Ten things you might have missed about the White Paper

Monday’s publication of the government’s White Paper, Success as a Knowledge Economy: Teaching Excellence, Social Mobility and Student Choice, came six months and 600 responses after the Autumn’s Green Paper, Fulfilling Our Potential.

Back then I flagged ten issues and questions that might otherwise have been missed about the government’s proposals for market reform and teaching excellence. Here I return to those items, some of which have been clarified and some of which are still vague, while highlighting new developments that appeared two days ago. It is worth noting that the White Paper is shorter than the Green Paper (85 pages to 100 pages) and uneven – compare the detail on the Teaching Excellence Framework (which has its own sixty-page technical consultation) to the complete absence of information on the ‘high quality bar’ used to determine whether challenger institutions should be granted Degree Awarding Powers at inception.

1. Information is the counterpart to competition

The government is promising an information and transparency revolution for English higher education, placing a duty on institutions to publish new kinds of information as part of Unistats. The three TEF outcomes – Meets Expectation, Excellent or Outstanding – will tell students clearly ‘where the best provision can be found and to drive up the standard of teaching in all universities’ and potentially perform the signalling function that tuition fees cannot do. I agree with the White Paper’s thrust that publishing this data is more significant than tying the TEF to fee increases.

In addition, institutions and UCAS will be required to share admissions cycle data broken down by ‘by gender, ethnicity and disadvantage’ allowing applicants to see how their predecessors move from application to offer (or rejection) and to acceptance. Progression rates will also have to be broken down by these categories and published.

Sunlight is said to be the best disinfectant and the press release that accompanied the White Paper states:

This will shine a spotlight on universities that need to go further and faster on social mobility and spur further action to ensure all institutions to reach out to disadvantaged groups.

(Some of this sunlight wouldn’t go amiss in the Treasury and BIS).

2. We have a new sector acronym: its name is LEO

New information on graduate earnings by course and institution is on a fast-track to be published this Autumn, following the work done by the Institute for Fiscal Studies and others into graduate borrower salaries.

In computer history, LEO was a British success: the first computer used in a commercial setting by J Lyons & Co. Lyons Electronic Office ran its first payroll and logistics functions in the early 1950s, being used to coordinate production across the company’s range of teashops.

The Longitudinal Education Outcomes dataset ‘will link higher education and tax data to chart to chart the transition of graduates from higher education into the workplace better’ through studying earnings:

This rich new data source will give students the information about the rewards that could be available at the end of their learning, alongside the costs. This innovation is at the heart of delivering our reform agenda ambitions: improving choice, competition and outcomes for students, the taxpayer and the economy. By increasing transparency and making better use of public data than ever before, we will shine a light on the employability outcomes of courses and institutions for students to evaluate alongside other considerations. We hope this will also be used by providers evaluating their provision and considering how they can tailor it to better deliver relevant skills for the labour market. At an aggregate level, by enabling more authoritative data to be produced of the employment and earnings of graduates long after they have completed their education, we will be able to facilitate an improved understanding of the value added by a higher education degree.

(Chapter Two: Choice, §42)

There will be a consultation with the sector over the Summer and the government is looking to incorporate the data into the TEF by 2018/19. The IFS report raised concerns about the variation in graduate earnings and the government also therefore proposes to commission research into ‘robust measures of the value added by different subjects and institutions’ (to be published in mid 2017).

Data like this will be of obvious interest to applicants and to the Treasury (it tells them which loans have such low repayments that they are really ‘vouchers’). But questions arise given that the IFS report was based on the earnings over ten years of students who graduated in the early 2000s.

How far will applicants be swayed by earnings data of graduates who studied at their institution (or its precursor) over 15 years ago? Was the course that interests them even offered back then?

How far can providers’ evaluate their current provision’, as the government wishes, against courses and intakes so far in the past? That is not clear. Perhaps the main function of LEO is undercut misplaced prestige, which also thrives on similar time lags.

3. TEF Incentives are much clearer in the White Paper

As the TEF introduces three outcome grades, these will lead to differential fee caps and tuition fee loan caps from 2019/20 (using the results of the 2018/19 TEF).

In 2017/18 all institutions who Meet Expectations will be allowed to apply an RPI uplift to the maximum tuition fee they charge and the tuition fee loan their borrowers can access. The same will apply again in 2018/19.

At this point there will be two levels of fee cap – a £9,000 pa limit for those who do not Meet Expectations and second limit to which two lots of RPI uplift have been applied. (A similar RPI uplift applies to private providers who choose not to have regulated fees – in that case the uplift applies to their maximum tuition fee loan of £6,000pa).

Then differentiation kicks in. For 2019/20, the Meets Expectation cap now only rises by half of RPI each year, while a new cap is introduced for those who achieve Excellent or Outstanding in the TEF, one that continues to increase fully in line with RPI.

Institutions will be able to charge the maximum tuition fee that their TEF badge in the previous academic year allows. If an institution fails to Meet Expectations subsequently it must drop down to £9,000 fees. Thus there will be three tuition fee caps in operation for the established sector.

The government expects this measure to represent an additional £1billion in loan outlay per year. RPI is currently around 1.5 per cent.

I could not see a costing of the administrative impact on universities but the TEF is voluntary, ‘allowing providers to consider the benefits and costs of applying’ before doing so.

