Time to rebalance funding, regulation and autonomy

Originally published on wonkhe

New research out this month demonstrates that when you shift the undergraduate student funding system to a voucher-based loan scheme where all provision is driven by applicant demand, students begin to behave more like consumers. And in further shocking revelations, when the number of graduate jobs dries up but the number of graduates increase, students and their institutions all start thinking about jobs more. Extraordinary!

Temple and Callender’s fascinating new research underlines just how important labour and labour markets have become to the sector. The slow prizing open of the HE data black box is making the usual bland claims about the graduate premium meaningless – as applicants, students and graduates all come to realise that what is taught, and where it’s taught, is just as important as the fact that it’s taught at all when it comes to getting a job. Meanwhile dinosaurs still stalk the campus, bemoaning even having to think about jobs after university (because, well, they didn’t have to), let alone talking to employers or spending fee income on work preparedness – all oblivious to the fact that every call for fresh HE investment over the past 20 years has been accompanied by the claim that it matters because the UK needs higher level skills.

That sense of UK economic need is sometimes dismissed, but the uncomfortable truth is that we can’t just spend billions on youngsters finding themselves, lest they and their country end up finding themselves in debt for a very expensive academic holiday. Taking HE as a whole, along with its large public subsidy, it’s not unreasonable for one of the key factors to be economic contribution – but as such it’s hard to believe that the invisible hand of Willetts’ market really is delivering what the country and graduates need. In fact it’s highly likely that there are too many young people studying liberal arts and too few studying the higher level vocational courses that serious economic analysis regularly suggests we need.

The problem for successive governments hasn’t been working this out – it’s been causing it to happen. The slow marketisation of the sector over successive governments has also meant the slow removal of any lever for ministers to influence what gets put on and where. New Labour had a few goes at incentivising alternative modes of study, and there are still a few capital levers around, but generally that voucher based loan scheme is bound to mean a drift towards selling shiny things with a good return that are cheap to produce, rather than what we need.

Employers don’t help. When the CBI repeatedly rehash their trope about needing graduates with key transferable skills, they forget that what they’re talking about are things that are neither key, transferable nor skills – they’re really just behaviours of middle class politeness that can no more be taught by academics than anyone else. The truth is that they don’t know what they need in the future either- and even if they did, they can’t lobby ministers to use non-existent levers to deliver it.

The other thing that Temple and Callender’s research points to is a fresh question about where the spoils of that voucher go once they hit the HEI. This matters to students – especially when home students discover that once centrally provided WP funding is now almost all provided by a topslice of their £9k, and when international students discover that at least £1.5k of their fees has gone on recruiting them. This mattered to Willetts too, but HEFCE’s languid response was to slowly suggest that autonomous HEIs take a glance at some vague guidance – a pdf that effectively requires them to produce a pie chart that can’t be compared with any other institution. Proof, if any was needed, that HEFCE is struggling to adapt to its role as robust regulator rather than cosy funder.

Ultimately, all of this points to the need to reduce the autonomy of higher education institutions and their vice chancellors. That’s what makes the prospect of a lower fee, allocated places and a higher centrally planned subsidy so alarming for vice chancellors – that in exchange for their incredible salaries and huge public subsidies, they might have to respond to the needs of the country as determined by those we elect to determine it.

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