Leader: Little buy-in for market dreams

The government expected price sensitivity and consumer choice to drive down degree costs, but that's not happening

July 26, 2012

There's nothing like a cock-up to get the media going, and the run-up to the London 2012 Olympic Games has been a time for the press to make hay, even if the sun has rarely shone.

Sensing a repeat of April's "omnishambles", when the government suffered a string of embarrassments, newspapers have devoted page after page to G4S' security failures, restrictive Olympic traffic lanes and sponsorship lunacies. In the midst of all this, it has been easy to forget about the feast of sport we are about to enjoy.

Speaking recently at the University of Exeter, Sir Alan Langlands, chief executive of the Higher Education Funding Council for England, drew parallels between this pre-Games narrative and the continuing focus on the details of university funding reform.

So should we stop carping about organisational matters and devote more time and energy to the main event? As Sir Alan put it, should we stop talking only about means and start talking about ends?

For the students who have made the decision to start university this autumn, the focus will be firmly on their education, not the means by which it is funded. But for institutions, there remains much interest in the means because of the continuing uncertainty about how things will play out.

In the latest development, it became apparent this week with the unveiling of tuition fee levels for 2013-14 that an increasing number of universities are bunching around the £9,000 cap, with three-quarters in England now charging a maximum at that level.

This takes us back to 2006, the year that variable tuition fees were introduced in England. All but a handful of universities shot straight to the £3,000 limit, and those that charged less in an attempt to create a market did not stick with it for long.

This behaviour was undoubtedly in the thinking of the Browne review, which suggested that the fee income universities receive should taper off above a certain level. The intention was to encourage a wider spectrum of charges, but the proposal was ignored.

As we now know, the system put in place, with a hard cap of £9,000, subsequently had to be modified to try to generate competition. But the fee levels set for year two of the new regime, announced this week, reinforce the impression that it was naive to hope for a fiercely competitive market based on price.

With the number of "margin" places for cheaper institutions cut, it was all but inevitable that fees would rise. And there is some evidence that students' choices have also played a part.

The government's reforms rely on the principles of price sensitivity and consumer choice to drive lower-cost degrees. Yet the latest application figures appear to show that many student consumers are not deterred by the high cost of a degree compared with lower-cost courses. While applications for honours degrees are down by 5.6 per cent, foundation degrees are 22.1 per cent adrift and "other HE programmes" have fallen by 44.7 per cent. The figures tally with a growing understanding that loan repayments will be broadly similar regardless of fee levels and suggest that cost may be seen as an indicator of quality.

For many students, it seems that a mainstream university education remains the only "end" that interests them.

john.gill@tsleducation.com.

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