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October 19, 2010

HEPI’s devastating critique makes Browne look shallow

Be in no doubt, the assessment of the Browne Review of student fees produced yesterday by the Higher Education Policy Institute is extremely damaging.

It is not that the independent HEPI disagrees with Browne on this point or that point. That is to be expected with a report covering as much ground as Browne.

No, the truly damaging aspect of HEPI's critique is the repeated allegation that Browne’s finding are not properly thought through.

According to HEPI, Browne has failed to undertake important preparatory research, gets its facts wrong, is simplistic, fails to explain its reasoning, asserts conclusions on matters of dispute, comes to conclusions on the basis of detailed but unpublished calculations, fails to properly cost its proposals, gets confused about important issues, proposes schemes that are unworkable, ignores important concerns, draws implausible or unproven conclusions - and so on.

For example, HEPI takes aim at one of the central conclusions of Browne, that the much higher fees and interest rates will not deter poor students from university. It says, "The Committee’s confident conclusion that 'if fees can be deferred, then participation can be protected' seems at best optimistic.  A fair conclusion is that we do not know how the proposed changes will affect decisions about whether and where to go into higher education."

The overall impression that HEPI gives is that Browne is shallow and amateurish. HEPI's director is Bahram Bekhradnia, formerly director of policy at the Higher Education Funding Council for England, and you get the impression that in his day such a shoddy piece of work would never have been allowed to reach publication without a substantial improvement in quality.

John Browne used to run one of the world's biggest companies, and very successfully. But HEPI's critique suggests that the decisiveness that made Browne a true captain of industry may have limited his wilingness to get to the bottom of complex issues.

HEPI's is a closely reasoned critique and one which, because of Bekhradnia's background, it will be hard for Browne or the government to swat aside.

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 I have extracted below the dirty bits from HEPI's critique (bold highlighting is mine). These are not necessarily the most important observations HEPI has to make. Rather, they are the ones that give the impression that Browne's entire approach is shallow. Numbering refers to the numbers used in HEPI’s own summary of its analysis.

 9 Also, some fundamental points are asserted by the Committee and taken as a given – that it is right that the contribution from government should reduce relative to the student contribution (and in many cases that it should disappear completely); and that the market is a sufficient mechanism for determining where students go to university and for making judgments about standards and quality. These are highly contested points, and their assertion as a given colours the entire report.

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11 Knowing what it knows about the cuts that are to come, the Committee suggests that £6,000 in fees will be the amount that will allow universities to maintain funding levels equivalent to today's (actually £6,000 would be less than today's level of funding according to the Committee, but in an alarming return to the language of the 1990s it speaks of “efficiency” reductions to justify a figure of £6,000. These “efficiencies” are likely in reality to mean worse student:staff ratios – England already has one of the worst in the OECD area – or fewer books in the library). Many universities may feel that they will be unable to charge fees even at that level, and many will charge less. They may find ways of maintaining quality while being more “efficient” but in that case similar “efficiencies” should be required of others. Most likely, their quality will suffer. They may be able to attract students because of their price. As likely is that they will enter a spiral of decline. We cannot know, nor does anybody else. No market research underpins the report, and so a substantial risk is being taken.

12 The Committee appears strangely unconcerned with the effects of its proposals on universities whose market position may not be strong and which may not be in a position to sustain even a “lower resource” fee of £6,000. The country needs these universities to thrive and succeed. The reason they may not be strong in the marketplace may have nothing to do with their quality or their standards. There is ample evidence that one of the principal things that motivates students in their choice of university is to acquire a positional good; and historic reputation, longevity and institutional wealth (largely driven by research income) are the prime drivers of this. The market undoubtedly has a role, but the apparent absence of any recognition of public interest in the health and well-being of those universities that may not thrive in the marketplace is to be regretted. Universities are part of the national infrastructure, and it is in the interests of the country and the responsibility of the government of the day to ensure that universities at all levels of excellence thrive.

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15 The government appears largely to be withdrawing from investment in higher education teaching, and the Committee appears to endorse this as a matter of principle, rather than an unfortunate consequence of the economic crisis. If that is the Committee's view, it is a pity that this fundamental point was not argued in more detail rather than offered as a given. If that is not the Committee's view then it is equally a pity that it did not argue more vigorously for greater government investment.

