Here’s the predicted hidden bomb in the White Paper:
Simplifying the process for changing corporate status
4.35 Where higher education institutions want to change their legal status, it can be complex. Different rules apply to different types of institution. For example, a chartered corporation may need to have a private Act of Parliament passed to convert to a different legal form. It has been argued that it would be helpful to institutions to ease their ability to convert to a legal status of their choosing –for example, to make it easier for them to attract private investment.
4.36 Our consultation on a new regulatory framework will explore whether to implement legislative change to make the process of changing legal status easier. We would ensure that, as the assets of a university have been acquired over time, partly as a result of direct public funding, the wider public interest will be protected in any such change of status.
This consultation would allow the established, ‘public’ universities to change their corporate status so as to become, for example, companies limited by share or publicly limited companies. That is, allowing charitable higher education corporations to become profit-making entities.
I appeared on Channel 4 news tonight along with Steve Lumby, Managing Director of LCA, to be grilled by Jon Snow on the government’s White Paper and privatisation.
Clip here. Scroll down to second video on the page.
Open Democracy have launched their new debate page on Capitalism & the University with a new piece by me, ‘First as Farce: higher education, the profit motive, and the New College of the Humanities’.
It focuses on the recent coverage of New College for the Humanities and positions this new initiative in the broader context of private and for-profit providers in higher education.
Read the full article here:
‘First as Farce: higher education, the profit motive, and the New College of the Humanities’
Since interpreting the coming HE white paper depends on understanding the fates of the quangos currently involved in monitoring, funding and regulating the sector, I provide a link here to an article on the legal situation of Offa (the Office for Fair Access) and the recent guidance letter issued by BIS. Dennis Farrington and David Palfreyman, authors of The Law of Higher Education(OUP, 2006), interpret the current legislation to ‘firmly deny Government any authority or ability at all to interfere in university admissions’ but take the recent letter to cross a line that limits Offa monitoring to how institutions increase applications from under-represented groups.
“If the Government really deems it necessary now to intervene to any such extent (or, in fact, to any extent at all) in the detailed admissions policies and processes of, and also the exact entry criteria set by, universities, institution by institution, rather than having the previous and entirely legal focus, via its arms-length quango-like agency in the form of OFFA, solely on applications, then, clearly, it will need, in its impending White Paper on higher education, to consult over awarding itself appropriate powers under new legislation – since at present the Government simply has no authority in Law to seek to become involved, via the work of OFFA, in the way seemingly implied in the February 2011 letter of ‘guidance’.”
The two authors suggest that any legislation of this ilk would breach one of the key principles of university autonomy and amount to the ‘virtual nationalisation’ of the university. It is hard to share the conclusion that this is the government’s aim, but it may go some way to indicating the kind of problems the government is facing in reconfiguring the regulatory terrain of HE. It is perhaps from this perspective that the ideas around hybrid recruitment caps should be interpreted – using the money to influence institutional decisions rather than interfering directly in application procedures.
Following on yesterday’s post about moving towards a new regulated market in higher education, here is an very interesting paper from Prof Roger Brown on the problems of producing the kind of timely, valid and reliable information about quality that could inform applicant decisions.
Vince Cable and David Willetts have repeatedly stressed the aim of allowing ‘student choice’ to drive change in the sector. ‘The Operation of the Market in HE’ suggests that quality cannot be captured or assessed in this manner.
In other words, instead of assuming that students know best (or would do if only the necessary information could be prised out of the system), and wasting resources on things like the National Student Survey, we should be putting our regulatory effort into ensuring (a) that all institutions are using their resources, including their resources of research and scholarship, to give all their students the best possible learning opportunities and qualifications, and (b) that the information institutions put out about themselves and their offerings is rigorously scrutinised for its veracity. We also need to put more effort into improving various aspects of academic practice, particularly student assessment. In this way, we can do our best to protect our students from the risks of making bad choices, which is surely our public, as well as our professional, duty.
That is, quality in education really depends on academic and professional practice: this form of assurance is threatened by commerical and market pressures, the effects of which cannot mitigated by bureaucratic regulation.
I blogged earlier about some personal correspondence I have received from David Willetts. In a second, longer letter dated 11 May 2011, he takes time to respond in detail to several points I raised with my MP.
I will concentrate on one issue here: the proposal in the Browne review to create a single superquango, HE Council, which would merge together the various HE bodies involved with funding, regulation, improving access and ensuring that students are receiving detailed information about courses. That is, HEFCE, the Office for Fair Access (Offa) and the Quality Assurance Agency (QAA) would be brought together into one body. This perhaps explains some of the very public positioning these bodies have been doing recently. (Especially HEFCE’s warning about the dangers of greater private sector involvement in HE).
