How to shrink the sector

A Policy Exchange proposal to bring back number controls has a curiously old fashioned feel. David Kernohan assesses the damage

David Kernohan is Deputy Editor of Wonkhe

The King’s Speech, scheduled for 7 November, marks the start of the final session of this parliament.

It’s the last chance for Rishi Sunak’s government to announce a full programme of legislation before the general election, expected in either May or October of 2024.

Coupled with the Autumn Statement (due 22 November), the focus is very unlikely to be the “long-term decisions for a brighter future” – expect a retail offer of very visible and ostensibly popular bills, backed by giveaways and short-term financial thinking.

What Policy Exchange proposes

The start of a parliamentary session also offers think-tanks and commentators the chance to submit their wishlists – Policy Exchange has been early off the mark with an optimistic collection of 13 bill proposals drafted by former Department for Education special advisor Iain Mansfield.

His proposed Higher Education and Skills Bill is ostensibly a rebalancing between higher and further education funding. What the proposal actually covers is the reimposition of student number controls, with the savings reinvested in incentives for employers to invest in skills.

Under Mansfield’s plans, the Secretary of State would annually (in the spring before each application cycle) set the total number of undergraduate university places the government would fund (which could not be lower than 95 per cent of the places funded in the previous year, and would be approved via a negative statutory instrument). The Office for Students would then set numbers caps on all registered higher education providers, with the total number of places available adding up to the government requested total.

It’s suggested that OfS could have regard to the following in setting these provider number caps:

  • What the provider would like
  • Sector stability
  • Student outcomes by provider, B3 style
  • National skills shortages (as set out by the Migration Advisory Committee)
  • The availability of student accommodation
  • Any regulatory conditions the provider is subject to
  • Guidance from the secretary of state
  • Institutional autonomy

But OfS would be specifically forbidden from having regard to

  • The content of courses at the provider
  • How academic staff are selected, appointed, or dismissed
  • How students are admitted

It would also not be able to set a provider limit lower than 95 per cent of the previous year, unless the provider asks for that. For providers that exceed the limit there would be a hefty fine (twice the the fee income for the excess students), but OfS could waive this if it is within two per cent of the cap if it thinks that the infringement was “neither negligent or intentional”, but only once during a three year period. There would be a fairly constrained right of appeal, and the Open University would be exempt from all limits on funded places.

It’s anticipated that the Secretary of State would use this mechanism to reduce student numbers – the savings would be used offer all UK business a corporation tax relief equal to 10 per cent of what they spend on skills (here drawn as apprenticeship wages, any course at a registered (HE, FE, independent) provider, T level placements, Skills Bootcamps, and the costs of external trainers. This wouldn’t apply for statutory training – so no health and safety training would be covered.

Good in parts

Just about everyone with an analysis of the problems facing higher education has contemplated the return of some form of student number controls in recent years. At this point it makes more sense to look at the nuances of each version rather than talk about the issue in general terms (something that there has been no shortage of on the pages of Wonkhe).

The Mansfield variant presupposes a mechanism to shrink spending on the sector (though the mechanism would also allow for controlled growth should a future government want to fund that). It presupposes a static unit of resource which would not be affected by inflation – indeed under these plans inflationary increases in fees or maintenance loans would be constrained by the need to specify a cap similar to the previous year’s intake.

The OfS would get a raft of new powers to determine how the overall reduction would be felt in the sector – the outline from Policy Exchange doesn’t suggest any means of prioritising these. Surprisingly, though national skills needs would be a factor it appears local skills needs would not, and the OfS would not be allowed to make determinations based on the subject area of provision anyway. If Policy Exchange was serious about using controls for higher-level skills planning, there would be a huge subject component here.

The inclusion of “provider wishes” in the list of things OfS could consider suggests some kind of a student numbers bidding process – a reverse additional student numbers bidding round, for older readers – that would see providers arguing to keep recruiting at current levels, rather than asking for expansion.

What other policies?

I really liked the availability of accommodation as a potential criteria (given the multiple stories of students forced to live many hours from “their” campus), though it’s fair to say that this presupposes a very traditional model of attendance. Any government that was thinking about local high-level skills needs would want to consider supporting growth in local or commuter students.

Which takes me to the absence of the lifelong learning entitlement as a consideration. LLE students would be accessing fee and maintenance loans at the same level (pro-rata), yet this sketch of a bill does nothing to limit anything other than traditional undergraduate recruitment. What would stop a provider that had been ordered to cut recruitment simply recruiting the same students, for the same amount of income, via the LLE?

There’s nothing specifically here about international recruitment either. The focus on fee loans does suggest the caps would only apply to home students, but we have seen that universities are very happy to recruit internationally. It would feel odd to have a world class higher education system that we are literally banning home students from attending – and doing nothing to address the underlying issue of funding – meaning that the whole thing is basically an incentive to recruit from overseas.

