News blog: Sajid Javid and Jo Johnson take higher education to market

BIS aims to step up competition for universities from new providers – but questions remain about impact on UK higher education

September 16, 2015

“Higher education: market entry guidance.” The name given to yesterday’s set of publications from the Department for Business, Innovations and Skills sounds like the sort of thing designed to go down well with the boss: Sajid Javid, the business secretary with a portrait of Margaret Thatcher on his wall.

BIS has published new guidance (although much of it hasn’t changed from the old guidance) about the routes by which private providers and further education colleges can enter the sector: gaining degree awarding powers, university title, “transferring from the further education to the higher education sector” and, importantly, achieving designation for funding by the Higher Education Funding Council for England.

By lifting the moratorium on new applications for degree awarding powers and university title – mysteriously and quietly imposed just before the election – ministers have a clear aim (or at least are trying to show their superiors that they do). And that aim is to step up competition for publicly funded universities by bringing in new providers.

Becoming a Hefce-funded institution would make a private provider’s students eligible to claim annual fee loans of £9,000 (provided that they reached an access agreement with the Office for Fair Access). At present, students at private providers are limited to claiming £6,000 a year.

You could read the BIS “market entry” guidance in the context of David Cameron’s “smarter state” speech in Leeds last week, in which he summed up the government’s agenda across a range of areas: “State monopolies should be broken and new providers with great ideas should be welcomed in.”

The BIS guidance doesn’t seem to make any hugely significant changes to the processes for gaining university title or degree awarding powers.

A BIS spokesman said that the new documents offer “full guidance that only previously existed in summary form.  The revised guidance provides greater clarity on the application process and evidence required to demonstrate the criteria; greater transparency on the assessment and decision making processes; as well as streamlining the administrative processes by transferring responsibility from BIS to Hefce.”

But the government clearly wants a shift in the pace of change. Jo Johnson, the universities and science minister, presaged the lifting of the moratorium in his speech at the Universities UK conference last week, saying: “Once again, we are opening the doors to new entrants and challenger institutions, all in the interest of increasing the choices available to students.”

He also said that we “will cast a critical eye over the processes for awarding access to student support funding, degree awarding powers and university title”. So the changes making it faster, or easier, for new providers to enter the sector as competitors to universities will follow.

Johnson talked about the “anti-competitive” nature of requiring new providers to have a validation agreement with a university before they can apply for degree awarding powers.

A faster route to degree awarding powers and university title also makes it easier for for-profit owned providers to attract investors – accelerating their ability to compete with universities still further.

New College of the Humanities, the private college set up by A.C. Grayling in 2012, is said to have had a formidable lobbying impact on ministers and figures prominently in their thinking.

Cameron, Javid and Johnson, like all the ministers in this government, believe in the power of markets to drive up standards and efficiency by increasing choice – and believe that power should be applied across a range of sectors.

But there are some big questions about “market entry” in higher education.

The gold standards of university title and degree awarding powers, with applications judged (at present) on advice from the Quality Assurance Agency, are crucial to the high standing of UK higher education overseas – and to commanding the confidence of domestic students.

If the government creates “faster” routes to those gold standards, how will it avoid the risk of damaging the standing of UK higher education?

Given the government’s experience of expanding student numbers at private colleges in the previous Parliament, has it anticipated some of the ways that some for-profit providers, in particular, may respond to new market opportunities?

Is the public happy with the idea of large sums of their money invested in English higher education heading into the accounts of for-profit firms, possibly owned overseas?

Perhaps ministers have already thought through all these questions. If so, it would be nice to hear about it.

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