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White Paper on universities – Success as a knowledge economy

White Paper Success as a knowledge economy cover

The UK Government’s Green Paper on universities has now, following the consultation, become the White Paper on universities – Success as a knowledge economy. The Queen’s Speech on 18 May 2016 (the statement of intended legislation for the year) announced that a Higher Education and Research Bill, based on the White Paper on universities, would be presented to Parliament for approval. The purpose of the Bill is to deliver greater competition and choice by making it easier and quicker for new, high quality universities to set up, while ensuring that students receive value for money, and that the UK’s higher education system is giving employers the skills they need.

The main benefits are that there will be more choice for students by levelling the playing field for new, high quality providers. The Bill will make it simpler, quicker and easier for new innovative and specialist institutions to set up, award degrees and compete alongside existing institutions. A new Teaching Excellence Framework (TEF) will raise teaching standards so students and employers get the skills they need and will, for the first time, ensure that funding of teaching in higher education is linked to quality, not simply quantity – a principle that has long been established for research.

The key proposals of the White Paper on universities are:

Creating a competitive market

Competition gives consumers a greater choice of more innovative, better quality products, at a lower cost and incentivises providers to satisfy customers. However, new and innovative providers currently face difficulties in entering the market. In order to enable greater competition the regulatory landscape will be simplified with a single route to entry and a risk-based approach to regulation. Unnecessary barriers will be reduced, but quality will be maintained.

The Government will introduce a range of reforms to the way in which providers can award their own degrees (degree awarding powers, DAPs) or call themselves a university. The current system, designed around traditional large established multi-faculty providers, is both outdated and insufficiently flexible, so a suite of options will be created for organisations wishing to award their own degrees.

However, as part of a healthy, competitive, well-functioning market the Government will now accept that institutions will fail. It will though ensure that students are protected. Therefore providers will have to publish plans to protect their students in the event of exit or course closure.

New providers will be able to apply for degree awarding powers from day one of their operation under a three year probationary arrangement while subject to ongoing monitoring and annual reviews. After three years providers would be able to apply for full degree awarding powers. Three years after that the provider can apply to be called a university. Thus the total process will in future take six years instead of eight.

Choice for students

The Government recognises that students must be able to make informed choices for competition in the higher education sector to deliver the best possible outcomes. Research suggests that the most important outcome of higher education is finding employment. As opposed to the current survey based data, in future higher education and tax data will be linked to provide students with the information about the rewards that could be available at the end of their learning alongside the costs.

Information, particularly on price and quality, is critical if the market is to perform properly, but there is currently little pressure on providers to differentiate themselves this way. The lack of information is especially lacking in respect of teaching quality and that should be one of the most important factors.

Teaching quality will therefore be measured through the Teaching Excellence Framework (TEF), similar to the established Research Excellence Framework (REF), to provide clear understandable information to students about where the best provision can be found and to drive up the standard of teaching in all universities. The TEF will be trialled in 2017/8 and will be subject to a separate technical consultation.

Updating the regulatory architecture

There are currently ten arms’-length Government bodies operating in the higher education and research space. This will be reduced to two. There will be a single market regulator, the Office for Students (OfS) and a single research and innovation funding body, UK Research and Innovation (UKRI). The Office for Students will be formed from merging the Office for Fair Access (OFFA) with the learning and teaching functions of the Higher Education Funding Council for England. The OfS will be explicitly pro-competition and pro-student choice. It will have an extended remit to regulate all registered higher education providers and will operate as a Non-Departmental Public Body at arms’ length from Government. It will also be responsible for distributing teaching grant funding to eligible institutions.

A call for evidence will ask for ways to enable students to switch courses more easily.

Our comments

The introduction of competition should produce more of a real market in education with an associated increase in choice, price and quality. The changes will make it easier for non-UK universities and large businesses to obtain UK degree awarding powers, which will increase the number of providers and thus help increase competition. However, it is very important that quality is maintained, otherwise there could be a race to the bottom (for example through grade inflation), with an associated damage to the reputation of British education. Is it a true market if Government maintains minimum standards? Probably yes, as Government intervenes to ensure, for example, minimum safety standards in aviation, and so it is a sensible and appropriate intervention.

Universities which score well in the TEF will be able to increase their charges (for UK/EU students) in line with inflation, so the Government is presumably hoping that an increase in competition, primarily through the impact of more providers, will result in a wider range of fees than in the current environment. Will this lead a range of fees being charged? No university so far has taken the opportunity to charge significantly less than the others for directly comparable courses in the UK. There could therefore be an opportunity for a low cost university, perhaps just teaching online, to transform the market in the same way the low cost airlines have changed the travel market. On the other hand if fees are not capped, then charges would undoubtedly increase significantly which would deter many from going to university and mean high debts for those who do, as is the case in America. But if fees are not significantly different between universities will it be a true market?

Of course the fees for international (i.e. non-UK/EU) students are not affected by the fee cap and have long been based on a relatively competitive market environment. International fees already vary depending on factors such as the reputation of the university and its interest in recruiting international students. Indeed international recruitment is heavily influenced by the university’s position in the various ranking tables available, and it is not clear whether the proposed changes will have any impact on these rankings as they generally use other criteria to judge universities.

Will there be cherry picking and a decline in less popular courses? If there is then is that a problem? There could be intense competition for popular subjects such as professional studies and business management degrees, but little interest in degrees in Latin. Does that matter? What is the role of a university? Is it just to produce qualified people for employers?

Does it matter if an established university fails? The students who are directly affected will be protected under the plans, but regional universities can be very important to their local economies. They have tens of thousands of employees and students who need accommodation, food, transport, entertainment and other items all of which generate significant business for a town or city. The shift to funding through student tuition fees and the lifting of student quota controls has already caused difficulties for many universities that are struggling to recruit enough students and cover their costs. The loss of a university in an already socially deprived area would probably not be replaced by another provider, in the same way that the loss of traditional heavy industries such as coal, steel, ship building etc. are not replaced, and so would have a devastating impact.

How good will the TEF be? How much do league tables in practice actually distort activities with the need to tick boxes and score well rather than provide what would otherwise be the right service? The TEF risks homogenising and oversimplifying the diversity and complexities of higher education. Higher education varies massively between subjects ranging from intense laboratory based science subjects to one-to-one tutoring for musicians. Will standard metrics be able to cope with qualitative as well as quantitative measures?

Almost every university highlights the importance of its research activities. Research income is only a small percentage of a university’s income, but research is perceived to affect its reputation, and thereby staff and student recruitment. How much does research actually benefit teaching in a university bearing in mind that not all researchers teach? In practice though research has become increasingly concentrated among a small number of Russell Group universities. Will the plans therefore lead to teaching-only universities (and research-only institutions)?

The reforms do try to create a competitive market in education and will benefit students. It will not be a fully competitive market for the reasons mentioned, but the limitations are reasonable because of the nature of the market for education. The Higher Education and Research Bill has to be approved by Parliament before it becomes law, and there could of course still be changes during that process. However, in practice students, parents and employers will probably continue to value the historic prestige of a university’s name rather than the teaching it delivers for a long while yet.

Ian Fraser

Principal and Director


Click here to read the White Paper