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January 25, 2011

Funding teaching or funding research? Implications of the new fee regime

Universities unable to charge above £6,000 will, as a consequence of the reduction in public spending (through HEFCE block grant), experience a significant cut in the money previously available to support teaching, while their students will pay more for less. It is this that leads the Higher Education Policy Institute to think that most universities will seek to charge the higher fees and that it is in the interest of students that they should do so. According to HEPI, under the proposed loan arrangements the extra cost of the higher fee for ‘low earners’ is less than £300.  For this they would benefit from significantly greater investment in their courses. The National Union of Students, however, is committed to campaign for the lower fee to be standard.

But, what will ‘premium fees’ buy and will the extra fee income be invested in teaching? Already the vice-chancellor of Birmingham University and member of the Browne Review Professor David Eastwood is suggesting that, after allowance of money for enhanced bursaries and so on, there will be a 'premium' of £1,000 per student above what it costs on average to teach a student (once the HEFCE block grant reductions are taken into account). He suggests that some of the extra income from premium fees will be spent on improving teaching, but argues that less research income means the university would have to use teaching income to subsidise research. This suggests that the UK’s ‘premier’ institutions seek not only to recover lost teaching income from their students, but also lost research income.

This is in contrast to the Wakeham Report on Financial Sustainability and Efficiency in Full Economic Costing of Research in UK Higher Education Institutions, (June 2010). It said TRAC shows, "that research is being subsidised to a possibly unsupportable extent; and that overseas student fees are not being spent on teaching" (para 2.2, page 39).

While overseas students will continue to be charged higher fees than home students, it seems that home students will now join them in subsidising research at a time when, following the Comprehensive Spending Review, UK public spending on research is well below that of comparable countries.

The Prime Minister’s answer in November 2010 to a question from a student audience member at Peking University about tuition fees for overseas students revealed his own limited understanding. He said, "Raising tuition fees will do two things. It will make sure our universities are well funded and we won't go on increasing so fast the fees for overseas students. In the past we have been pushing up the fees on overseas students and using them as a way of keeping them down for domestic students. We have done the difficult thing. We have put up contributions for British students. Yes, foreign students will still pay a significant amount of money, but we should now be able to keep that growth under control" (as reported by Patrick Wintour in the Guardian (‘David Cameron hears the same old gripes from Beijing students as at home’.)

The Prime Minister was wrong. Overseas students have been used to subsidise research, not teaching. However, at universities charging £6,000, any overseas students will begin to subsidise the teaching of home students. At ‘premier’ universities they will be joined by home students in subsidising research.  Of course, those universities will also continue to maintain the very substantial price discrimination between home and overseas students that the Prime Minister came close to disavowing (and which is not found in those US universities that do not have a public subsidy of teaching).

Will British universities be able to continue the price discrimination toward overseas students? Now that public funding has been removed from most undergraduate degrees, there is little justification for discriminatory pricing. It will remain, however, not least because universities that charge premium fees are also lobbying for the fee-cap to be removed so that they can close the gap between home students and overseas students by charging the former what they currently charge the latter.

Under Professor Eastwood’s preferred regime, students would subsidise the research activities of universities. When that moment comes students will be paying for the ‘university brand’ and higher education will have become a positional good.

Given the current uncertainty, a different strategy on the part of NUS might be appropriate: Demand the higher fee of £9,000 to ensure that prospective students do not pay more for less, and demand that universities demonstrate that the additional income is used wholly to support teaching. In this way a differentially funded system of public higher education will be avoided and it will be easier to resist ‘round 2’ of the reform process, the lifting of the fee cap and fees well in excess of £9,000. 

John Holmwood is professor of sociology at the University of Nottingham.

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Comments

Interesting. David Willetts keeps saying universities must improve their teaching. But as you say, any extra money seems destined for research.

Clearly, in the new system the right to charge more than £6,000 is the key lever that ministers have to shape the behaviour of universities. But as yet, I see no sign of improved teaching being a condition. Rather, the emphasis is all on "widening participation", the key issue for people like Simon Hughes.

So we could say in HE, with the big tuition fees decision taken, the Coalition now appears to be prioritising Lib Dem objectives over Conservative ones.

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