In 2020 universities will reach the nadir of the demographic valley of death they have been toiling through for the past five years, as the number of 18 year-olds in the population begins to climb steadily again. The result, according to Mark Corver of DataHE, will be a reverse recruitment crisis requiring the equivalent of 30 new universities to cope with the increased demand for higher education.
The painful, capacity-stretching result of this demographic bulge can currently be seen in the schools system, soon to work its way through to higher education. When education secretary Damian Hinds claims that government spending on schools is the highest on record, he means that the government is spending a smaller unit of resource on a larger cohort of students. As a result, media stories abound of schools closing early, enrichment provision vanishing, and head teachers cleaning toilets to save money.
Where will we put them?
Conservative education policy has largely abandoned the notion of a centrally-planned system in favour of a free market. Part of the assumption was that new higher education providers would enter the system to provide competition to established universities and meet increasing demand. But it is doubtful that new providers entering the market could expand to the scale required with sufficient rapidity, and the tendency of new providers to cluster geographically in London and the South East, and in the creative arts and business studies disciplines, suggests that the market will not meet demand on its own.
Established providers will no doubt welcome the opportunity to increase numbers, but as David Kernohan and Jim Dickinson argued on Wonkhe recently, rapid growth in the student population has knock-on consequences for towns and cities, including driving accommodation standards down and costs up. The new regulatory system in England takes the individual university as the “unit of agency”, and some far-sighted vice chancellors may be putting the necessary capital investment in place to plan for a demographic boom, but the variable assessment of risk for private finance will make that process much easier for some universities than for others, and not necessarily for those that are best equipped to meet increased demand.
Where will the money come from?
The Augar review panel may well have considered these issues, and may have concluded that the coming demographic spike only adds to the need to drive down the unit of resource. A massive numerical increase in higher education participation means a much greater student loan liability for government. The era of the gold standard in UK higher education may be coming to an end, as universities follow the school system in cutting the curriculum to the bone. The alternative is to channel a subset of students into cheaper forms of provision and retain the gold standard for an elite.
Scotland and Wales have fundamentally the same problem. While the English system could count loans as an asset on the government books whether they were expected to be repaid or not England could technically tolerate unlimited expansion of student numbers. Now that unpaid student loans are to be counted as a liability on the public accounts the issue across the UK is one of controlling public subsidy to higher education in an era of increasing demand.
One alternative to cutting the unit of resource would be for the government to charge students fees at a rate that takes account of the cost of delivery of a higher education experience that is genuinely transformative, and adjust repayment rates to enable the bulk of the costs to be recouped over the course of a graduate’s lifetime. Public subsidy could be targeted towards capital investment to accommodate rising demand, to build new higher education provision in cold spots and to support the scaling of competitive new forms of provision. Government could even offer loans to universities to support capital investment, which would have the benefit of being cheaper than universities raising private finance to fund capital investment and funding their debt from publicly-subsidised student fees. It’s politically unpalatable for all sorts of reasons, but it could safeguard the system for the future.
The other possible alternatives are to restrict access to higher education or, indeed, to swallow the cost of continuing to subsidise the system in its current form, perhaps with additional carrots or sticks in place to achieve marginal efficiencies. The politics of telling a cohort of qualified, ambitious young people that no, they can’t go to university like their mum or dad did, because their government isn’t prepared to invest in their future, could get tricky very quickly, no matter what kind of funding system is in place. But the Treasury is unlikely to endorse a plan that sees student funding eating up an increasing chunk of the public accounts.
The growth in demand for higher education ought to be a good news story for the country. Yet the politics of higher education funding means that wherever we end up, some people are going to be very unhappy. That is how representative democracy is meant to work – we elect politicians to make the tricky decisions (or they farm it out to an independent review panel). The market is effective at creating winners and losers in a time of stable or gently growing demand. But if politicians leave it to the market to deal with the demographic boom, young people will be the losers.