Monday, 25 October 2010
The most important service the economic historian can offer is to place contemporary policy into context. In this sense analysing the CSR is easy: it represents an unprecedented slowdown in public spending. Such reductions have never before been attempted in modern British history – nor anywhere within the OECD. They are so great that, on certain assumptions about inflation, the real stock of public spending will drop for the first time in many decades. Previous crises in 1922 (the ‘Geddes Axe’), 1931 (the Report of the May Committee), 1947 (sterling convertibility), 1967-68 (devaluation), 1976 (IMF crisis) and 1992-93 (ERM debacle) did lead to cuts to planned rises in public spending. But none of these were on anything like the scale of what the UK economy is now being asked to bear. Other previous examples of deficit reduction – notably Canada and Sweden in the early 1990s – have been slower, and raised more taxes as part of the policy mix. In short, attempting to move into balance within four years, and doing so mainly through actual cuts, is a move into totally uncharted waters. We are left with modelling and inference when we come to measure the macroeconomic impact, and the effect on services. Economic history is little guide when governments break so rapidly with the past. We may expect growth to slow, though probably not stop; a series of painful cuts that do not always appear internally consistent (for instance over Britain’s aircraft carriers) and a rise in inequality – troubling outcomes indeed.
Browne’s recommendations: rationality within constraints
There is actually much to applaud in the Browne approach. There will be no up-front payment. More fees will indeed bring in desperately-needed resources. The money will come in rapidly – unlike new cash from a graduate tax. Browne’s recommendations maintain the link between universities and their income, without allowing the Treasury to see and seize the money at any point. The money will act as an incentive for academics to teach, rather than just research. The Independent Review cannot either be accused of being regressive in terms of income, for it raises the earnings floor at which graduates start to pay (£21,000), and provides for more grants and loans for poorer students. Part-time students will also now become eligible for support – the lack of which was a major scandal within, and a highly regressive feature of, the old system. Within the brief he was given – to contribute to deficit reduction and to withdraw much state funding from HE, as well as to reform student finance – Browne has done a creditworthy job.
The central paradox
But it is exactly within this wider remit, in the central unresolved paradox of yet again promising more with less, that the Browne Report’s recommendations look likely to break down. Browne argues it is ‘not sustainable’ that private funding has so far only plugged the gaps of lagging public investment. His work actually makes a convincing and powerful economic case – in terms of jobs, exports and growth – for large increases in HE spending. But Browne then goes on to accept the provision of very little extra funding, for the Report more-or-less explicitly takes the withdrawal of most state teaching support as its starting point. This seems to make little sense, an asymmetry explored in greater depth below.
The Report’s recommendations are also an unprecedented break with the past, to some extent stifling historians’ and social scientists’ responses. For there is no analogy to draw on: nothing like this transition has ever been attempted in an OECD country. Despite long-standing promises and warnings that recommendations very similar to these would emerge from the Independent Review, academics and administrators perhaps did not quite believe that shock therapy really would be recommended. Their astonishment is thus all the greater – one reason why debate so far has shed more heat than light on the subject. Commentators have also focused on the short-term impact, since the scale of these changes is so great. But such passing issues as the Liberal Democrats’ political fate, the United Kingdom’s immediate budget deficit and Labour’s proposed (but extremely ill-defined) graduate tax are likely to seem ephemeral in fifty years’ time. The fate of the UK’s Higher Education sector will not.
Scholars of public policy should, therefore, at least make a start on the work of analysis. What strikes the observer immediately is the lack of intellectual clarity of both the Browne Report and the government response. The outstanding issues can, very briefly, be grouped into three separate areas: consumer issues, surrounding the relationship between the student and the university; management issues, covering the ways in which HE institutions conduct their business; and the wider issue of universities’ relationship with the economy and with society as a whole. The following bullet points suggest a string of questions – and there do seem presently to be more uncertainties than answers surrounding the reform process. This state of flux should be settled much sooner than later if Britain’s (and particularly England’s) universities are to prosper in any new system.