Willetts writes in relation to Browne’s suggestion:
“We will think this through carefully and not rush to a decision. However ‘superquangos’ are not inherently attractive to this Government. We will consult on any structural change as part of a HE White Paper, to be published later this year. We recognise the need for the OIA [Office of the Independent Adjudicator] to remain an independent body. … We are taking the time to engage comprehensively with stakeholders before we publish our longterm vision for HE.”
Although not inherently attractive, such a body would have certain advantages as a regulator within a new marketised environment.
Given the government’s commitment to ‘free up the system’ (Willetts phrase in the letter), reforms are likely to be geared towards allowing universities more independence but also allowing new providers into the sector. Willetts is commited to a ‘dynamic and responsive HE with fewer barriers for new institutions’ particularly as they are likely to be lower cost, better value for money and potentially innovative (less likely to ape the way in which the established sector teaches). Here, the main ‘barrier’ to entry is the power to award degrees and the process by which it is granted by the Privy Council with the involvement of the QAA (private institutions must currently seek renewal every 6 years). Willetts would prefer to remove this hurdle and replace it with an information-based, regulatory system.
Willetts recognizes that there are ‘high expectations’ that have to be met for ‘any institution which benefits from public funding or student support [loans?]’ . Here, for the third time in this short section of the letter, he refers to a consultation: the White Paper is going to be very ‘Green’. We should not miss the emphasis here: let the new providers have a go and see if they live up to expectations, rather than set an initial, very high bar to control who is allowed to offer their own degrees.
Regulating such a liberalised sector would require robust forms of quality monitoring, especially in relation to concerns over for-profit providers offering ‘lower cost approaches’. It is not clear if the appropriate data is currently available, though both HEFCE and QAA have been given a broader remit in this regard recently, with the QAA being tasked to ensure ‘minimum threshold standards’.
In brief, what will this mean for the understanding (public and otherwise) of what a degree is? how will such regulatory structures change the traditional autonomy of the university (currently understood to be a ‘self-critical academic community’ and hence ensuring its own standards)?
There is a further dimension here. HEFCE is not simply a funding body: it must approve financial commitments before they can be undertaken by public universities and, since 2010, it has also had responsibility for overseeing their charitable status. Both of these functions would change substantially were HEFCE to be incorporated into a regulatory superquango. But such changes would be of a piece with freeing the sector from central control.
Wes Streeting, former President of the NUS, and Martin Lewis, a popular, independent financial journalist, have been appointed to head up the newly launched Independent Student Finance Taskforce.
You might wonder about the politics of launching such an initiative (and agreeing to front it) prior to parliamentary approval for key features: repayment terms and rates of interest on loans (see footnotes 2 and 4 at the BIS site on Student Finance). But the real issue is that an independent website on financial matters seems to have put itself into a conflict of interest, since it is aiming not to dissuade people from going to university. Now I believe everyone should go to university if they can benefit from it and introducing a complex financing scheme is a disaster from this perspective; as such, I feel we should be informing people about why they should resist these measures not accept them as the new ‘reality’. To repeat, this scheme does not yet have parliamentary approval.
For some context, the discussion I had with Lewis on his website now has a different sheen. He seeks to bust some myths with ‘20 Key Facts’ everyone should know. (Note how he places some blame for the confusion on those campaigning against the imposition of new higher fees and the cuts to central funding for universities).
I first posted on his forum to alert the site to some misplaced assumptions about the manner in which the scheme should work. In response, ‘MSE Dan’, the website editor who made the corrections I suggested, wrote in reply:
What’s struck me during the process is how marked the changes caused by a tweaked assumption have been. It will be really interesting to eventually find out the levels set by government, and how they affect repayment amounts and timescales.
The manner in which ‘tweaks’ to the assumptions about future RPI and wage inflation cause large-scale changes to total repayments made is the mark of the volatility of the scheme (on which I’ve already commented repeatedly). It is for this reason that I think the published models, which are supposedly meant to provide information on the ‘investment’ made in going to university, are misleading. On the Lewis website, Fact 17 declares- many people will never repay their loans in entirety.
Some will never repay them, but if too many begin to fall into this category, the government will change the scheme – in terms of the interest rates charged and the repayment thresholds.
Why then is Lewis’s site so reluctant to explain two basic points to its readers? Read more…
Tonight, a repeat of Tuesday’s live discussion about the New College for the Humanities and UK higher education in which I participated.
9-10pm on London’s Resonance FM – 104.4 FM or live stream.
