Forget about canaries, the signs of impending doom are more like the sound of cracking rock thundering through the coal mine and debris collapsing around us.

Here are just two recent signs.

Sign 1

New research recently revealed that now more than half of supposedly full-time undergraduates are doing paid work for more than 15 hours a week and nearly a quarter have full-time jobs alongside their studies to make ends meet.

The idea that students whinge about not having enough money is nothing new. (There are even a jokes about it in Chaucer’s Reeve’s Tale from the fourteenth century.) But we have reach a different order of poverty now. The situation is desperate and it’s damaging to their wellbeing and their outcomes.

Sign 2

In the past few weeks dozens of universities have announced redundancies. Just this morning the number crept to 49 and there are probably more to come. This is because HE funding in the UK has been facing real terms cuts for the past decade. This is the equivalent of anorexia for our world-leading HE sector. With no more fat to shed, the system has started to consume itself.

There is a crisis in the way we fund students and the way we fund the institutions where they study.

What should politicians do about it?

The major political parties would rather not say anything about this. They know the parlous state of the nation’s finances. They know the majority of voters would prioritise any available funding to be directed towards health, crumbling schools, bankrupted local councils, the cost of living, et cetera et cetera et cetera. And the politicians fear that commitments to solve the crises in HE will not come cheap.

They have to say something though. A blank where an HE policy should be will be noticed and challenged. So right now, I suspect drafts are being drawn up with long-grass-kicking promises of a ‘review’. If we’re lucky, they’ll be wondering where to commit to ‘a radical review’.

They shouldn’t be so quick to dismiss the opportunities to win votes and do The Right Thing in the process. The rewards of having a successful higher education sector are boundless: a higher skills pipeline leading to greater productivity in the workforce; home-grown talent filling labour market shortages; social mobility opportunities; investment-sparking research; levelling up around HE providers acting as innovation hubs and major regional employers; et cetera et cetera et cetera.

To that end, I want to offer two options for the manifesto of any party that wants a real and practical solution.

The safe option

I was delighted that my Fairer Funding proposal for an Employer Levy has been economically modelled & polled in Higher Education Policy Institute’s latest report published this week.

It wouldn’t cost taxpayers more. In fact it would save a staggering £8 billion a year compared to currently.

Yes, you read that right: £8 billion for each cohort of students. That’s not my estimate, that’s according to the independent economic modelling by London Economics Ltd, who analysed the Employer Levy alongside 3 other proposals for English HE and one for Scotland.

Not only would it save billions of pounds, it would better balance student demand and labour market needs, support access, provide financial headroom for more student maintenance support and better HE funding.

What’s more, student debts would be slashed and – instead of loan repayments of 9% by graduates and, in effect, their employers – grads and employers would pay just 3% each.

Perhaps it’s no surprise that among potential students, polling showed the Employer Levy as easily the most popular with 78% saying they would definitely or probably apply (compared to 41-74% for other proposals and 68% for the current system).

The bold option

The bolder option (which is not necessarily mutually exclusive with the safe one) is for politicians to stop regarding the human capital of the nation as a cost at all and start to recognise that – like building roads, railways and power plants – building a skilled future workforce is an investment in the infrastructure of the country.

As such, all post-compulsory education could be treated as expenditure that will be financed by the additional revenues that will be generated by the investment and by avoiding the costs that would be incurred if the investment were not made.

It would require radical change to fiscal rules, but when the rules get in the way of so much benefit, I suggest they are what’s wrong, not what they prevent.

The post What should party manifestos say about higher education funding? appeared first on Johnny Rich.

The media coverage of my paper for HEPI Fairer Funding: the case for a graduate levy has been widespread and the reactions surprisingly favourable. While there haven’t been many people getting out the bunting and ticker tape, many people seem to agree that it is an interesting proposal and it is right and timely to address the question of employer contributions to the cost of higher education. 

The most common complaint, however, appears to be to deny that market forces have any place in higher education. One tweet read:

You’ve made the fundamental mistake of assuming that market forces can be made to operate efficiently in HE. There’s no evidence of that at all.