The HE sector has been good at conceptualising academic freedom as freedom from direct political interference, but it needs to start thinking about indirect pressures.

4. University finances will be eroded by inflation-indexing

RPI is an improvement on the possibility of CPI as the inflation measure to use for uplifts, but it still leads to an erosion of staff pay and conditions. (Tuition fee increases of this kind affect the repayments of higher earning graduate borrowers, unlike repayment threshold freezes which hit lower and middle earners hardest).

As I pointed out in November, the Office for Budgetary Responsibility has repeatedly called attention to the fact that average earnings tend to increase faster than RPI. HE is a labour-intensive sector and one where many of its employees are graduates, who are meant in theory to receive earnings that even outperform average earnings.

The politics of HE pay is a close-to-hand example of why graduate earnings do not simply represent reward for increased productivity and thereby a direct measure of ‘value add’.

5. There was little to no mention of part-time or mature students

A repeated theme, I’m afraid. There was no mention of mature students and the two references to part-time study only repeating the announcement made by George Osborne in March’s Budget (word for word): ‘the government will review the gaps in support for lifetime learning, including for flexible and part-time study’. Part time undergraduate numbers have dropped from 250,000 to 100,000 since 2010/11.

Instead, the government has decided to focus on ‘flexible’, full-time study, by which it means accelerated degrees and two-year degrees. These will be subject to a ‘call for evidence’, which also intends to look at making transfer between institutions mid-degree easier. Speaking as someone who transferred in the mid-90s, I can say that this is long overdue. And, in truth, a mechanism of this kind should be put in place before any further market liberalism occurs – otherwise the discovery of high quality is on the back of students who can get a very raw deal. (I didn’t improve ‘my life chances’ as the government would have it, but I did go to a better course, academically speaking..)

As I said last time, part-time is what the government should be looking at:

The failures of higher education and industrial policy are entwined here. A smart government would overhaul current ELQ restrictions and look how it can intervene to promote part-time study. This is where more choice is needed.

6. There may be sanctions!

A ‘level playing field’ for all providers, as promised by the government, would require that the risk-based quality and standards assurance processes will apply to all institutions. That means the sanctions listed in the White Paper have the potential to be used with the established sector. (Though the threat is likely to be stronger than the execution).

The following are listed:

• Enhanced and more regular monitoring;
• Imposing an action plan;
• Blind marking of a selection of degree scripts;
• Student number controls;
• Charging fines;
• Re-classifying as provisionally satisfying conditions;
• Varying DAPs conditions to constrain activity;
• Removing DAPs; or
• Ultimately, removing the provider from the register.

In addition, the Office for Students and BIS will have the power to ‘enter and inspect premises (with a court warrant if there is suspicion of serious breaches, such as fraud or malpractice’. The associations conjured by OfStud might make it a better abbreviation than OfS.

7. Sharia-compliant student loans

There’s no further detail on alternative student loans in the White Paper as compared to the Green Paper. In fact, the only noteworthy points are a repeated commitment to bring legislation to Parliament and the dropping of ‘sharia-compliant’ from the description of the loans. The Green Paper is still the first port of call for detail on what is likely to be proposed.

8. Higher Education Corporations & the Public Interest

As with the ‘alternative finance product’, the Green Paper has more detail on the potential future for Higher Education Corporations, a common form amongst English HEIs.

The White Paper promises that the ‘unnecessary statutory requirements’ will be removed. In practical terms, these relate to a lack of clarity over whether current statute gives HECs the power to issue bonds and financial derivatives. HECs are also a quasi-public corporate form – this issue is not mentioned in the White Paper and nor are the current statutory protections regarding the assets of institutions that had a varied history of public ownership. For more detail on these matters, see the previous article. But, again, it strikes me as odd that the White Paper should have less detail here than the Green.

9. Universities / Approved (fee cap) providers will remain subject to Freedom of Information legislation

…but those providers adopting Registered or Approved models of funding will not.

In the last year’s Green Paper we considered the application of the Freedom of Information (FOI) Act to higher education providers, and whether there was scope to level the playing field between different types of providers. On 1st March this year, an Independent Commission appointed by the Cabinet Office reported on the Act and the burden of FOI on public authorities. The Commission did not recommend making any significant changes to how the FOI Act applies to higher education providers. In light of this and the responses to our consultation, we will retain the current approach: approved (fee cap) providers (who are eligible for direct grant funding) will come within the scope of the FOI Act, while registered and approved providers (who are not eligible for direct grant funding) will not.

Chapter 1: Competition, §32

10. Public Interest and Charitable Status?

Again, there have been no further developments regarding November’s announcement that a review is in underway into the public interest principles pertaining to higher education providers. There’s been no new Ministerial Letter and nothing was mentioned directly in the White Paper, although the four currently defined areas of public interest – DAPs and university title, academic freedom, governance structures and finally, ‘powers and charitable objects’ – will all be affected by what happens after the White Paper.

As argued previously, charitable status haunts this whole discussion. How will charities fare in the new market? Can the Office for Students have a first duty to champion competition and the student interest and at the same time become the regulator for the exempt charities in the sector? Previous experience tells me this is a topic few are willing to address head on.