In December 2013 in his Annual Autumn Statement the UK Chancellor George Osbourne announced the end of the Student Number Control (SNC) regime for English higher education institutions, thereby removing the cap on places that had been in place since 2009.
Instead we are to have a demand-led system, to be kick-started with 30,000 additional places in 2014/15, and which is ultimately expected to see around 60,000 additional student places per year, many at new entrant providers and further education colleges.
This announcement marked the end of an experiment in market making based on quality, information and price. The context for the number control regime was outlined in the White Paper as the introduction of variable tuition fees up to a new maximum of £9,000 per year.
The idea was to use quality and consumer choice to open up a tuition fee differential between those institutions that most satisfy the wants of students and those that least satisfy them. Combined with a liberation of student numbers (hitherto distributed on the basis of ‘block grant’ in the form of capped quotas from the Higher Education Funding Council for England (HEFCE)) this fee market would reward excellence.
The main mechanism was the removal (exemption) of High Grades (AAB and above A Level and equivalent BTEC qualifications, later extended to ABB and above) from number allocations; institutions could recruit as many of those with High Grades as they wished within their institutional cap. The idea was that the ‘most popular’ institutions would expand by enrolling student with higher grades that were previously enrolling at less prestigious institutions.
Applicants were expected to take account of Key information Sets and thus make ‘informed choice’. The less prestigious institutions would then react to losing high grade students to more prestigious competitors by lowering their average tuition fees to attract sufficient alternate students. It is worth recalling that this market mechanism was introduced precisely because tuition fees set by institutions in the first year of the new regime (an average of £8.2k) were well above the level modelled by government in order to make the system financially sustainable (£7.5k).
The Higher Education Academy commissioned myself and Carol Taylor at Sheffield Hallam University to carry out a piece of national research: Evaluating the impact of Student Number Controls, choice and competition consisting of a national survey of institutional policymakers at Pro Vice Chancellor and Dean level, and a series of follow-up interviews of a representative sample of them. As it happened, we were carrying out interviews only weeks before the announcement. Certainly none of the interviewees expected or predicted the Treasury announcement or a free market in student places; they mostly spoke about the problems and distortions created by the High Grades policy and other aspects of marketisation, and in the process provided us with some useful perspectives on why the policy was withdrawn.
The (mis)application of market levers
So the key question becomes: was the High Grades element of the Student Number Control regime always destined to fail to create a price differential between institutions? Or was it only designed to last for two academic years as a prelude to an opening up of the market to full competition? The latter is unlikely as the then Minister for Universities & Science, David Willets MP, asked HEFCE ‘to consider the best way to deliver further flexibility for 2014/15 – in line with our white paper commitment that ‘the share of places liberated from number controls altogether rises year on year’ – only months before the Treasury statement.
Why, then, did the Government lose patience with their experiment? Part of the answer was simply that demand for higher education places still exceeded supply (given the cap on numbers), with acceptances up to a record level for 2014/15 according to UCAS figures, and average fee levels for 2014/15 (£8,600) were also closer than ever to the maximum and further from the modelled average.
Even at the higher achieving end, demand remained high in those post-1992 institutions because many of the equivalent-to-ABB qualifications are BTECs that are often not been considered for access to more prestigious institutions (the Russell Group and other pre-1992 institutions). However, they are accepted by post-1992 institutions, which consequently attracted healthy proportions of exempt students in addition to their SNC and were thus largely unaffected.
Overall in the first two years of the new financial regime and the operation of the High Grades mechanism, our research found that there had been little redistribution in student numbers from one part of the sector to another, and what little High Grades redistribution there was mainly took place between pre-1992 institutions. That wasn’t actually surprising: HEFCE’s own analysis on the distribution of AAB+ students by mission group prior to the 2012/13 reforms found that most applicants with AAB+ grades already attended these institutions, and that a redistribution of higher grade places beyond the selective pre-1992s institutions was unlikely.
Of 22 HEIs that enrolled over 50% of student AAB+ profiles in 2011, 17 were members of the Russell Group or 1994 Group and the other five were specialist colleges of higher education covering the arts, dance and music.
Unintended Consequences for subject breadth
However, while our respondents reported little actual redistribution of numbers, there were profound changes below the surface, especially in the second year of the regime when the exempted grades were expanded to ABB and above. This reduced the size of the core student number allocation to around only 20% of places for some of the more prestigious Russell Group members. They found that expanding those subject areas that require ABB and above (STEM and Subjects to Medicine mainly) meant that they had fewer places within the overall institutional cap to offer on courses which don’t always require ABB+, even in Russell Group institutions. These include hugely popular degree programmes in the Social Sciences, Humanities, Arts and Modern Foreign Languages. Nor, they reported, could they maintain courses specifically designed for widening participation students (who usually have lower grades) or EU students (who by definition don’t have the required exempt qualifications).
Taken together, this threat to subject breadth and aspects of their mission such as fair access severely impinged on institutional autonomy; some mused openly that, while they weren’t yet considering closing departments, it may be necessary in the future, especially if the core was to be further squeezed. And this is at some of the most prestigious institutions, remember, where all aspiring ‘bright’ applicants are supposed to be choosing to go.
So how did this situation come to pass? Let us look at how institutions dealt with two key issues impacted by the control mechanism: widening participation; and subject breadth.
While it should be noted that there is no necessary correlation between candidates with sub-ABB profiles and widening participation students, they are statistically under-represented in selective pre-1992 institutions, which take on most students with the higher grades. However, there is in fact little correlation between the subjects that WP students apply to study and the subjects that are least likely to require high grades. Often our respondents noted that the distribution of ABBs was skewed heavily towards some disciplines (Sciences, Engineering, Subjects Allied to Medicine) that recruit quite strongly from those with WP backgrounds, while other disciplines popular with those from non-WP backgrounds are less likely to recruit those with ABB or above simply because these grades are not often required for entry.
The threat to autonomy
In order to protect WP and subject breadth, some pre-1992 institutions were obliged to shift responsibility for number allocations away from academic departments, in effect centralising the admissions function. This meant departments no longer had the freedom to adjust their own minimum admissions criteria to fill places. So if a department ran a course demanding ABB and received 100 UCAS applications from young people anticipating those grades, but in the event only 90 of those young people actually achieved ABB and the rest ABC, the department no longer had the discretion to take on the other 10 as in the past. The institution found it needed those sub-ABB numbers to maintain the viability of other programmes.
The reality of dealing with the post-2012 SNC regime challenges the simplistic notion that equates prestigious institutions, the most selective provision and the most qualified applicants all meeting at the pinnacle of the market driven by student choice.
Tapering down from this £9k pinnacle a differentiation of tuition fees would emerge, driven by the informed choice of applicants without high grades obliging other institutions to lower their average tuition fees. The missing element in this supposition is that many of the most prestigious institutions see it as part of their mission to offer programmes of study in subjects that, in fact, do not require ABB+, yet which are in high demand from applicants whose choice is supposedly sovereign.
The Plan is dead: long live The Plan
With the structural problem of the supply-demand imbalance, the decline in the number of 18 year olds and the decline in the number of young people taking A levels, the failure of the government’s High Grades market mechanism was always likely.
Add the shrinking core number control problem into the mix, which effectively precluded further ‘year on year’ flexibility, and you have a mechanism that completely failed on its own terms; no fee differential; no redistribution of high grade students; no downward pressure on less prestigious institutions. Time, therefore, for Plan B – the opening up of a demand-led system which may – or may not – bring down average tuition fees across the wider sector, but at least restores freedom of movement to institutions.