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May 21, 2012

Defining the front line

"So we will continue to campaign for the key recommendations of this report: government should come clean about its financial chicanery and open the books, secure the much-vaunted loan repayment terms in statute, and restore direct grant funding of universities for mainstream teaching activity. The battle for education is far from over, and these are its new fronts."

These were the words of the NUS president, Liam Burns, in his foreward to the new report on the government's higher education reforms by Andrew McGettigan for the Intergenerational Foundation. They are unambiguous. The report outlines some problems and some remedies. And both the analysis and the prescription for what the government should do are being endorsed by the NUS. Some 18 months after suffering the biggest defeat in its history, the NUS has dusted itself down and worked out what the "new fronts" are in its campaigning.

This is of more than passing interest to both universities and teenagers. The Coalition's new settlement for HE is unstable because the public sees fees of £9,000 as too high, because the one thing Ed Miliband has definitively done is to set Labour against it, because it is impossible to see the post-Nick Clegg Liberal Democrats supporting it, and because - as the report outlines - the finances of the scheme itself are shaky. The next election could easily lead to another volte face in policy, and the NUS is one of the major institutions that can shape the debate that eventually determines that new policy.

So let's pause for a moment and look at where the ideas picked up by Burns have come from - the idea that the Coalition's policy is essentially one of financial chicanery, the objective of securing the terms of graduate loan repayment in statute and the belief - against every austerity lecture - that restoring block grants to universities for teaching is practical. 

Financial chicanery

The financial chicanery that Burns refers to was originally laid out by Andrew in a series of six articles that I commissioned for Research Fortnight last year entitled The Third Revolution. We've had a lot of requests for these articles so I'm going to list their PDFs here:

The truth about Middlesex   7 September 2011, on how the government was positioning itself to privatise universities

2.1 'Demand would be enormous'   21 September 2011, on how universities could start to finance themselves with bonds 

2.2 Borrowing greatness   5 October 2011, on how bond finance has inexorably driven up tuition fees in California

3.1 'A dodgy PFI scheme'   16 November 2011, on the basic mechanics of the macro financing of the new loans scheme, and the problems that follow

3.2 Shifting the risk   30 November 2011, on the government's four options for reducing the risk losses on the student loan book 

3.3 Into the shadows   14 December 2011, on the murkiest of those options - monetisation.

In total, the series ran to about 20,000 words. We billed it as "a major series investigating how new forms of capital and constitution are set to reshape higher education in England" and events have shown it living up to its hype. 

The series' first contribution was to the government's decision to abandon its plan for a white paper on higher education. "The truth about Middlesex" not only explained how the government was preparing to enable the privatisation of many universities, especially those constituted as Higher Education Corporations. It also demonstrated with forensic strength how universities like Middlesex would be driven to leap into the private sector. Once this trajectory had been dragged out of the shadows, the government quickly lost its stomach for the fight it could see coming.

The financial chicanery was laid out in the last three articles. These went beyond the intrinsic complexity and uncertainty of the new arrangements, already well known at the time, to explain how the Treasury's need to manage the huge financial risk involved could easily become the central driver of the whole of higher education policy. Burns has now recognised the centrality of this issue.

Securing the terms of graduate loan repayment in statute 

While Andrew was digging away on the macro finances last autumn, I turned my attention to "the deal" being offered to undergraduates. I was horrified by the grotesquely misleading financial advice being offered to would-be students by the government and the naively co-opted moneysavingexpert.com. I eventually found myself in correspondence with the Student Loans Company, Office of Fair Trading and government departments over the terms of the agreement to be signed by students to get their loans. It became clear that there was no intention on the part of the government to contractually commit to the generous deal being apparently promised by ministers. The deal, it transpired, was not a deal.

"Thanks to the heedless rush to steer nervous students into the new system, we may therefore be in the early days of another great British mis-selling scandal to add to the various pensions and insurance debacles. Only this time the victims have had their legal redress taken away in advance," was how I put it in November (and the deteriorating economic outlook has only served to increase my concern that graduates will end up being ripped off). Again, Burns has now made this a central issue for the NUS. 

Restoring block grants to universities for teaching is practical

Of course, the NUS needs no help to argue that grants are better than loans. But still, the question of whether it is practical to restore the block grant in an age of austerity remains critical. Amazingly, even if you are an ultra deficit hawk, the answer is yes, it is doable. Andrew's report draws on the idea of the "CPI Effect" that I outlined last September, badgered the OBR to study, and on the back of their estimates returned to in February.

In other words, all three of the central issues cited by Burns can be traced back to the work we did at Research Fortnight last year.

Conclusion

Well by now you know that part of the point of this article was to blow our trumpet at Research Fortnight. But that is only part of it. Because the very fact that so much of this work was done by what remains a tiny set up is troubling. Where was Universities UK? Where were the mission groups? Where were the higher education academics? Where were the think tanks? There's an association of people who provide financial advice to students. What happened to them?

For the 20 years or so that I've been writing about universities I've been willing to accept that, in their different ways, UUK and the mission groups have the interests of everyone in higher education in mind. No longer. Yes, there are many well-intentioned individuals in those institutions. But over the past two years there has been too much silence, too ready a willingness to trade the interests of students for the interests of the universities. UUK and the mission groups have put themselves in a narrow, sectional position. No student or parent or politician can trust them now to provide anything but a very partial picture.

What we need now is some new institutions. We need a charity to promote the benefits of higher education as a whole, and speak for it. We need something like a think tank. We need to reconnect the sadly isolated HE academics with the policymaking world. Above all, we need to start telling the public the whole truth.

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