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17 What is less convincing is the argument for removing any cap and allowing unconstrained fees. If these proposals are implemented then England will be virtually the only public higher education system in the world (including in the United States) with no government imposed fee cap. The reason all other countries regard university fee levels as a matter where the government has an interest is that the fees charged by universities – and the implications of this for access and participation – are matters of public interest. It is implausible to say, as the Committee does, that it felt unable to set a limit because there was no objective way of doing so. All other jurisdictions find it possible.

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20 The Committee proposes many measures which can be expected to increase public expenditure, and others that will lead to a reduction, and calculates that net effect will be to reduce the demands on taxpayers by £1.8 billion annually. A large part of this is the reduction of HEFCE teaching grant from £3.5 billion annually to £0.7 billion, but the next largest is an increase in fee loan repayments to £2.9 billion – a highly uncertain figure that it is not possible to test because the underlying assumptions have not been revealed.

21 So we must take the claim that the proposals will reduce the taxpayers’ contribution by £1.8 billion annually as at best unproven and at worst unlikely,

27. There is a strong emphasis by the Committee on the market as a mechanism for setting fees and for enabling students to exercise choice and for improving quality. It is this that underpins the Committee’s recommendation that there should be no constraints on universities recruiting students. However, the report also acknowledges that much better information is required for the market to work correctly. To this end it makes ambitious proposals – repeating proposals that have been made previously but have never been fully implemented – concerning advice and guidance for potential students. It does not go so far as to say that until the information needs have been addressed its recommendations that rely on market mechanisms should be put on hold, but that is the clear logical conclusion. Reliance on the market to the extent proposed by the report will be positively dangerous if the market is not working properly and in particular if good and accurate information is not available to inform choice.

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30. Although the loan and repayment arrangements are similar – and although the previous fee regimes did not impact participation – the amounts concerned are much higher now, both the absolute amount of the fee and loan, and the interest payable.  We cannot be so confident in future that the financing arrangements will have no impact on participation. Indeed, to the extent that the decision to participate in higher education is an economic one, it will be entirely reasonable to assume that the much higher costs will put some people off higher education. And it is reasonable also to assume that these will disproportionately be from poorer backgrounds, who tend to derive the least financial benefit from having attended university. 

31 Although the Committee’s confident conclusion that “if fees can be deferred, then participation can be protected” seems at best optimistic.  A fair conclusion is that we do not know how the proposed changes will affect decisions about whether and where to go into higher education.

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33. On the one hand, it is excellent that part-time students will be able to benefit from the same loans for fees as full-time. On the other hand, whereas part-time fees have been held down in the past – for the very reason that loans were not available – these will very likely now rise to match the full-time fee. Yet part-time students are often in work already, and earn more than the threshold for repayment. And we know also from HEFCE research published in 2009 that part-time graduation rates are very low (in part no doubt because a qualification is very often not the aim of those undertaking part-time study).

34. The new arrangements will be mixed for part-time students, but on balance there may well be a disincentive to study part-time in the future – ironic in view of the well-meaning intention of helping and encouraging part-time students.

35. The Committee recommends that there should be a further 10,000 places each year provided in higher education. It also recommends that universities should be free to admit as many eligible students as they wish and who wish to apply to them. There is a tension here between the free-market ideology of the report and the reality of needing to constrain public expenditure and therefore to limit the number of places. It needs to be remarked in passing also that the latent demand for higher education is far greater than the 10,000 additional places per year for three years that the Committee recommends, although what is not known is whether that latent demand will be dampened because of the increased fees.  The Committee has attached no cost to this proposal, though there will be a cost and it could be substantial, because the interest rate that is to be charged will be lower than the cost to the government of providing loans. The absence of any assessment of the Resource Accounting and Budgeting costs of their proposals is a curious and serious omission on the part of the Committee, both here and in the discussion of the costs and benefits of their proposals.

36. What the report says about liberalizing recruitment is confusing, if not confused. On the one hand, the Committee recognizes that there has to be a limit on the total number of students in the system because of the impact of numbers on public finances. The more students there are, the more loans the government has to make and the greater therefore the public subsidy. On the other hand, the Committee wishes to allow the market to rule, and for universities to take as many students as apply to them. It is unable to offer a satisfactory resolution to this conundrum.  It seeks to resolve this by setting a national threshold for higher education admission according to the number of UCAS tariff points achieved. So universities will be told by the government whom they may and whom they may not admit – a major new intrusion into university autonomy.

37. But the Committee recognizes also that significant numbers of students go to university without having been through the UCAS system, often without points that would count towards the UCAS tariff. In order to enable the market to be seen to be working unconstrained, the Committee ends up by proposing a complex and probably unworkable scheme which involves two types of application and “pass marks” which will shift year by year according to the government’s finances.  Thus the problem is solved by turning the potential student who is qualified but cannot get a place into someone who is unqualified to enter higher education.