(I won’t name the author (although you can find it on Twitter), because I haven’t asked his permission to quote him and his only right of reply will be in the comments below or back on Twitter).

Market forces exist whether we like it or not. It is not a choice whether to let them in to higher education. There were market forces even in the days of full grants, no fees and low student numbers. Remember how polytechnics were seen as ‘a lower quality product’? That wasn’t fact. It was market forces – the interplay of demand and supply creating their own ‘truths’.

Only Canute would try to defy market forces in a capitalist economy (which, like it or not, is what we have), but that doesn’t mean we let those forces decide the market. Market forces are amoral. It is the way we set up the rules of the market that imprints our values on them.

To talk of market forces operating ‘efficiently’ implies that those forces know what they’re doing. They don’t. They are more like the forces of evolution by natural selection, driving changes without mercy or meaning.

We need to supply the mercy and meaning.

At the moment the market in higher education is a fabricated and self-destructive one, setting the interests of students against those of taxpayers and universities, and ignoring how the money actually enters the system. My proposal acknowledges who the ‘customers’ actually are (employers and taxpayers) and values the partnership between unis and students, directing change in the direction we want.

Would my proposal be 100% efficient at delivering the desired outcomes? No, of course not. But it is easier to head in a direction with the tide helping you along than to try to swim against it or to try to plan a course without recognising that the tide is likely to overwhelm your plans.

I’m no neo-liberal, but I like to think I’m economically realistic and, like a sailor who uses the winds but doesn’t control them, I want to steer a course that protects the values of HE that I’m sure most people in society – and particularly in the higher education sector – share.

The post On market forces in higher education appeared first on Johnny Rich.

My policy paper for the HEPI think tank was published yesterday proposing that employers contribute directly to the cost of higher education. 

Here’s a quick and dirty round up of some of the coverage.

• Here’s a link to the paper itself as published by HEPI
• Here’s a longer version with a more detailed argument and commentary on potential objections.
• A blog I wrote about it on this site. 
• A piece I wrote about it for the Times Higher Education (subscription).
• Another one on Wonkhe.
• This week’s Wonkhe Weekly podcast where I talked about it (among other topics), episode 10.
• Interview on BBC Radio 5 Live.
• Interview on TalkRadio.
• Article on BBC website.
• Article on the i.
• Another article on the i.
• Article in The Times (subscription).
• Article in FE News.
• Article in Media FHE. 
• Interview on RT.
• Response blog by Alan Simpson of Million+.
• Another response blog by HEPI’s Hugo Dale-Harris.
• A response from UCU.

I’m sure there are others out there and will be more (The Guardian will be doing something next week), but that’ll do for now.

You may also be interested in:  

• Fairer funding: achieving the impossible

The post Fairer Funding coverage appeared first on Johnny Rich.

Read Fairer funding: the case for a graduate levy (HEPI Policy Note) and, exclusively on this site, Fairer funding: the case for a graduate levy (full proposal).

What I’d like for Christmas:

1. We should abolish tuition fees.
2. We should fund English universities well enough that they can continue to be among the best in the world.
3. We should match graduates and jobs so that they have the right skills to get jobs they want and succeed in them.
4. We should ensure that the nation’s skills gaps are plugged. 
5. We shouldn’t ask the taxpayer to pay for more than the public benefit of higher education. 

Is that really such a big ask? Over decades of fiddling with the funding system for higher education in England, apparently so. That’s because some of my wishes are seen as mutually exclusive.  

The funding of higher education England has been played like a game in which if one player wins, another must lose. For example, if students win and don’t have to pay so much, then the taxpayer loses and has to fork out more.

More usually over the past 30 years, it’s the student who’s lost: the burden of cost has shifted consistently to the student, first through student loans in 1991, then top-up loans, then fees of £1,000, then top-up fees of £3,000 and then, in 2012, a trebling of fees to £9,000. 

The funding system is under review at the moment by Philip Augar at the behest of the Prime Minister (as she is at the time of writing). Leaks suggest the balance may swing back away from the student, but the cost will fall instead on either the taxpayer or on universities in the form of slashed  funding. 

