Universities more concerned with student numbers than government grants

The customers are always right. Chris Ison/PA Wire/Press Association Images

I recall the time some years ago when the possible introduction of student fees was being debated and a government decision was imminent. I was attending a seminar on the subject organised by a think tank. The higher education minister of the time was also present. One of the opening speakers began the proceedings quite frankly: “Let us be quite clear. Public funding of higher education represents a transfer payment from the poor to the rich.” The minister nodded. Debate over. Fees were duly introduced and have remained with us ever since.

Student fees have risen dramatically under the present government, to the extent that the grant allocations to universities by the Higher Education Funding Council for England (HEFCE) may no longer seem particularly significant.

A much higher proportion of the higher education institutions’ incomes, used for teaching, will now come via the student fee route. Student numbers have become the most critical factor. And despite the introduction of high fees, enrolments appear to be increasing. With the government’s decision to remove controls on student numbers, we can expect a growth in supply of student places in coming years.

Questions remain concerning where the places will be, what subjects they will be in, and who the extra students will be. These can only partially be answered through the government’s recent letter setting out funding levels for next year and the much-anticipated response to it by HEFCE.

As has been the case previously, there will be grant support for more expensive degree programmes, notably in the science, technology, engineering and maths (STEM) subjects, and for “widening participation” students, from under-represented groups.

Who will buy?

As the English higher education system shifts from public to private funding, so the importance of consumer decisions substantially increases. Here, relevant consumers are not just students, but parents, their employers and others who may assist in paying the fees.

The government’s grant allocation, to be administered by HEFCE, for the coming year contains no great surprises. There has been an overall reduction in funding levels in 2014-15 from £5 billion to £4.1 billion, reflecting general government policies about deficit reduction rather than any specific policy about higher education.

But the grant reductions may be less significant to higher education institutions than the way the market operates, and the effects of the government’s encouragement of private new providers to enter that market.

There has been a steady growth in the number of new private institutions offering mainly first degrees in business and information technology subjects. This is not unique to Britain. In general, new private providers in other European countries have a relatively problematic status in where they lack the power of tradition and research-based reputation.

Where, not what, you study

As in most countries, British higher education has become more differentiated in recent years. This partly reflects growth, partly demand, and partly the effects of government policy. The British system is widely regarded as one of the world’s most steeply stratified, where the issue of where you study may be more important than what you study.

Universities need to be top of their game. Nottingham Trent University, CC BY-NC-ND

How changes in funding arrangements will affect this differentiation is currently unclear, but it is a question of considerable significance in the long term. There is speculation about “weak” institutions “failing”, while other institutions expand some of their provision. Such is the operation of markets.

The problem with the higher education marketplace is that the similarities and differences between what is on offer at different institutions are by no means clear. There are reputational difference between institutions, to be sure, but how these relate to differences in the educational experiences on offer is much less clear.

Alongside the differentiation of provision of higher education, there is considerable diversity in the demand for it. Questions of what to study and where to study are answered differently by different people in different places.

The answers depend on institutional reputation and location, subject interests and career plans, social networks and domestic commitments. Student choices do not simply follow the reputational hierarchies suggested by rankings and league tables. Some students do, but others may not even be aware of them and will have their own priorities.

Widening participation students, in particular, are more likely to want to study locally, often because of existing domestic or employment commitments. Their opportunities are limited to what is available near their homes.

They may also be more concerned about the debt implications of taking out the loans required by high fees. Even though the policy on loans is currently flexible in ways which are meant to reflect differences in the future circumstances of different graduates, it seems unlikely not to influence decisions by many potential students about what, where and whether to study.

One final factor in the unknown future of higher education is the effect of new forms of course provision, shaped by the application of learning technologies, such as Massive Open Online Courses and other global initiatives. These bring a new, cheaper product into the higher education marketplace, and may provide yet another element in its increasing differentiation.

The shift from government grants to student loans in the funding of higher education reflects a shift in emphasis from its social benefits to its individual benefits. Whether future decisions shaped mainly by the latter will result in changes and possible reductions in the former remains a key question.