STUDENTS DECEIVED BY SHAMELESS LIB DEMS

Following the publication of Lord Browne’s proposals for the future funding of universities in England, a key question is whether universities will be better-off under the proposals. The answer seems to be an emphatic ‘no’.

The Browne Review assumes that the Comprehensive Spending Review (CSR) will cut 80% of the annual teaching grant that is currently allocated to universities via the Higher Education Funding Council for England (Hefce). This teaching funding allocation amounts to £3.5bn and Browne recommends that this should be reduced to just £700m with a further proposal that this funding should be targeted at ‘strategically important and vulnerable subjects’.

If Browne’s recommendations are adopted in the CSR, public investment in teaching (which has already been reduced by £1bn) would fall by £2.8bn per annum. As a result, million+ and London Economics have estimated that universities, whether they like it or not, would have to levy an average fee of £7,400 per annum to make-up for the loss of teaching funding which Browne recommends. Even if the CSR does not accept Lord Browne’s recommendations in full, any significant reduction would impact on the level of fee that universities would have to levy – the greater the reduction, the higher fee which all universities will have to charge.

Fee levels: no race to the bottom
The Browne Review also recommends a taper so that if a university charges more than £6000, they will only receive a proportion of the additional fee levied – for example, a university would only receive 94% of a £7000 fee or 89% of an £8000 fee. The result is that universities will have to charge even more to recoup funding lost as a result of the taper.

The majority of students (80%) are currently studying subjects which are in Hefce Price Bands C and D. These are by no means just classroom-based subjects. Many are practice-based and professionally or vocationally focused and require state-of-the-art facilities to ensure that they are at the standard being used by industry and employers.

million+ surveyed universities to estimate the percentage of teaching funding that they would lose in the event that all funding was removed from subject Bands C and D (i.e. the effect on individual institutions bearing in mind that teaching funding is not evenly spread by subject band amongst all institutions).

Many universities reported that they would lose between 95% and 97% of all teaching funding. Once Lord Browne’s recommendations were taken into account, universities reported that they would have to levy fees of up to £8000 per annum. Even if the reductions recommended by Lord Browne are implemented in a different way i.e. not using the current subject price bands, the scale of the reductions envisaged will mean that all universities will have little option but to consider uplifting fees significantly.

There is likely to be little merit in universities in England engaging in a race to the bottom in terms of fee levels which, in the case of universities with the most socially inclusive student profiles, would simply end up in them having less resources for students who benefit the most from the opportunity to study at university.

Differential impact on universities and students
It is well-known that some universities have much more inclusive social profiles than others. Those institutions which make the biggest contribution to social mobility commonly have up to 40% of their students from socio-economic groups 4-7. These universities also make the most significant contribution to social mobility by offering opportunities to first-generation students and to students who enter university later in life. They also educate the over-whelming majority of students from black and minority ethnic backgrounds.

It would be unwise to conclude that these universities will not seek to replace current levels of investment for teaching through higher fees if teaching funding is cut substantially in the CSR. These universities are engaged in world-leading research and high quality teaching which otherwise might otherwise be at risk. However, there is an obvious concern that even with a progressive student support system, the prospect of high fee levels will deter students from widening participation backgrounds.

Moreover, universities which have a higher proportion of students from wealthier backgrounds are very likely to end up receiving more resources – either because their students can pay upfront more easily or are not so likely to be deterred by higher levels of loans. These universities are also much less likely to have to provide large numbers of students with bursaries compared to other universities.

‘Subsidy’ vs public investment
The Browne Review enters new territory in describing the public funding of teaching as a subsidy rather than an investment. If the ConDem Coalition Government accepts the approach that this terminology implies, this will signal a major shift in policy. Effectively, public investment is being removed from higher education and the responsibility for the future funding of universities in respect of teaching is being transferred to the individual. Lord Browne describes this as ‘funding following the student’. In reality, the funding is not being transferred directly to the student - rather the student is required to take out a loan and repay it.

This is very different to the partnership approach advocated in the Robbins and the Dearing Reports. It is also very different to the approach being taken in the UK’s competitor countries where the need for the government to invest directly in higher education through public funding of universities for teaching as well as research is recognised even where countries have a student fee regime.

Although the system proposed by Browne is a modification of the 2004 HE Act which introduced the current variable fee system in England, it effectively abandons the principle of ‘additionality’ i.e. the income provided through the repayment of graduate contributions by students was additional to the public funding provided by government.

Rather the assumption of Browne is that the fee-loan system for students and repayments by graduates will substitute for public funding. Moreover, Browne assumes that the unit of resource for teaching will be reduced. As a result, the foundation of the 2004 Act (additionality) is replaced by substitution and a cut in resources for teaching.

The Browne Review, the CSR and the deficit
The recommendation by the Browne Review that teaching funding is cut by 80% supports the Government objective of reducing the deficit principally because teaching funding is counted against the PSBR. However this is not the whole story. Unless they can pay upfront, students will take out state-funded loans to pay fees and will repay as graduates (as now). The government will therefore have to continue to borrow to fund the higher fees loans to cover the higher fees which universities will be forced to levy. So why will this not increase the deficit?

The Treasury accounts for fee loans in a different way from the direct funding of universities through the Hefce teaching grant. Only the ‘RAB charge’ - the amount that the government estimates will not be recovered from graduates over the 30 year period of the loan - goes down in the Treasury books. As a result the Treasury is inclined to spend extra money on loans whilst making substantial cuts to teaching funding and arcane Treasury accounting rules will make it appear that greater savings have been made.

Of course, it would be open to the ConDem Coalition Government to amend the Browne recommendations and to make different decisions in the CSR about investment in teaching funding in English universities.

However, judging by their record so far, I don’t think anything this awful coalition does is likely to improve on the Browne recommendations.