It is worth taking a step back from the furore over Labour’s abandonment of its pre-election promises to ask why and how we fund higher education. In a global knowledge economy, in which countries are putting science, research and innovation at the centre of their productivity strategies, our student finance system must have three goals. It must: remove financial barriers; ensure our universities are funded efficiently and held to account for student outcomes; and share the cost of higher education fairly between students and the taxpayer, reflecting the mix of private and public benefits.
The English system of tuition fees and government-supported loans meets all three objectives. Young people from the poorest areas are now 43 per cent more likely to go to university than in 2009/10, and 52 per cent more likely to attend a high tariff institution. Statistics show the proportion of young people on free school meals going to university is at a record high. Drop-out rates, too, have also come down. Our universities now enjoy 25 per cent more funding per student per degree than seven years ago.
And the system is fair on taxpayers: a university degree boosts lifetime income by between £170,000 and £250,000. Students pay on average roughly 65 per cent of the cost through fees, while the taxpayer shoulders around 35 per cent, through teaching grants and loan subsidies, and a much higher share if we add £6bn of annual investment in research. This is an equitable split.
Jeremy Corbyn would land the taxpayer with the entire bill—a regressive subsidy from less wealthy non-graduates to richer graduates. Moreover, without tuition fee income, universities would struggle for public funding against other spending priorities. The result would be reduced funding per student, strict rationing of places and risks to institutional autonomy from increased government dependence. Take Scotland, where the policy of avoiding fees has led to a squeeze on funding and a cap on places, with, according to the Sutton Trust, “particularly negative consequences for less advantaged students.” English universities are no stranger to the risks. In the two decades before fees, funding per student fell by over 40 per cent, and caps meant fewer young people from disadvantaged backgrounds made it to university.
The English system works. The Organisation for Economic Co-operation and Development has described us as “one of the few countries to have figured out a sustainable approach to higher education finance.” Abolishing fees would be bad for disadvantaged students, regressive for taxpayers and catastrophic for university funding. It would make underfunded universities the preserve of an elite. While we will continue to keep the system under review to ensure it remains fair and effective, it is clearly fulfilling its core aims.
"A stubborn third or so of students reporting they get poor value for money"The fundamental question is not really about fees at all, but how we ensure higher education delivers better value for money for students and taxpayers. For a second year, the Higher Education Policy Institute Student Survey shows an unsatisfactory student experience—with a stubborn third or so of students (32 per cent in 2016) reporting they get poor value for money. Employers are losing confidence in some qualifications, which are failing to hold their worth. While the average graduate earnings premium remains compelling, too many—perhaps a third of students—end up in non-graduate jobs. Students lack a sense of where their fees go, with unease growing at increases in vice-chancellor salaries that seem unrelated to undergraduate outcomes.
Securing value for money has been my focus since I became universities minister in 2015, and it was at the heart of the Higher Education and Research Act. The new regulator that it creates, the Office for Students will implement the Teaching Excellence Framework and hold universities to account for how students fare. Institutional incentives have led universities to prioritise research over teaching. The new framework corrects this by assessing universities on their student experience, teaching standards, and outcomes for graduates. In the words of Simone Buitendijk, vice-provost for education of Imperial College, the TEF has been “a godsend.”
"The TEF has been called 'a godsend.'"The OfS will also make it easier to set up high-quality providers, paving the way for institutions like the Dyson Institute of Engineering and Technology, or the New Model in Technology & Engineering, in Herefordshire. Universities will be free to offer two-year degrees, and students enabled to transfer credits between institutions. The OfS will require evidence of exceptional performance. It will tackle degree inflation and introduce new contracts between students and universities. These will set out what students can expect from in terms of resources, contact time, assessments and so on.
As the CBI has put it, our “new emphasis on quality of teaching at universities together with transparency and openness to competition should also help in driving up standards among the graduates coming out of higher education.” We have a student finance system that works. Debating tuition fees is a distraction from the real changes we need to see in our universities.
