Clarke scheme rather than totally abolishing fees. Abolition will inevitably lead to a cap on student numbers and thus to fewer poorer students entering universities.’

Nick Hillman of HEPI added his three penn’orth in a blog on 13 July 2017: ‘Lord Adonis now says the whole system of funding teaching in universities via tuition fees is wrong and should be junked altogether. More than that, he has taken to lashing out at Vice-Chancellors, called for an investigation of tuition fees by the Competition and Markets Authority and is now battling away with academics on how they spend the summer on Twitter.’ Hillman said Adonis was ‘intellectually incoherent … intellectually weak. … [and making] false linkages: ‘it is silly to draw a direct line between higher tuition fees and the current levels of remuneration.’ However Jo Johnson was ready to endorse part of the Adonis rant, saying, “There are legitimate concerns about the rate at which vice chancellor pay has been growing. I think it is hard for students at a time when they have concerns over value for money and want to see real evidence of value for money from their tuition fees”.

Undaunted, Adonis made multiple media appearances, no doubt delighted to be once again in the political spotlight and feeling that his political bandwagon was gathering speed. As John Elledge of CityMetric wrote for the New Statesman on 4 July 2017: ‘Maybe scrapping tuition fees would be regressive. Perhaps we should do it anyway’, arguing that ‘Supporters of fees may be right on the policy – but they’re way off on the politics.’ Adonis even attacked the Times Higher Education for allegedly not exposing the issue of VCs’ salaries, a ludicrous comment revealing his ignorance of years of evidence in THE to the contrary.

The evidence-based debate on the pros and cons of tuition fees continued, but in a different universe. The 11 May blog for WonkHE by Gavan Conlon of London Economics, a longstanding expert commentator in this territory, argued that abolishing fees is fundamentally regressive. Christopher Newfield (University of California at Santa Barbara) blogged for WonkHE on 15 May 2017 about why abolishing tuition fees is a good idea. It was a scholarly values-based argument which built on his recent book The Great Mistake: How We Wrecked Public Universities and How We Can Fix Them (Baltimore: Johns Hopkins University Press, October 2016). The common argument in the US is that if public funding goes down, tuition fees go up, but Jason Delisle of the American Enterprise Institute argued for the ‘Bennett hypothesis’ – former US Secretary for Education Bill Bennett said that tuition fees increase until they exhaust the availability of public funds for student support. The long-term trend in the US shows a strong correlation of declining public support with rising tuition, but Delisle argued, in a report released on 1 June 2017, that colleges’ natural explanation should not be taken for granted. Becky Supiano interviewed Delisle for the Chronicle of Higher Education on 1 June 2017.

WonkHE’s weekly briefing on 5 June noted ‘New research from Claire Callender and Geoff Mason … at the UCL Institute of Education … The paper argues that tuition fees debt deters poorer and ethnic minority students from applying to university … The findings challenge the argument that the recent (post-fee increase) growth in full-time HE participation by 18-year-olds from all social classes proves that fees are not a deterrent. UUK chief executive Nicola Dandridge has responded to the paper with a blog criticising the methodology of the report. Dandridge argues that the study’s conclusions do not follow from its survey results and that the survey implies “that student loans are just like other domestic forms of debt such as credit card loans. This is far from the truth”.’

This was conveniently close to the arguments that Minister Jo Johnson had been making, since Dandridge was then unveiled by Johnson as the first chief executive of the Office for Students. It was however somewhat removed from the view of a significant number of her own current employers: later surveys would reveal a third of VCs wished to see substantial change to the fees regime.  Andrew Adonis described Dandridge’s appointment as ‘producer capture’, which exercised OfS Chair Michael Barber enough to write to The Guardian on 10 July 2017 saying ‘Don’t dismiss the Office for Students’ – a clash between two former heads of Tony Blair’s No 10 Policy Unit. At least Barber, the author of ‘deliverology’, is showing early signs of realising the limitations of target-setting in his approach as OfS Chair. Adonis, on the other hand, is showing much of what seems to be wrong with politicians in HE. His memory of events and version of history is selective, his evidence is flawed, his arguments are intellectually weak and incoherent, he seems to be too concerned to ‘protect his legacy’, and he has struck an almost Trumpian note in attacking rather than listening to anyone who disagrees with him.

The fee abolitionists are an unlikely combination of more-means-worse elitism and leftist utopian economics, and as Jo Johnson continues to promote market solutions he remains onside with the for-profit providers scenting new opportunities. Abolishing loan-backed fees would be devastating for those private sector providers, and that alone makes abolition unlikely for the present government, even before we get to the economic cost. If Adonis gets his wish for reform, the messy politics might lead to closures of public sector institutions, with less diversity, fewer opportunities for disadvantaged students, new lowest-common-denominator for-profit providers offering courses with less gainful employment for graduates, continuing student debt, and growing dissatisfaction among disenfranchised would-be students. But you can be sure that when the next crisis arrives, the politicians will be blaming HE, the opposition, the media, or anyone – except themselves.

Rob Cuthbert is Emeritus Professor of Higher Education Management, University of the West of England and Joint Managing Partner, Practical Academics rob.cuthbert@btinternet.com

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The student experience in England: changing for the better and the worse?

By Paul Temple

When the present English tuition fee regime was being planned, there were plenty of voices from inside universities warning that it would change the nature of the relationship between students and their universities for the worse. Students would, it was feared, become customers, rather than junior partners in an academic enterprise. Indeed, this was what the Government’s 2011 White Paper, Students at the Heart of the System, seemed to look forward to: “Better informed students will take their custom to the places offering good value for money” (para 2.24) – in other words, they would, it was hoped, act like normal consumers. Has this happened? Continue reading →