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October 13, 2010

Beware political compromises on Browne

John Browne’s panel has come up with an insightful and shrewd report. It builds on the political settlement that introduced graduate-payment tuition fees in 2006. It was to be expected that Browne would recommend that those fees should rise, and he has come up with some well crafted safeguards against higher fees being a deterrent to students from less well off backgrounds, and to protect against universities over-charging.

In a different political and economic climate, this approach could have paved the way to a wholly new approach to the funding of the UK’s universities, sweeping aside the existing tight government control over student numbers and fees and setting universities free at last to compete globally.

But in the present climate, the report fulfils a different function. Its entire approach is based on what Browne believes will emerge from next week’s comprehensive spending review announcement. We can see already that BIS has failed to convince the Treasury of the economic value of a thriving higher education sector  warranting tax-borne investment. Indeed, it looks likely that BIS will suffer deeper cuts than other departments, coming on top of the £1 billion that has already been taken out of higher education. The impact on university teaching budgets will be dramatic. Browne assumes – no doubt on Treasury advice – that all Government teaching grant is to be withdrawn, except for some exceptional high cost and high priority courses. Out of a current annual budget of £3.7 billion, only £700 million will remain. In a politically sane world, this CSR announcement would have come first. As it is, Browne has been forced to abandon any prospect of an orderly implementation plan. His review has been turned by the CSR into an emergency funding measure.

The Browne model is one in which private investment is substituted for public. But the £3 billion is not an immediate savings to the Treasury. Browne would transform the present Government grant to universities into a voucher system under student control. Universities are to be free to take as many students as they wish, with student-consumer sovereignty determining the universities to which the resources will go. Hence the level of public investment actually remains undiminished for the next several years, but it changes character from grant to loan. That allows for different accounting treatment, and hence a declared savings, notwithstanding the proposed 30 year repayment period.

Although Browne offers a market solution, the freedoms that might be expected to flow from this are highly compromised. The headline message is that the cap on fees is to be lifted. The reality is that this is will not significantly advantage leading universities, because any fee over £6,000 – which is less than what universities receive under the present combination of fee and grant – is to be subject to a tax rate for each £1,000 above £6,000, starting at 40% for a £7,000 fee and rising to 75% at a £12,000 fee. The purpose is to cover the assumed higher risks of loan default, but it is also clearly intended to moderate fees ambitions overall, and ensure that all opportunities are taken to drive through efficiencies. But it also acts as a disincentive to invest in the improvements to facilities and staffing support for an excellent student experience that globally competitive universities simply must make. It may even operate as a perverse incentive for some universities to concentrate on increasing international student numbers at the expense of places for UK undergraduates. Moreover, universities choosing to charge higher fees are to be subjected to a more intrusive inspection regime, which suggests limited confidence in market forces as the driver of excellence.

There is recognition of the need for additional tax-borne support for science and clinical subjects, but this is to be on a discretionary basis through a new Higher Education Council. In the absence of any assurances as to quantum, teaching in STEM subjects is seriously at risk. Ministers freely anticipate the closure of universities under the new regime; they must also be contemplating the closure of scientific departments within otherwise successful universities.

Most ominously, there has been no Browne review to help the Government and universities cope with the consequences of the anticipated cuts next week in the science budget. It is from this quarter that the greatest threat comes to the financial sustainability, not only of the big research intensive universities but also those in the middle range which expect also to be under greatest pressure for teaching.

We are not exactly in an era of cool political analysis and consensus. Labour and Conservatives are currently adopting an approach set at 180 degrees from what they espoused in the debates in 2004. The Liberal Democrats find themselves in an impossible position. Their MPs are pledged on the one hand to vote against an increase in tuition fees; and committed on the other hand – they are after all in Government – to voting in the funding cuts that generate the need for fees. Nobody can now seriously believe that a graduate tax offers any solution – and certainly not Alan Johnson, new Shadow Chancellor and in an earlier life the architect of the present tuition fee model.

This suggests that various political compromises may yet have to be offered to steer legislation through – Vince Cable has already hinted that a fees cap may be re-imposed – which are likely to undermine the package offered by Browne and lead to a seriously adverse outcome for all those with a genuine stake in the future of our universities.

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