I suppose the only person wringing rubbing their hands with glee over tomorrow’s vote is likely to be Lord Mandelson who commissioned the Browne report to avoid Labour having to make a decision on Higher Education funding before a General Election (and they still haven’t got a policy so far as I can tell), but this tuition fees bruh-hah-hah is a complete shambles.

It won’t come as any surprise to anyone who remembers my campaign for the Lib Dem Federal Policy Committee in 2008, for me to say that I would have preferred a completely free market in Higher Education phased in over the course of a generation, which, together with banking and monetary reform, would enable everyone to be able to afford to save and borrow for Higher Education at a low enough cost for it to be a genuine personal investment.

But so far I have kept my own counsel since the Browne report was published, and have been watching with increasing horror as politicians have turned a bad report into worse and worse policy, tacking on half measures on top of after thoughts in an attempt to keep the many plates of different constituencies spinning.

Well, I’m ready to declare my hand (especially so since I am no longer a university governor), and that is that the whole thing has descended into farce, and not just for the troubled consciences of Liberal Democrat MPs.

If it weren’t for the fact that the government wants the new regime imposed from the beginning of the 2012 academic year and that universities therefore have to make a decision on what they are going to charge in time to put it into prospectuses in early 2011, the fees vote should be postponed and further time given to consult, instead of lurching from announcement to announcement to the tune of the different, and competing, interests of students, universities and politicians.

First, very little has been said about the situation that so many jobs now require degrees that did not, not so very long ago.  As David Willetts stated when he came to give a speech at Brookes in June, he estimated that more than half of all undergraduate students were now on what he termed “license to practice” courses – that is, they are potentially now faced with up to £30,000 of “debt” simply in order to get onto the first rung of the ladder in their chosen job.

Nurses, school-teachers, accountants and dear knows how many more did not need three and more years of full time education to get on their ladders only a generation ago.  In fact, I say that these professions have simply externalised their training costs first onto the state and now onto the student when the state cannot cope any longer, not to the benefit of either their newly trained practitioners or their clients, but to save costs within those organisations that practice in those professions.

Next, on the fees themselves.  In order that universities do not lose out on income, they are likely to look to charge roughly the same in student fees as they currently get in the earlier top up fees plus current government teaching grant.  This is, for the great majority of courses, more, significantly more, than the lower fees limit of £6,000. In fact it is more like £7,500 – halfway into the bracket within which universities will have to have their fees vetted by the Quangocracy and more taken off them to provide bursaries.

This in turn means that the range of fees within which there can be a “market price” with different institutions potentially charging different amounts, is reduced to just £1,500. As a result, this small range means that any institution that thinks they are worth their salt – let’s say the top half of the various league tables in Higher Education – might feel they have to cluster near the maximum, to give them any scope for differentiating themselves from the less good institutions and to avoid giving the impression that they are somehow worth less than their near competitors.

Worse, for those students for whom the decision on whether racking up this debt-hybrid is worth the investment is most marginal – those who expect in their chosen job after graduation to make a marginal increase in their income, those who will likely pay for their fees for the full thirty years before they are written off – there will be very little difference between a £7,000 fee and a £9,000 fee – because the thirty years will wipe out the remainder of both, regardless.

So why not charge the top price?  Your highest earning graduates will afford to pay off the top price, but for your lowest earning graduates it won’t make any difference (but will mean the taxpayer ultimately loses out as more that has already been spent is written off thirty years down the line).

If, for example, they had left no upper limit except to say that institutions charging over £x thousand, say, had to use their fees structure to ensure they could take any student “needs blind”, there could have been a real market created.  Instead of creating an artificial incentive for very many institutions to cluster around £9,000 in order not to be seen as underselling themselves, there would be some institutions that thought themselves worth £20,000 a year and many others who would know they could not sustain such levels and who might actually charge less than they will under the proposed £9,000 cap.

A genuinely free market should put as much downward pressure on costs and fees for many institutions as it would upward pressure on a few globally elite institutions.  But there’s another aspect of market failure in the government’s proposals: supply must still be constrained – even though they claim to want to open up more opportunities for people to study!

Again, when “Two-Brains” spoke at Brookes the one thing he was sure about was that, alongside the Comprehensive Spending Review,  they could not have a system that required the Treasury to fund places up front, as that would not reduce the government’s revenue requirements for current spending. What have they got?  Oh yes, a system that requires a call on current spending to fund places up front and then collect (some) of the money later (if it’s not written off).  Great.  So places cannot expand to meet the demand, and therefore prices are even less likely to fall.

A perspicacious friend the other day wondered out loud why, for example, someone who had had £10,000 a year spent on private education to age 18, with perhaps an average of 25 hours classroom contact time, in groups of say fewer than 15 in the sixth form (rather than lectures of 200 or more), personal tutors on hand, with five nights of prep thrown in and probably a lot of extra-curricular activities to boot, in some of the best facilities available in education would want to spend £9,000 for, let’s say, 12 hours’ contact time in larger groups just because it’s called a “university”.  Perhaps entrepreneurial private secondary education institutions could just open Higher Ed departments?

For nearly forty years we have had a private university (now two after BPP joined them this summer), in the shape of Buckingham, whose fees for the equivalent of a year of a three year course are under £6,000.  I’ve heard an estimate, from someone who ought to know such figures well, that the fee range at which a new private provider of Higher Education could turn a profit might be around £5,000.  With some creative finance packages, perhaps similar to Sweden’s Jak Bank or a credit union, one could probably put together a package that would cost less, longer term, for the graduate as well as the beleaguered taxpayer, than the state’s RPI+3% back end fees system as proposed.  This would have the added benefit of tying alumni into an stronger longer term relationship with their alma mater!

So, the bottom line, so to speak, is that there is potential, in my opinion, for a very wide ranging change in our system of tertiary education, one which could put downward pressure on prices and competition to put upward pressure on quality and the level of service students can expect.  But it’s not going to come out of these new arrangements, at least not terribly easily.  The government either needs to think again about these changes, or accept that just as soon as they have implemented these ones they need to plunge the sector into yet another period of uncertainty.  I say they’d do better to get it right the first time.

This is to say nothing about the pedagogical innovation and change that the newly superconnected world offers to providers and consumers of Higher Education.

Fees vote leaves students, universities and politicians deep in the Browne stuff
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