Consumer issues, or, why students will revolt
- Paying more for less. As indicated above, the main problem when it comes to actually implementing Browne will come about because of the withdrawal of most government funding for tuition. Most of the extra money will simply be swallowed up by this funding ‘black hole’ – a fact explicitly accepted by the Report, which recommended a £6,000 soft cap for fees to drive ill-defined (and unlikely) ‘efficiency savings’. Students are not going to see any return for their extra outlays, even if they pay £12,000 per annum. 27 per cent of that charge will pass directly to the government, leaving only a small increase in funding over the total unit of resource even at ‘elite’ institutions. In fact, just the reverse – buildings are going to deteriorate, they are going to see their tutors less, IT investment will slow, and research laboratories will be slimmed down. They are unlikely to take all this in good humour.
- Intergenerational transfer. Post-Second World War Britain has already witnessed one of the greatest shifts in wealth from one generation to another in modern history – fact recently chronicled, though inevitably rather schematically, in a book written by the Higher Education Minister himself. Rapidly rising house prices, Mortgage Income Tax Relief, subsidised pensions, universal benefits and unsecured personal borrowing in a sustained inflation all served to move UK wealth strongly against the young, and towards those now in their 50s and 60s. Much higher fees will further tilt the balance against young people in Britain.
- The time-frame and family savings. The announcement of a quadrupling of fees over a two-year period is something of what economists call an ‘exogenous shock’. Families and individuals have had little to no time for adjustment – unlike the situation that pertains in the United States (more of this later), where households have eighteen years or more to bring their savings in line with their ‘market-oriented’ demands on HE. They have not been able to save to absorb some of the fees’ impact – for if they had capital to fall back on, they would be able to subsidise their loans by paying them back rapidly and avoiding a proportion of their interest payments.
- Opaque universities and the problem of teaching quality. The Browne Review posits large increases in quality driven, not by extra resources, but by more student choice. The argument goes that more choice will drive up quality, as ‘good’ departments can grow (there will now be no government cap on numbers) and ‘bad’ departments will shrink. But some universities have become masters of obfuscation: the Research Assessment Exercise, constant grant bidding and an infusion of distantly-administered EU money have taught them that game-playing, assertion, clever document-writing and paper policies will all serve to buy off government attention. Novel inquisitions run by the new Higher Education Council seem unlikely to do any better at seeing ‘inside’ universities: published teaching metrics will be no more meaningful than the absurd research ‘ratings’ of recent years. Few students fill in published surveys; organised campaigns ‘for’ and ‘against’ individual courses, propelled by university managers and students alike, will probably become important here.
- What are students buying? Following on from the last point, many ‘elite’ universities contain weaker departments – subject fields that, due to a focus on research, complacency or poor management, provide frankly inadequate teaching. Here students may pay £12,000 a year to see a PhD student for two hours a week over twenty weeks a year: at £300 an hour, not much of a bargain. But as economists have long known, undergraduates are not really buying tuition: they are purchasing a mark of quality, the imprint provided by the ‘quality’ exam filter they have passed through to enter a famous institution. Even poor teaching with a veneer of quality will attract enormous funds in a low effort bargain established between students, family and faculty: the weeds will be watered.
Management issues, or, why the transition will be tough
- Uncertain revenue streams. Universities have become used to a steady income – one of the reasons they have been willing to accept trifling sums hat have at least been reliable. University life will now speed up, extremely quickly, for a drop in course numbers may lead very quickly to the closure of whole departments, faculties and schools. Outside the Russell Group, it will become very unusual for a university to teach ‘across the board’, as institutions increasingly focus on their ‘known’ strengths. This process will have to be very carefully managed if universities are not to become over-specialised and thus subject to higher risks of failure.
- University management. This need for renewed acuity and judgement seems unlikely to be met. Although most academics can tell horror stories about overbearing management, one of British HE’s critical weaknesses might be exposed by a market: its lack of a skilled and experienced corps of managers. Academics promoted into these roles are often temperamentally and intellectually unsuited to management. Their low-paid and poorly-motivated technical staff are likely to find it very difficult to react to the speed of change – especially if resource constraints mean there are fewer of them.
