Thursday, 26 February 2015

Allowing university fees to rise will not solve higher ed's most pressing problems

English university tuition fees are in a mess. We here at 'Public Policy and the Past' always said that we were heading for a kind of headbangingly bonkers worst-of-all-possible worlds, of course. Higher fees for students. Even more outlays for the taxpayer. Massive debt burdens that are hugely, hugely underrated in the headline £27,000 figure for three years' tuition. And yes, we got all that right - tick, tick and tick again.

Now it hasn't all been bad. University numbers have not fallen - although that was never the main fear of those who actually understood (and understand) these reforms. The number of students coming from the poorest postcodes has risen, not fallen, though of course it's hard to winnow out what would have happened if we'd left fees at £3,000. The fact is that we are living through a social revolution in which more and more people aspire to go to university, and have the qualifications to do so. And so the numbers keep going up - at least as a share of the younger age group.

But the changeover to high fees has been chaotic - and completely unsustainable. The main reasons why the coalition government started to charge fees were twofold. One, they shifted the spending out of 'debits' and into 'credits', because technically Her Majesty's Government was building up a great big pile of money that it'll be owed in the future. Now about half of that the taxpayer will never, ever see again. As we also said at the time. But let's place that to one side today, and focus on the second reason why the ideologues in Westminster and Whitehall wanted to charge more for university tuition: the fact that they wanted to encourage a market-led system in which 'consumer choice' was king.

That's led to some of the worst debacles in the system, as we now see in a damning Parliamentary Accounts Committee report covering the millions that were wasted on private providers that were very poor marginal players at best, and at worst downright fraudulent. Nearly £700m was sprayed around in such a fashion; nearly £4m was paid out to ineligible students who shouldn't have got the money supporting their fees in the first place. Other examples of waste and disorganisation abound. The Department for Business, Innovation and Skills, which is in charge of the universities budget, 'failed to heed' warnings. It had inadequate structures in place to check courses and new providers. It wasn't sure what was going on at the grassroots. Basically, it failed - in much the same way as trying to govern Free Schools and Academies from the centre, from inside the Department for Education, is beginning to disintegrate as well. 

Because it's impossible. There's not the time, the money, the inclination or the skill to understand and then regulate a sector as big and important as this one from inside BIS.

There's a lesson here, and it's an important one at a time when it's rumoured that the Government is thinking of allowing universities to charge more than £9,000, as long as it's universities themselves (and not central government and the taxpayer) raising the loans. The lesson is that there's not enough intellectual and administrative capacity in our HE system - let alone in Whitehall - to deal with those innovations without long lead times and a lot (and we mean a lot) of care and attention to detail. Let the whole thing go cloudy and hang loose for a few years, and you might reap exactly what you've sown in this cautionary tale of private providers: chaos and confusion.

Universities are not really designed to take on this level of risk. They are finding it hard enough balancing all the different elements that government keeps piling on them, as if they're some sort of Buckaroo-style dexterity game from the 1980s. Even designing contracts with student-consumers that keep up with the law is hard enough. Could they really design, draw up and manage huge 30-year bonds with banks and asset managers? Mortgage their buildings, or even sell them on and lease them back? Engage in their own Private Finance Initiatives? Logic, and our experience with £9,000 fees, says not.

Labour is apparently steeling itself to announce lower fees should it win power in May, with a new limit of £6,000. Now this isn't exactly a university utopia either, and no doubt the Treasury will make sure that not all of the funding shortfall is plugged with state monies. But that policy might involve a little less gambling, a little less blind faith, and a lot less risk than letting the whole thing rip.

Who wants to be the Minister and the Secretary of State when the first big Russell Group redbrick goes 'bang' in a massive debt crisis? No-one, that's who.