The future funding of HE and Adult Learning generally presents a huge challenge


The cap on university tuition fees in England should be scrapped by the government, according to the centre right Adam Smith Institute think tank.

Tuition fees in England and Northern Ireland are £3,225 pa. In Scotland: free for Scottish residents, £1,775 to others in UK. In Wales: £1,285 for Welsh residents, £3,225 to others in UK. Overall, universities have generated close to an additional £2.7 billion in income from top-up fees since 2006.  According to James Stanfield of the ASI , Ministers are “retarding the natural development of higher education” with the current cap.  But Lecturers and students have attacked the proposals, saying they would have a negative impact on higher education. Capping fees artificially increases the demand for places and causes students to value their education less, its report called The Broken University suggests.  It results in less overall investment in higher education and encourages universities to be less responsive to student needs, it argues.

A report released this month by the Association of Graduate Recruiters (AGR) argues that lifting the cap on university tuition fees, which from next year will be £3,290 per year in England, is “inevitable”.  But it says it should be removed in stages, and fees should only be repayable when a graduate is earning more than £15,000 or the equivalent taking inflation into account.

The report also claims that the government’s controversial target to get 50% of under-30s into higher education has “driven down standards and devalued the currency of a degree and damaged the quality of the university experience” and should be scrapped. “The focus must shift back to quality rather than quantity,” it says. Families should be encouraged to save for higher education through a national savings scheme, it adds. They should also be given better information by universities about the relative value of their degree courses and the employment outcomes of their graduates.

Last month the think tank Policy Exchange in its report More Fees Please said that the Government must raise the cap on top-up fees to avoid a serious deterioration of quality in our universities. More Fees Please? warns that with the Government’s student loan debt expected to rocket to £55 billion by 2018, the Treasury will not be able to afford a rise in fees without a radical change to the system of student support. The report recommends that students from the wealthiest households are removed from the public student loans scheme, and offered a loan from a regulated private loan scheme at a lower than commercial rate of interest instead.

All publicly funded institutions are feeling the squeeze. But Higher Education feels particularly aggrieved as the pressure on the sectors funding pre-dated the recession and credit squeeze. The massive expansion in Higher Education to meet the Governments 50% target was under funded. Policy Exchange pointed out that the Years of chronic under-funding have had a number of serious consequences that are still being felt today. Buildings were allowed to decay as necessary infrastructure projects were put on hold and academic pay fell far behind levels in other developed countries, making it harder to attract and retain the best staff. Student to staff ratios also rocketed up. From a starting point of around 8:6 students to staff in 1975-76, data from the Higher Education Statistics Authority (HESA) now puts the number of students to teachers at 16:4 for 2007/08 .As a result institutions have increased the size of student teaching groups, pulled in a wider range of staff to teach (including postgraduate students) and replaced some lectures with online resources.. Most negatively a report for the Higher Education Funding Council for England found that there has been an effective breakdown of the system of pastoral tutoring in some cases, a reduction of staff-intensive forms of learning such as laboratory sessions in the sciences and essay tutorials in the humanities, and cut-backs in face-to-face feedback.

The Government’s annual grant letter to HEFCE, announced the third major cut to the HE budget over the past 12 months. In short, it signaled an overall reduction of £915 million, which is believed to represent a 12.5% cut between 2010/11 and 2012/13. Representing Universities UK, Steve Smith claimed the cuts “will leave universities in England with £449 million less than they had expected for 2010–11. The lack of clarity about the £600 million saving sought by 2012–13 will also cause a great deal of uncertainty for the sector”.

And its not just full time undergraduates who are being affected. Part time undergraduates  and adult learners more generally, are  seeing cuts. Despite making up nearly a third of undergraduates, part-time students get a fraction of the financial support received by full-time students. They have to pay their fees up front, they cannot take out a Government supported loan, and their chances of securing any financial support are slim.

In October 2009, CfBT Education Trust published a report Funding Upskilling And Reskilling In The 21st Century: From Personal Pension Accounts to Personal Skill

Accounts (October 2009) that focused on the funding of adult learning. It proposed “a national system of compulsorily funded personal skill accounts where employees contribute 1% of national insurance, employers contribute 0.75% and the taxpayer contributes the equivalent to 0.25%”. In support of the publication, Tony McAleavy, education director at the CfBT Education Trust, said “that in the long term, Britain’s skills needs cannot be met through public spending alone, but, at a time of financial constraint, are we willing to devote our own money to it?”. He added: One response to the problem is compulsion, as in the compulsory funding for pensions and social care. The report proposes that a new system of personal skills accounts could be funded through “compulsory” tripartite contributions, with adult employees’ national insurance contributions increasing by 1 percentage point, employers’ increasing by 0.75 percentage point on all earnings, and the state contribution increasing by an equivalent of 0.25 percentage point. This, the report argues, would give all employees access to an individual fund for their own upskilling or reskilling needs, with any unused funds into personal pensions on retirement.

(‘Couldn’t we pay for skills the way we pay for pensions?’ The Guardian, 27th

October 2009).

This report offers imaginative solutions to address a particular challenge, something that has been in short supply to date  in the debate on HE funding

Cuts are happening at a time when there is huge pressure on universities to improve access and also to remain globally competitive. Our HE sector is still seen (just) as the second best in the world after the States, but China, India, Australia and others  are rapidly narrowing the gap. The Russell Group has highlighted the fact that with just 1% of the global population, our HE sector produces 7.9% of the world’s research publications and 12% of all citations. The total contribution of higher education to the economy in 2007/8 was  estimated at £33.4bn—equivalent to 2.3% of GDP. The sectors  gross output exceeds that of either the pharmaceutical or the aerospace industry.

Following the publication of Higher Ambitions in 2009 the Government announced that an independent review of higher education funding and student finance had been appointed under the chairmanship of Lord Browne of Madingley. Its aim was to publish its findings in autumn 2010 (ie after a General Election) with any changes implemented following the review coming into effect in the academic year 2011–12 “at the earliest”. In a written statement at the time   Lord Mandelson said that variable fees had provided institutions with an “income stream worth £1.3 billion per year, which has helped to sustain the long-term financial health and viability of this crucially important sector”. However, he added that “to continue to thrive in the coming decade, institutions will need to respond to the changing needs of students, businesses and the wider community as well as adapt to demographic changes and growing international competition”.

It is right in principle that those who benefit from higher education – graduates – should have to contribute to its costs. Indeed, most seem to agree that fees will need to rise in the future if we are to protect and improve the student experience, and retain Britain’s position as a global leader in higher education. But it is important too that any new deal in funding universities must protect  the poorest students. Cost must not be an impediment to going to university .

The Government must ensure a clear system of financial aid exists and importantly that all potential students understand it. It is also important, as Policy Exchange has pointed out, to realize that any rise in tuition fees will counter-intuitively cost the Government more, not less money. And while Lord Mandelson anticipates Universities raising more  funding from the private sector with more employer involvement, PA consulting has found that  most employers have a different mindset, still regarding  themselves as customers of the outputs of the higher education system, not as funders, and even less as co-providers.’ As one very large employer put it to PA Consulting, ‘we are in the business of business, not of education’.  What is strange about the debate about future funding is the relative failure of Universities themselves   to offer a clear and imaginative vision for the future in the on-going debate about how to structure funding, tending to focus on just the amount they believe tuition fees should rise.

They must understand that they have to offer something in return if taxpayers are asked to fork out more funds for a sector that has a relatively poor record in holding itself to account to the end consumer.


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