Blue skies thinking

Ed Milband has raised eyebrows recently by stating that £6,000 tuition fees topped up, with unspecified strings, from general taxation is a ‘red line’ for any future Labour administration. However, what happens to universities if the Conservatives end up forming the next government?

The cabinet reshuffle that saw David Willetts replaced by Greg Clark as universities and science minister was partly intended to neuter the more overtly ideological aspects of the Conservative agenda in the run up to the election. The dizzying reform and ad hoc policy making in HE, typified of the early Coalition years, has been replaced by a placeholder minister determined to spend as little time as possible with his brief.

While we await the manifesto, some Conservative policies are clear enough. Officially, we are told that £9,000 fees look sufficient to fund universities for the foreseeable future. However, there are pressures on that figure. If the Coalition imagined in 2010 that the average annual fee for an undergraduate degree course would be somewhere around £7,500, it is now ironic that both Conservatives and Liberal Democrats defend £9,000 fees today as the only way to fund higher education.

Ostensibly, a Conservative government would not make changes to the present fees and loans system. However, the truth is that in this parliament, universities have cost a lot more than expected, and loan book write-offs have drawn the unwelcome attention of a Treasury eager to get its money back.

Meanwhile, universities have become used to living off of a generous funding settlement and have been happy to ignore the trouble that was being stored up in the public finances as a result. It would now cause a great deal of hardship in the sector to reduce the unit of resource, hence Labour’s commitment to covering the gap between £6,000 and £9,000. However, it is highly likely that the higher education budget would be squeezed in a post-election spending review committed to £55bn worth of cuts across Whitehall.

And relative to other public institutions, universities have lived high on the hog in this parliament. Other spending priorities and tax giveaways are being compromised as a result of covering annual losses on the loan book. This is a tricky position for universities to find themselves in after an election at a time when, should existing funding arrangements continue, universities would want to make the case that the maximum fee of £9,000 has been declining in real terms for the last five years, and expensive laboratory-based teaching or ‘elite’ models call either for a rise in the fees cap or its removal altogether.

The experience of this parliament and the recent troubles of the Abbott government in Australia make it unlikely that the Conservatives would propose the more radical offer of a removal of the fees cap. Instead the Treasury has asked the sector to prepare arguments for funding higher education in advance of the coming Comprehensive Spending Review.

Sector experts are scrambling for evidence to justify maintaining the science ring fence, the knowledge exchange budget, widening participation programmes, and the undergraduate unit of resource. They will have to produce some pretty compelling arguments to avoid spending cuts exacerbated by loan book impairments. If a choice is made to release the elite from the fees cap and to concentrate research resources further, this will make life very difficult for everyone else.

We also know that despite the views of some ministers, a Conservative government would remain committed to keeping international students within the net migration target and retaining post-graduation work restrictions for non-EU students. This will continue to place UK universities at a competitive disadvantage against other recruiting countries. With the real prospect of a referendum on European Union membership, universities will be concerned about worker mobility, international student recruitment and access to European research funds.

It is unlikely that the Conservative front bench would back a ‘Brexit’ and the referendum would be intended to settle the question of EU membership for a generation. But as the recent referendum on Scottish independence has shown, such sweeping political calculations seem premature. An announcement of a referendum on EU membership would mark the start of a deeply uncertain and destabilising period for UK HE.

There are other more ‘micro’ promises currently in the Conservative policy workshop. If there is to be a consultation on a postgraduate loan book initiated this side of an election, it will have to be announced within the next 15 working days before the civil service goes into purdah. How is this policy to be squared with the proposed removal of the undergraduate number cap? Labour have been careful not to offer an uncosted HE policy, but little attention has been given to how these government proposals are to be funded.

The government would not require primary legislation to introduce such a scheme – it could be realised through statutory instruments, as could any change to loan interest rates and income-contingent repayment thresholds. However, with £55bn of spending cuts to come and a promised £7bn tax cut on the books, how would a Conservative government continue to fund universities at the present level? The numbers cap proposal may yet prove to be a non-promise as a demographic decline in applications makes it unnecessary, allowing expenditure to be re-routed towards postgraduate loans.

However, some form of legislation to incentivise universities to be co-investors with private finance would be an alternative no-cost, market-based solution favoured by some in the party. The sale of the student loan book for c.£12bn remains within the OBR forecasts for the next financial cycle. While moves are already afoot on big ticket capital items requiring shared inventories and efficiency savings.

How far would a Conservative government continue to push the inclusion of new entrants and private providers into the higher education market? This revolution has stalled in the light of seemingly fraudulent claims on student finance and concerns over teaching quality.

Last weekend The Sunday Times reported that Greg Clark is considering a manifesto commitment to create a teaching inspectorate linked to funding for universities to address rising student complaints and value for money concerns. The minister is said to be looking at how quality assessments would be made and how closely they might resemble Ofsted ratings for schools.

An emphasis on teaching quality was central to the abandoned white paper Students at the Heart of the System, but the inspectorate proposal would ensure a more robust examination of how universities are spending the £1.9bn distributed in tuition fees. Such inspections are likely to be cumbersome and invasive but will prove increasingly difficult to argue against under present funding arrangements.

The mistake of the Universities UK February letter to The Times, questioning Labour’s £6,000 fees policy, was that it gave the appearance that vice chancellors of English universities supported Conservative Party policy. Despite the increase in fees income, the last five years under a Conservative-led government have been far from benign for most in higher education. A continued mix of marketisation and financialisation with contradictory pressure on immigration and spending cuts, could yet spell significant hardship for the majority of the sector.

Universities should not be so sure that they would have as easy a ride in the next parliament under the Conservatives as they did in this one. If what we have just experienced is what you call ‘easy’.

Leave a Reply