University challenges

I really don’t understand the logic of the Government’s higher education policy. I have supported the need for increased fees, and recognise the good sense of having more bursaries at the same time. Having a higher repayment threshold for graduates also makes tactical sense coupled with higher interest rates on the loans. I can also the merit in encouraging access schemes from summer schools to places guaranteed to the ablest students in particular schools (though not some of the madder quotas suggested by Simon Hughes). However, it is the economics of the policy – and the approach of other government departments – that just doesn’t add up.

The first problem is that the Government has cut the teaching budget by far too much at the same time as allowing higher fees. Of course, universities might have been expected to bear a 15or 20% cut, but an 80% cut is absurd, and it makes it inevitable that most will seek to compensate by increasing fees as far as they have.

The second major problem is with overseas students. The clampdown  on bogus colleges may focus on the right targets, but there is a danger that differential practices in consulates overseas sees many overseas students taking their studies - and their money - to Australia, New Zealand, Canada, Europe or the new Asian universities instead. More importantly, as James Dyson has said this week, the decision to limit work opportunities for recent overseas graduates is wholly self-defeating. Once again, the ideological self-certainty of the coalition - this time on the Conservative side - has been allowed to triumph over a more nuanced position that was much more clearly in Britain's economic interests. This could cost us all £2 billion a year, with nothing to show in return.

And lastly, the government has let the universities off the hook on loans. It is the same with the decision to lift fees to a £9000 maximum but not properly to cost the likely effect of scrapping a large swathe of teaching grants: of course, most universities will try to charge the top rate. It is wholly bizarre that the Government didn't simply require them to develop their own loans schemes for fees above £6000. After all, that is what many vice-chancellors had been expecting.

The government is right to want to encourage colleges and other lower cost providers to enter the market - and bidding for funded places seems a reasonable mechanism, so long as a quality threshold is met - but it needs to think through rather more carefully how its higher education policies will interact with each other. If it doesn't, not only will it fail to improve social mobility, it will greatly
reduce the competitive capacity of English higher education.

So, as it rewrites its long-delayed Higher Education white paper, it needs a fundamental rethink of its model. Given that it is unlikely to restore teaching grants – and if it did so, it would probably raid FE budgets to pay for it – there are three things it could and should do.

On access, it should actively encourage merit-based access programmes, including those that offer places conditional on slightly lower grades to the ablest students in disadvantaged neighbourhoods. The focus needs to be on access for the poorest, not state school students who don’t need an extra leg up. On overseas students, while continuing to clamp down on bogus colleges, it needs to craft an attractive package for genuine students that tells them they are welcome rather than tolerated – and that includes access to skilled jobs in the two years after graduation. The Home Office should not be allowed to kill this vital export industry.

And finally, the Government should require universities that wish to charge £9000 a year to bear some of the liability for the loans that this will lead to, rather than trying to micromanage the market any further. By all means, auction some funded places to the lowest bidder and encourage FE and private alternatives, but do so by allowing more rather than less of a competitive environment to develop, where students can make informed choices. Getting this right is vital for students and universities.