The Universities UK call for a national debate on the future of higher education funding has, worryingly, failed to ignite the media and electorate – suggesting that post-18 education is not a high priority for voters.
Despite that, there has been considerable activity behind the scenes as various individuals and institutions have signalled their preferred approach to these issues in the future.
The issues and options currently being considered by these different groups include the following:
- The likely financial consequences of the introduction of the new Plan 5 system – with 40 year repayment and lower interest rates – in England, Scotland and Wales.
- Ameliorating the regressive consequences of the Plan 5 arrangements in England and Wales by having higher earners repay more and by not penalising women and others who take a care or career break – the so-called STEP model.
- Proposals for introducing maintenance grants in England.
- A graduate tax and/or employer focused graduate levy.
- The possible introduction of student number controls.
All of these proposals share three things in common.
First, they look solely at one part of the post-18 education and skills landscape by ignoring the financial position of other learners over the age of 18 whether they are studying in further education colleges, completing an intermediate or advanced apprenticeship or other form of adult education and skills provision.
Second, they attempt to maintain the principal features of the current higher education student income contingent loan arrangements and the institutional funding this enables.
Third, they maintain an approach driven by almost exclusively individual student demand – without addressing the needs of communities and employers.
The other 50 per cent
The Augar report (published nearly four years ago in May 2019) highlighted the almost total lack of focus in England on adults that do not participate in HE in the opening paragraph:
Post-18 (or ‘tertiary’) education in England is a story of both care and neglect, depending on whether students are amongst the 50 per cent of young people who participate in higher education (HE) or the rest. The panel believes that this disparity simply has to be addressed. Doing so is a matter of fairness and equity and is likely to bring considerable social and economic benefits to individuals and the country at large. It is our core message.”
That core message from the Augar panel has been supported in subsequent reports which have made clear that these differences play themselves out through the deepening of established social and economic disadvantage in the most deprived parts of the UK.
To begin the process of dealing with these issues, Augar recommended:
- A reduction in the level of the maximum student tuition fee from £9,250 to £7,500,
- The extension of the repayment period to 40 years,
- A universal learner entitlement to a full level 3 qualification, and
- The introduction of a Lifelong Loan Allowance for short courses and full degrees which could be studied at points of the learner’s choosing throughout their lives.
These four recommendations have been implemented in part. The first by stealth through inflation eroding the real value of the student fee closer to the G7 average level of funding for tertiary education. The second and third through action announced two years later to accompany the publication of the government’s response to the Augar Report. The fourth through legislation currently passing through the Houses of Parliament.
Among the other 49 recommendations contained within the Augar Review, some have been partially implemented and others have not, including:
- Investment in the salaries and development of the further education workforce.
- Increases in the funding rates for economically valuable adult education.
- A capital budget of £1bn per year for further education colleges.
- Bursaries for students on level 2 and 3 courses.
- Maintenance grants of up to £3k for undergraduate students.
The central consequence of this inaction is that whilst investment in the “two halves” of post-18 education is not only wildly imbalanced, it is worse than that because it has become even more unfair since 2019.
The Learning and Work Institute has reported that investment in adult skills in 2025 will be £1bn lower than in 2010, whilst HE funding continues to grow as uncapped student numbers allow, unlike in FE at Level 3 and below where cash budgets limit numbers (and aspirations and opportunities).
There are no simple figures on this published by DfE, but our estimate is that in 2022/23 £23.3bn has provided by the government for HE (including maintenance), some of which will be repaid by students – and around £3.3bn spent on all the rest (Level 3 and below in FE and apprenticeships).
Meanwhile, employers in the UK spend half as much as their European competitors on education and training, and the National Audit Office reported in 2022 that an astonishing 39 per cent of employers did not provide their staff with any training in the preceding 12 months.
Unsurprisingly, this all impacts on life and work chances as opportunities to learn have been lost year on year. The Institute for Fiscal Studies has demonstrated there are two million fewer people undertaking adult education and skills courses now than there were 13 years ago.
