In the Wings: Deregulation and Private, for-profit Providers in the proposals for Higher Education

The parliamentary vote on Thursday relates only to the raising of the current cap on tuition fees to £9 000 per year.  It is being done with minimal consultation and little time for proper debate. 

We have still had no clear proposals relating to two key aspects of Lord Browne’s review   – the number of students who will be eligible for the new Student Finance system and the information that would need to be provided to create applicants who are informed consumers.  Both of which were meant to be key to assessing the fairness of higher fees. 

Where Browne’s review indicates that all universities would be required to publish data on student satisfaction, employability, contact hours, etc., Willetts has pointedly only made reference to these requirements with respect to institutions that would charge over £6 000 per year (or are in receipt of central funding for priority subjects). 

In the draft guidance on access published today (8 December 2010), OFFA appears to have been granted no new powers or sanctions.  What is asked of those seeking to charge more than £6 000 is what is currently required of all institutions charging ‘top up’ fees.  The message seems to be that those institutions charging under £6 000 for arts, humanities and social sciences degrees will be relieved of the burden of widening participation, and, more generally, subject to a light touch regulatory framework somewhat analogous to the independent status currently adopted by the University of Buckingham.  Where Browne appeared to propose the regulation of the entire higher education sector, the government’s proposals have rejected that vision.

In conjunction with Willett’s vague, but repeated, references to ‘new providers’ entering the sector, things appear under a different perspective.  Competition will be brought into the arts and humanities by allowing new providers to undercut the established provision.  Willetts apparently has “a stream of new providers who believe that there is potential to offer an alternative. I believe that the challenge for universities is to look very carefully at their costs, not simply assume [they can] take today’s costs and put them into the new world.”

Who does Willetts have up his sleeves? Again, little detail as yet, but perhaps they look like the only current for-profit institution in the UK with degree awarding powers, BPP University College.  The for-profit sector has been lobbying the Conservatives for some time now; they seek a ‘level playing field’ to compete against the established universities.  Such equalisation has four components:

1. Remove all central public funding from the subject areas in which they can compete: the arts, humanities and social sciences;
2. Allow students at for-profit institutions access to the proposed loan schemes.

Browne’s review explicitly recommended the second; the Comprehensive Spending Review effected the first.  The other two are yet to be achieved:

1. Overhaul and rationalize degree awarding powers;
2. Allow more institutions to title themselves as ‘universities’.

Universities established before 2004 have degree awarding powers in perpetuity; the new providers are only able to apply for these powers for six years, when an application to renew is required.  In the promised Spring White Paper on Higher Education, we should expect legislation that claims to rationalise a complicated and inconsistent situation; the true aim will be to create the level playing field when the for-profits would be in a position to provide additional competition. 

There is a further dimension.  The removal of the block grant from arts, humanities and social sciences will disproportionately affect those institutions which specialise in those areas, thus creating financial uncertainty, not to say, short-term chaos.  There is no London weighting built into the tuition fee caps which adds a further disadvantage given the number of universities in the city and around which are exposed to the cuts from central funding to arts and humanities.  Should one face financial collapse, no rescue based on public investment can be expected.  However its assets could be attractive to investors with private capital. 

There is currently no legislation to provide the framework whereby a private, for-profit company could take over a university and maintain the existing degree awarding powers.  Removing this impediment to venture capital is a desirable object for think tanks close to David Cameron, such as Policy Exchange.  Again, we should expect the Spring White Paper to facilitate such buyouts.

For Members of Parliament of all political parties, this should be to mind for Thursday’s vote.  This is not simply about the merits of a loan scheme over a graduate tax.  Aspects of the new scheme appear to facilitate a deregulated market in derivative knowledge and subprime degrees.

Originally posted on Mute 9 December, 2010