The government’s proposed managed market in higher education will produce a number of unintended consequences. Instead, we should move as quickly as possible to an open market for students
In the Demos paper on Future Universities we assess how well last year’s higher education white paper is likely to build on the three principles of HE success in England. These are: institutional autonomy, open competition for the best students and staff and the ‘Robbins Principle’ that courses of higher education should be available to all those who are qualified by ability and attainment to pursue them and who wish to do so.
The analysis suggests that English higher education is already very good, and what we need is to build on historical strengths. The market has a useful role to play in this, if that means open competition for students. Unfortunately, the government has not given us an open market, but a managed one. The management consists in only allowing competition for students with ‘A’ level grades at AAB and above (AAB+ students) and for 20,000 ‘margin’ places that institutions can bid for if their average net fees are £7,500 or less.
What we get is a market at the top and the bottom, with the middle hollowed out and all sorts of unintended consequences, such as ‘elite’ universities being less likely to take a punt on bright disadvantaged pupils with lower grades. But, worst of all, the 20,000 ‘margin’ places are doled out by a HEFCE panel – a new bureaucracy at the heart of the system.
In light of these damaging distortions we need to move as quickly as we can to a proper open market for students.
Also essential to a properly functioning market is the better matching of supply and demand. At the moment there is so much excess demand that institutions are not under particular pressure to improve quality and/or lower prices. The main reason a stringent cap on numbers exists is that the repayment terms on student loans are so generous that over a third of loans will never be repaid. So the Treasury is protecting itself by insisting that the Department for Business, Innovation and Skills caps numbers.
The most worrying consequence of the cap is the harm it does to social mobility. The single biggest thing BIS can do for social mobility is to expand places in HE, since progression to elite universities by poorer students depends on what happens in schools and homes, not on what universities do. HEPI have estimated that unmet demand will rise to 100,000 applicants a year by 2020. A lot of these applicants will be from disadvantaged backgrounds.
So there’s a trade-off to be made between generous loans and university places. I suspect that restricting the latter is the greater threat to the Robbins Principle and believe that loans should be less generous (but still keeping the progressive structure of the terms of repayment).
It’s not an easy choice to make, but it’s the right one, and alongside proper open competition for students, is key to putting English higher education on a sustainable footing.
Matt Grist is senior researcher on the Family and Society programme at Demos. The Future Universities paper was launched at an event in London last week