This shortfall in adult education and skills provision is holding back improvements in productivity and improvements in wage levels as well as overall economic growth. This is before we even begin to consider issues of fairness and the negative impacts on income and wealth inequality within and between regions and between the younger and older.
No magic money tree
Tackling this is not straightforward. Any incoming government after the next general election will face tight finances, with little prospect of a simple and rapid levelling up of FE funding to where it should be.
Meanwhile, we are likely to see growing numbers of young people applying to HE simply because of cohort growth on top of the cultural issue that “going to university” is what you do if you’ve been successful at Level 3 in your teens.
Sadly, as yet there is no public nor political outrage at the wasted talent we spurn every year by abandoning so many other teenagers who have not got to Level 3.
So without a magic money tree solution, we need three things to happen.
First we need a truly tertiary system to be developed, with a post-18 education and skills strategy setting out how every adult will be supported to attain and maintain the skills they will need throughout their lives.
A strategy which will set national priorities for sectors where most change will happen – green skills, construction, engineering, digital, health and care – and show how Government investment will encourage employer investment.
That strategy will set the framework for the newly-emerging Local Skills Improvement Plans in a more consistent way. It will also show how the system can be fair to all adults at all levels of learning, across their lives, with bursaries and maintenance provided in a variety of ways and not just to level 4+ learning.
We called time and again for a strategy to be developed during the passage of the Skills Act in 2021, but ministers kept refusing our ask. It was puzzling at the time, but I concluded that their main reluctance was because they didn’t want to be held to account for not delivering when they knew there is simply not enough investment – from government and from employers.
If that is correct, then we desperately need to have a strategy to set out both the cost of investing enough, and, of course, the cost of not investing enough. A strategy would make the case for investment in HE and FE, in universities and colleges, not in one against the other; that’s why we need the university sector and the college sector to come together on this, both confidently as vital parts of a tertiary system.
The second area for action is in the leadership, management, funding, quality assurance and regulation of the tertiary system. It is a dysfunctional mess which serves nobody well.
There is a need to consider the post-16 (or post-18) education system, nationally and regionally/locally. A review is needed of the current roles of the Education and Skills Funding Agency (ESFA), Institute for Apprenticeships and Technical Education (IfATE), Office for Students (OfS), Student Loan Company (SLC) and Mayoral Combined Authorities (MCAs) with the aim of a more streamlined system which can ensure that adults and employers get the outcomes they want and need. Too much time and resource is wasted in serving the current systems rather than on meeting the needs of people, communities, employers, and the labour market.
Thirdly, we need to recognise that as well as more public investment, the tertiary system needs more employer funding. At our recent “Future Skills Coalition” event at Portcullis House, there was agreement between Lord Blunkett and Lord Johnson that this should come from extending the apprenticeship levy to bring in more funding and to include adult skills as well as apprenticeships.
To support this, we can look to Northern Ireland, Scotland and Wales where the apprenticeship levy is used on a national and regional basis to prioritise areas where there are skills gaps and shortages and not just spent on apprenticeships.
This approach should be adopted in England as well with the current and planned future Mayoral Combined Authorities being charged to work with employer representative bodies, colleges and universities to target this funding where it will work best – for the labour market, productivity, economic growth as well as for inclusion and fair outcomes.
Apprenticeships work well in many employers, but not in the majority, so a more thought-through approach would support adults where an apprenticeship is not going to happen, to get the skills they need in a rapidly-changing labour market.
The devolution of increased funding for adult skills would help to support investment in colleges – their workforces, buildings, equipment, course development, outreach, advice to SMEs, innovation – to meet the demands from the labour market.
MCAs would be able to invest what is needed to increase learner numbers in economically valuable courses, but to do so inclusively with fair access at the heart of the plans through providing funds for bursaries and grants in priority areas. This funding could also be leveraged by increasing MCA access to bonds and loans to fund and steer capital investment.
A truly tertiary system for England might seem like a pipe-dream, and it would not simply solve all of the shortcomings – but it would help focus in on the need for a response to a changing world in which lifelong learning will become more and more important for every citizen.