However, there is another player in the game, keeping his gambit very quiet in the hope of not being noticed: the employers. 

For too long employers have escaped making a fair contribution. They would, of course, argue that they do contribute through corporate tax and through salaries (which, on average, are higher for graduates). 

That’s true, but this approach leaves them without any skin in the game. They’re not making their investment work for them. 

I have written a paper for the HE sector’s think tank, the Higher Education Policy Institute on how employers could and should pay a ‘graduate levy’ instead of graduates paying fees. This needn’t cost the employers more and, critically, it would mean they get what they need from higher education far better than at present. 

In the process, it would also eliminate tuition fee debt. It would improve courses and graduate employability. And sure enough, it would fund universities well while costing the taxpayer less.

It sounds too good to be true, so please make up your own mind by reading the HEPI paper or I have also produced, exclusively for this website, an expanded version of the full proposal which also includes fuller explanations and counter-arguments to some objections that have been raised with me in discussion.   

The post Fairer funding: achieving the impossible appeared first on Johnny Rich.

Today, The Guardian reported the publication of a report out today from the Higher Education Policy Institute (HEPI) with the headline ‘“Less than half’ of tuition fees spent on teaching at English universities‘. 

The headline here is more than a little misleading as the article goes on to report how HEPI’s paper shows how almost all of the tuition fees charged to students at English universities are spent on student-facing costs.

However, to understand this issue, we also need to remember some other stuff about fees.

When fees were tripled to £9k, the intention was that 1/3 of the income over £6k would be spent on access measures (bursaries, outreach, etc). This was never made a specific requirement, but it would amount to 11.7% of what is now a £9,250 fee.

It seems that, while universities do spend a lot on access, there’s a significant underspend compared to this intended level. That’s bad news for access but good news for current students who get more of the the direct value of the fee that is paid on their behalf.

‘Paid on their behalf’ is important here. In the debate about whether students get value for money, we should remember that whatever graduates end up paying, it’s very unlikely to be £9,250.

For some it will be far more. For most it will be far less. The Government reckons about 45% will never be paid by the graduate: the amount they will at some point pay equates to around £5,087 per year of study.

In other words, students pay barely anything more than the direct spend on their teaching and definitely far less than the amount that is spent on things that directly benefit them. That’s good value for money in anyone’s book.

I am not saying that the system of tuition fees is right or fair. Others – taxpayers, employers – get value for money from higher education and the balance of contributions they make may not reflect that equitably.

We should also note that the split of how fees are spent will vary hugely between courses. For an engineering student, the direct cost of teaching will be far higher than for a philosopher. Indeed, some data suggests costs would exceed the whole £9,250 for the engineering course.

That doesn’t mean the philosophy student gets ‘bad’ value though. On average they earn less than engineers, so – if they do – they end up paying less.

It also needs to be pointed out that not all value is measured in money. In fact, what matters most is not.

Two final reflections: I wholeheartedly support the report’s recommendation that ‘student fee’ is more appropriate terminology than ‘tuition fee’ and this paper slam dunks the proof of this.

This level of transparency about how funds are spent is really important. Some of the truths may be awkward, but it’s more awkward to avoid them. The truth here actually turns out to be universities’ friend.

Nick Hillman, Director of HEPI, has argued this last point well in this blog, quoting medieval canon Henry Knighton committing one of history’s worst mixed metaphors when he objected to the translation of the Bible from Latin into English saying, ‘The jewel of the church is turned into the common sport of the people’.

By the way, congratulations on a great piece of work to its authors: Nick Hillman, Jim Dickinson, Alice Rubbra and Zach Klamann.

The post Tuition fees: money well spent? appeared first on Johnny Rich.

BBC Radio 4 reported this morning a leak from the current Augar Review of Post-18 Education Funding. They claimed that a ‘source’ had supported a report in The Times last week that the review would propose that tuition fees should be capped at £6,500 and the “shortfall would be made up by capping student numbers”. 

For starters, the way this is worded makes no sense as capping numbers would only make funding shortfall worse, not better because of loss of economies of scale. I put this down to the BBC’s over-simplified description.