“Novara – a weekly show discussing political theory, practice and aesthetics. Discussions and interventions will be with workers, theorists, students and activists. Hosted by Aaron Peters. Novara – a weekly show discussing political theory, practice and aesthetics. Discussions and interventions will be with workers, theorists, students and activists. Hosted by Aaron Peters. This week the New College of the Humanities; busting the myths about Grayling’s college and asking ‘is another university possible?’
In the Guardian today:
Peter Hall, a financier who has donated more than £450,000 to the Conservatives, provided money to set up the for-profit New College of the Humanities, which will be led by philosophy professor Anthony Grayling and staffed by celebrity academics such as the historian Niall Ferguson.
Hall, who has radical Conservative libertarian views, said that as the founding chairman, he provided £200,000 to “breathe life into the idea”. …
Hall told the Guardian he had backed the project because “my personal view is that the public sector should not be involved in providing services. They can pay for services but it is much better if there’s a creative environment where there’s lots of different types of enterprises competing to provide services.”
Hall… has donated to the Conservatives since 2005, and in return has been given access, with other large donors, to private dinners with leading party figures including David Cameron and George Osborne. In 2007, he lobbied the then shadow education spokesman, David Willetts, whom he had also funded. Hall wanted him to adopt his ideas.
Serious doubts will remain about New College of the Humanities until it provides full details of its backers and investors, especially the anonymous ‘Swiss couple’ who own 35%. Appeal is made to the ethics and integrity of AC Grayling and the ‘founders’ but their equity stakes must be very small. Hall himself only claims to have 4%.
Even Malcolm Grant, Provost of UCL, in his weekly all-staff newsletter, indicated that his exercise in ironised agnosticism about the project had conditions:
If it is to flourish it will have to promote the highest standards, with an academic rigour and range of intellectual excitement that ranges well beyond the standard requirements of the University of London’s International Programme. It must have the same transparency of any other university, in terms of admissions requirements, academic appointments and advancement, and its finances. It will need to develop a scientific and a research capability.
There’s a lot released today about HE including the UCU survey on attitudes to for-profits amongst senior academics and HEFCE’s mock kis.
This though makes me angry and baffled: THE again. Willetts seems to want to start talking about a tax rather than a loan:
Mr Willetts said that although the system of income-contingent loans repaid by graduates bore little resemblance to credit-card debt, advertising agencies had warned the coalition against avoiding language that had become “ubiquitous”.
“Their advice was…if you don’t use the language of fees and loans, it looks like a bunch of shifty politicians who are not willing to use the same language everyone else uses,” Mr Willetts said.
This is more shiftyness. He’s right that what’s proposed is better able to claw money back from EU students, but that’s because it is a loan-scheme.
They came up with a complicated system (and the last post on recruitment caps perhaps indicates that nothing is getting any simpler – more administrators!), made it more complicated because of political exigency (last minute concession to LibDems on repayment thresholds), and now they quibble over how to discuss it.
For an individual trying to understand how it might impact financially on money in pocket in the early stages after graduation, there is some value in saying, ‘It’s a bit like a 9% tax on graduates earning over 21 000.” Though it’s then a tax that stops at some point and the difficulty comes in working out when that will be. It also lacks the ‘democratic’ elements of taxes: it’s a loan because it can be sold off to third-parties, and because it’s an income-dependent loan, it’s inherently volatile – it is very difficult to predict how long it will take to pay it back the outstanding debt once repayments start or how much will be paid over the thirty years of repayment before whatever’s left is cancelled. And unlike credit card debt, you can’t elect to vary how much you pay back (the government is proposing to consult on early repayment – whether to make it possible and, if so, what penalty to impose).
You can see my discussion here with Martin Lewis and his financial advisory website about the assumptions in his guide. Martin seems to think that in a few years’ time with may see different thresholds and interest rates operating depending on when the loans were taken out: no tax operates like this. I have elsewhere criticised the widely-publicised ‘BBC figures’ for assuming wage inflation at 4% and RPI at 2% over the next 30 years.
And, yes, I did build my own model of the student finance proposals and I decided not to make it public, since the only conclusions I could draw from it were that the loan outlay is large and the scheme volatile (small, difficult to predict changes to the variables – RPI and wage inflation – have large impacts).
If anyone has more knowledge of income-contingent repayment loans, I’d be very interested to hear. Once the size of the scheme goes over a certain level, it becomes difficult to manage for individuals and underwriters, as far as I can tell.
p.s. The government has effected as much of its plans as possible using existing statutory instruments and legislative powers: e.g. raising the tuition fee caps and imposing additional information requirements from universities through extending HEFCE and QAA powers. ‘Loans’ should be seen in this context of expediency – see Part 8 of the Education Bill for the manner in which it is more convenient to use the existing loan structures to implement the new scheme which will not be enacted as legislation.
Critical Education 