38. In reality, so long as the government is involved in funding – in this case by paying fees upfront through a student loan – and, even more, so long as there is some public subsidy for each student recruited, then it seems difficult to see how controls on the number of student recruited by each university can be avoided, even if that were desirable.

39. Whether it is desirable is another matter. In the neoliberal environment advocated by this report, where the market is the determining agent that determines which students go where and how many students each university recruits, the Committee is clearly uneasy about any controls on numbers. However, universities are part of the national infrastructure, and the government cannot be careless of the health of universities – and that health to some extent depends on the number of students they recruit. It is too simplistic to argue, as the report does, that those universities that are not as popular as others will “raise their game" if they see their numbers falling, or will be allowed to fail. Those universities may be doing a perfectly good job, but be less well endowed, have less appeal, may be geographically disadvantaged – there may be a whole host of reasons why they are not so popular. But nevertheless the national interest would be ill served if they were to fail.

40. Without any explanation or argument, the Committee recommends the transformation of HEFCE into a Higher Education Council, that takes in the functions of the QAA, the OIA and OFFA.  It is difficult to conclude other than that the Committee has been encouraged to make this proposal by the government's plan for a “bonfire of quangos”. Certainly, there is no suggestion that the functions performed by the existing bodies are not required, nor that they are not being satisfactorily performed at present. The OIA was created only five years ago and it would have been possible then to incorporate it into an existing body if that were a better arrangement. And quality assurance was in fact accommodated within HEFCE until the QAA was created as a separate agency in 1997 as a result of the Dearing proposals. While there is a certain appeal to taking responsibility for quality and standards away from the control of those very institutions whose quality and standards are being monitored, this would be a major step, would run counter to international developments, and should only be done after proper consideration. In the absence of any argumentation, the reality is probably that the impending emasculation of HEFCE’s funding role led the Committee to look for other things for it to do.

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44. So although it is true that under these proposals universities will have some greater freedoms, they will also be subject to new and intrusive government controls.  And the greater freedom will, in reality, be exercised by only a minority – those able to command higher fees while at the same time recruiting more students – while the increased constraints will be more general in their effects.

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Comments

Thanks for pointing me towards the HEPI response; it's very well thought out and intelligently expressed. Personally, the paragraph in the Browne report that I would most like to see challenged is on page 21, where they refer to OECD statistics to assert that the benefits to the individual of HE exceed the benefits to the public and that this supports the argument that the individual should pay more. The same OECD stats show that the benefits to men of HE are greater than the benefits to women, in terms of lifetime earnings, so should we be charging men higher fees? Why not try instead to increase the benefits of HE to women or to the public as a whole? Isn't the characterisation of HE simply as a route to a higher paid job the source of many of our present woes? There are so many undebated issues in that one little portion of the report, that I am left spinning round and round not knowing where to start...

Cally, that's really interesting. Can you share a link to the OECD paper you're looking at? I'm genuinely worried that women may be put off going to university by the new economics.

The other point that strikes me on this is about that figure of £100,000 for increased lifetime earnings. Certainly in Britain, there is an enormous difference in terms of lifetime earnings between different universities. So if an Oxbridge degree is worth a lot more than £100k, equally a degree from a new university is on average going to be worth a fair amount less. Looked at that way, £40k of debt to go to a new university does not look like a good deal - especially if you're a woman.

The Browne review references the OECD Education at a Glance report which is available at http://www.oecd.org/document/52/0,3343,en_2649_39263238_45897844_1_1_1_1,00.html. To get the whole report you need to scroll down past all the data links to "How to obtain this publication". There are hundreds of pages, but I'm guessing that Browne & co are looking at indicators in A8 (incentives to invest in HE), but there is an awful lot of data in there and it is impossible to tell what they have considered: the messages are far more complex than their summary statement suggests.

With regard to the gender gap, indicators in A8 point to a higher lifetime earnings premium for men than for women (in most countries, including the UK) but indicators in A7 suggest that women in the UK actually do quite well - although this appears to be because men with what the OECD calls "below upper secondary education" are at a disadvantage, so there are relatively big gains to be had by gaining some higher qualifications.

I'd love to unpick this some more but I'm already in trouble with my supervisor for spending most of the last week reading Browne-related reports!

Thank you for the excellent summary.

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