More worryingly, this would be a disaster for any course costing more to run. That’s any STEM courses, specialist courses with a small intake, high-quality courses where the teaching is especially engaged and with low staff-student ratios, courses with lots of students from non-traditional backgrounds, and so on. In order words, it would undermine a damaging proportion of what is best about English higher education. 

Even for arts courses it would place greater pressure on unis to pass course costs to students for materials. The National Union of Students did excellent research in 2012 showing huge hidden costs across many courses, such as thousands of pounds for artists materials, for example.

A £6,500 cap would be a way of incentivising unis only to offer badly taught courses in subjects where the skills shortage is lowest.

To solve the shortfall for STEM subjects, the Government would be forced to top up funding through a teaching grant for particular prescribed subjects. Unless this extra funding is sufficiently generous – i.e. it allows universities to subsidise their overheads – they will still have an incentive not to offer as many of those courses. And even if the top-up were enough, it would still be subject to political control and adequate funding would be impossible to sustain.

These proposals would be a triple whammy for disadvantaged students:

1. The student number cap (which BBC couldn’t confirm with their source) would hit them by limiting places. That means sharp-elbowed, richer or otherwise privileged students get to front of queue.
2. Universities would have no money to support their access activities like outreach, bursaries and other support intended to help non-traditional students into and through higher education.
3. This proposal does nothing to address the main problem of debt for students (as opposed to the Governments financial problems or universities’), which is to do with living costs while studying. This, of course, isn’t just a problem for disadvantaged students, but for almost all students and the reason why student disquiet prompted Theresa May to set up this review in the first place.

I could have said it’s a quadruple whammy for disadvantaged students, because it does nothing to address the collapse of part-time and mature study, which are an especially effective way of opening access to higher education to non-traditional students. However, like student living costs, that’s a wider problem too – one that desperately needs to be solved for sake of students and UK’s skills shortages.

Ultimately, a £6,500 cap doesn’t even help the Government financially anyway. The way student loans are accounted, this would just dump more cost in the deficit, although the imminent (or should I say ‘impending’)  review of accounting arrangements by the Office for National Statistics may change this.

These proposals wouldn’t even be a win politically. The only graduates who would benefit would be those who end up earning most, who might end up paying back less. Most graduates wouldn’t see their repayments change – not the amount, nor how long they make them. This would be a thoroughly anti-progressive approach to the problem.

Even in terms of the political optics, this proposals isn’t sufficiently helpful to students to seem good enough. Indeed, it would just draw attention to how much better Labour’s offer to stop tuition fees altogether appears to be.

Fortunately, this proposal is just a leak and it is unlikely to be much like what finally appears. (The interim report is due in January.) There are too many clever heads on Augar’s team to let this be the true shape of their report (I hope).

I suspect this may be a DfE leak either (a) to prepare the ground for something bad, but less bad, (b) to run ideas up the flagpole, or (c) to create reasons to chuck the Augar Report altogether if they don’t like it.

When I say DfE leak, we may be seeing an internecine battle between HE and FE in the Department. The HE officials may be leaking the worst excesses of mooted proposals in order to goad the HE sector into putting up an opposition, which they’ve been pretty poor at over the last few months. HE officials, right up the the Universities Minister, might well be trying to regain ground versus the effective and worthy campaign that FE sector has waged in support of a better deal for them.

We all (universities, government, students, employers, and the whole of the UK) need much better ideas than this.

With that in mind, I have written a paper with a quite different approach to HE funding that will be published by the Higher Education Policy Institute later this month – watch this space.

The post £6.5k fees: a compromise to please no one? appeared first on Johnny Rich.

If you want to cut fees to win back the youth vote, you start with the courses that give the lowest financial returns, right? At first glance, this looks like a good idea to a new Secretary of State. So we can forgive Damian Hinds for flying the policy kite of differential fees for STEM and arts degrees amid the announcement of the HE and Post-18 Review.

However, after even a moment’s thought, the idea collapses. It is a policy that is misisng a clearly defined intended consequence and yet would undam a flood of unintended ones. 