- Reversing the research juggernaut. Governments have for many years insisted on the creation and maintenance of invasive research assessments and audits. This has increased the pressure to publish, and relatively reduced the esteem granted to teaching. An entire generation of lecturers has come to academic maturity obsessed, not with the classroom, but with which journals they and their peers can write for. This is a bias now encoded into the very DNA of UK academia, and its pernicious effects will be very difficult to shift. Students will demand change for very many years before a new generation of HE professionals emerges to really place undergraduates’ needs centre stage. Enormous frustration will be experienced in the meantime.
- The ‘gap’: four years of pain? If higher fees are charged from the start of the academic year 2012/13, the full yearly repayments of three cohorts will only flow into university coffers from the autumn of 2015 (and potential revenues from four-year courses a year later). So three to four years of enormous pain might be experienced as government funding for teaching falls, but is not entirely made up through fees. The government’s intentions in the respect are not yet clear, but it is clear that a ‘gap’ will open up that will have to be filled in some manner if quality is to be maintained.
- Dealing with failure: how will HEC react? Some – perhaps even a score or more – of universities are going to fail and close. That bald fact means that there must be contingency plans for what happens to the displaced students and courses who must be protected from having their (now expensive) degrees pulled out from under them. This should be a top priority for the new Higher Education Council (HEC). Machinery will have to be established allowing for gradual run-downs and closures, perhaps student relocation to other institutions, and even for universities to take over so-called ‘failing’ neighbours.
Universities and the wider world, or, why do other countries spend more?
- Do Britain’s universities really compete on a ‘global playing field’? One superficially persuasive argument often voiced by Russell Group Vice-Chancellors is that they ‘have to compete with Harvard’. The evidence is not persuasive in this regard – at least in respect of any competitive market for undergraduate tuition. In fact, very few undergraduates cross the Atlantic in either direction. British teaching is much better value for money – but history, tradition and distance militate against an international market for 20-year-olds. UK research, garnering Nobel Prizes and journal citations, also does not depend just on money: here Britain performs far out of proportion to her spending in both the private and public sectors. More thought might have been given to the unique mix of language, history, public service, cost efficiencies and collectivist ethos that has created this situation. Many of these soft and vulnerable links may in fact be disrupted in the new market. The international playing field may indeed have to be ‘level’ – but not monotonously one-dimensional.
- The economic contribution of non-STEM subjects. Here, at least, the author should declare an interest. As a historian at a new university, the present writer may well suffer adverse effects from the Browne Report’s emphasis on Russell Group teaching and STEM subjects. That said, there is a wealth of independent evidence of non-STEM subjects’ contribution to the British economy. ‘Sunrise’ or older innovative industries such as animation, cinema, computer games, theatre, travel and tourism – all areas of relative British strength and success – demand arts graduates. Lord Browne did not even bother to refer to this while recommending a focus on STEM subjects. This was, quite simply, a crude and tawdry act of economic vandalism.
- Islands of quality. The 2007 Research Assessment Exercise results made very clear that there are more ‘islands of quality’ among the new universities than previously thought. Specialist Masters degrees, small but innovative cross-disciplinary groups and research teams associated with industry – all, one would have thought, useful to Browne’s economistic goals – have thrived at institutions of varied overall provenance and reputation. Now their work will be put at risk. Though continued government spending and fee caps would not have guaranteed their continued existence, such controls did spread the risk and allow HE leaders to take intellectually profitable chances with research. It is to be hoped that this is not critically endangered.
- Access policy. Many of the institutions that will now be put at risk of closure were those with very successful widening participation initiatives and histories.
has a very high proportion of black and Asian students – at least relative to minorities’ representation in the rest of HE. These universities often involve local, part-time and non-traditional students using innovative teaching methods and resources. This admirable entrepreneurship, just as welcome as the new universities’ research strengths even within the Browne way of seeing the world, will also be put at risk. London Metropolitan University
- Regional policy. The Government’s abolition of Regional Development Agencies, its abrogation of centralised housing targets and lower welfare payments will strike very hard in Britain’s poorer regions. In this sense universities will become an even more important element of regional policy by proxy, since study after study has shown that their ‘clustering’ effect draws in investment and know-how more than other state spending. But some of England’s most vulnerable institutions are sited in exactly these regions. What will happen to the rural North-West, for instance, if the University of Cumbria is forced to close its doors?