We have to judge this bill as a way to shrink the sector – the link to employer-funded skill provision is facile (why not expand the apprenticeship levy as a skills levy, given that it already exists?) and unlikely to do anything to materially address the issue that (uniquely in Europe) most employers have very little interest in offering training. The shrinkage, realistically, would need to be fairly evenly distributed across all providers (given the 95 per cent provider cap) and thus unlikely to be strategic in nature.

But in shrinking the sector based on institutions (rather than subjects) and national rather than local skills needs betrays a very old-fashioned perspective on what universities do and why. And even if this is an attempt to shift away from expensive three year undergraduate degree provision, it’s a difficult message to sell on the doorstep that your children will be less likely to attend university because the government don’t think they are worth it.

6 responses to “How to shrink the sector

  1. My first thought on seeing this was flippant. Iain has done us a favour by thinking hard about a student number cap (SNC) and showing us how unworkable it would be.

    I stick with that in the cold light of day. In order to come up with a SNC you have to give OFS a bunch of powers not seen since the UGC/NAB days. HEFCE’s MASN and ASN system allowed discretion on the additions to the SNC, allowing yearly judgements based on what it, of DfE (or which ever department it was at the time) wanted to fund. It’s not clear how the Secretary of State would use their s2 and s77 HERA powers to direct OfS, but they are quite tightly bound.

    Let’s just take the sufficiency of student accommodation. How does OfS judge that? Does it look at a local planning district and decide there’s not enough student accommodation and order a 5% cut in student numbers at this or that provider? Take the city of Bristol. It would be a candidate for a city with insufficient student accommodation, but does OfS apply that SNC equally to Bristol and UWE (whose main site is outside the city boundary)? What does it do about Bristol Baptist College, City of Bristol College or Trinity College Bristol (all OfS providers). What does it do about BIMM, BPP, Falmouth and ULaw who all have registered students in the city?

    How would OfS plan? How would it create headroom for Cumbria to grow a 1400 student campus in Barrow in Furness? If NMITE is capped at its current student intake it can’t be sustainable. These are all judgements that OfS would have to make.

    The bit that really shows this to be unworkable? Iain suggests that DfE would announce the total fundable student numbers not least than three months before the admissions cycle starts. Even if the SNC process was iterative year on year, there’s the prospect of OfS running a SNC process on a series of judgements in three months…

    1. I am always slightly amused when people say that something we did just ten years ago is impossible. Number controls may be right or may be wrong, but they are definitely workable or we wouldn’t have had them for c. 30 years.

      On two points of detail:
      – You (and many others) have misread ‘may’ as ‘must’. The OfS would not have to take into account any of those factors; it certainly wouldn’t be expected to run some kind of detailed mapping of accommodation nationally. But it could (particularly in a growth scenario).
      – You are right that the total number should be given more than three months in advance. I suggest modelling after what happened under the HEFCE regime, as that clearly worked satisfactorily for decades.

      1. There were no single cap set by ministers under the HEFCE methodology. A budget was set each year, and HEFCE had to choose whether to reinforce the unit of resource (the price per student, as it were) or offer additional student numbers (ASNs) with supporting strategic development funds.

  2. As usual the unnamed spectre at this feast is institutional autonomy over entry requirements in a competitive market. What we will see over time is a general rise of entry requirements for undergraduate provision which will ipso facto reduce the number of low-income and other underrepresented groups of students in the system. Hark the day when a Minister can stand up in the Commons and say ‘Rejoice! our reforms have successfully made higher education more white and more affluent. Blessed day’

    1. The percentage of white young adults who go to university is much smaller than that of other ethnicities, so make higher education more white would indeed by a reason to rejoice if one cares about equality.

  3. Another thought.

    The plan is that DfE sets a reduction target, which cannot be more that 5% of last year’s total funded UG students (there were 1.4 million ‘all UG’ UK* students at English providers in 21/22). Then OfS can’t reduce any individual provider by more than 5%. DfE can’t realistically set the reduction at 5% otherwise OfS would just have to take 5% off everyone.

    Iain’s drafted this as the total student population, so there would be a disproportional hit on intake. Let’s imagine OfS decides that Bristol has to take a full 5% cut in funded UG numbers – wouldn’t that have to be a 15% drop in intake? (Bristol would need to reduce by 920 students on an intake of 6000). That’s £8.5 million in fee income (in one year).

    Back in the days of teaching funding for students, there were years when funding went down, but it did so by formula. This reduction would be because OfS had made a number of judgements. That would be contentious.

    *Policy Exchange says this is England only. Do they mean it applies to English providers or English students at English providers?

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