The problem is that all too often kite-flying ministers get distracted by the pretty ribbons floating in the breeze and they start trying to keep the mess of string and tissue paper aloft. Before they realise what they’re doing, their blue-sky thinking has turned into a bold idea of which they are the champion, a legacy-defining paradigm shift from which any retreat would be a U-turn.

For Damian’s sake – but, more importantly, for the sake of students, of universities, of taxpayers and of the economy – we need to nip this idea in the bud. Cutting fees for arts and social science degrees, but not for STEM, would be bad for all courses across the sector. It’s a direly dumb idea and here are just ten reasons why.

(1) Courses that are cheaper to run, such as arts, but which attract the same fees as more expensive courses make a greater contribution to the infrastructure and the cross-discipline services of unis, such as libraries, students unions, IT facilities, welfare, careers services, and so on. If you take away that contribution, those services would be cut, damaging the experience and outcomes for all students.

(2) Many STEM courses cost far more than £9,250 a year to run. Some receive some extra funding as a result, but often even that comes nowhere covering the marginal cost let alone the real cost. By cutting the funding from other courses that tops up the cost of those courses, ironically, it may well be those most expensive courses that get axed first. 

(3) Even if they weren’t actually axed, the cost of running STEM courses would need to be slashed to eliminate the cross-subsidy. Imagine doing mechanical engineering without ever getting your hands on any machinery or doing chemistry without access to chemicals. 

(4) If graduates from certain courses do genuinely earn less, charging them less does make sense. But, hang on, that’s exactly how the current loan repayment system works already. In fact, it’s designed to ensure you pay back more if earn more and pay back less if you earn less, regardless of what you studied. It seems fairer that a rich politician who studied history should pay more than a physics graduate who went into teaching. (And, by the way, the country is very short of properly qualified physics teachers.)

(5) If you make some disciplines more expensive, there are likely to be students who decide to opt for cheaper courses, looking at the ticket price in front of them rather than the potential financial return, which is far from guaranteed and is at best no more than hypothetical.

(6) The very students most likely to think like that are those for whom the cost is most important, ie. those from the poorest backgrounds. Disadvantaged students may well avoid STEM subjects in order to get a degree on the cheap denying them the supposed higher salaries and social mobility that wider access should be promoting. 

(7) A lack of diversity in the student intake would be bad for those courses and even worse for the career sectors they feed into. Drawing from a narrower pool of applicants is hardly likely to maximise the quality of those applicants. 

(8) Of course, I’m specualting about future applicant behaviours here. It may go the other way and, in practice, rather than courses becoming socially divided, instead the cheaper courses would simply become tarnished, second-class qualifications. (Indeed, ‘Veblen Good’ mentality is exactly why so few institutions price their course under £9k now.) Having an arts degree might single you out for derision – the butt of jokes about ‘only an arts degree, not a proper one’ – or at least for lower employment opportunities. It would exacerbate earning differentials in a spiral that would undermine some of our leading university depts & cutting off talent from creative industries, which just happen to be one of the UK’s most lucrative exports. 

Or maybe I’m wrong: we would get neither the social division across disciplines nor the demonisation of all cheap subjects. We might get lucky. On the other hand, we might get both. The avenue for avoiding disaster is dangerously, evidence-lackingly slim and doesn’t actually to lead to anywhere better than now.

(9) In order to decide which courses should be cheaper, the Government would have to use somewhat patchy data based on past graduates’ earnings. There would be a built-in assumption that employment and pay patterns from past, say, 30 years are a good predictor of the future. When you look at the 30 years before that, they weren’t.

(10) There is a radical shift going on in industry – big enough to be described as the Fourth Industrial Revolution – as automation, artificial intelligence and custom servicing become mainstream. Many in industry are predicting that the skill we’ll need most in future is creativity, at which humans – especially arts graduates – outperform machines and are likely to continue to do so for quite a while. 

It’d be an ironic shame if, in an attempt to turn students into salary-chasing units of supply, the Government ended up undermining our future labour market needs and damaging the lives of the very graduates whose votes they’re trying to win.

The post Differential fees: a flight of folly appeared first on Johnny Rich.