Vince Cable has opened the door to radical changes in the structure and funding of higher education in a landscape of reduced public investment, with potential innovations including bigger graduate contributions for high earners, the end of the distinction between further and higher education, state money for private providers and cash to reward teaching excellence.
The business secretary also said that the previous government’s commitment to a 50 per cent participation target would be dropped in a move towards greater provision of technical education in further education, more part-time courses and additional adult study.
In a speech today at London South Bank University, he said: “The reality is we are going to have to develop a model in which the balance of funding for higher education in England combines less public support and more private investment from those who benefit most from it.”
Mr Cable criticised the current system of university funding and student finance and called for a variable graduate contribution linked to individual incomes.
“We already have a form of graduate tax,” he said. “The problem is it is a fixed sum, a kind of poll tax, regardless of the income of the graduate.”
Under the current system, Mr Cable said, the “teacher, care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or City analyst”.
The existing system also reinforces the perception that graduates have a fixed burden of debt, whereas most individuals do not think of their future tax obligations as debt, he said.
“A lot of this is about language and perception,” he added.
Mr Cable said that Lord Browne of Madingley, who is heading the independent review of fees and funding, has given assurances that he is “looking at this issue as part of his review”.
“No decisions have been made,” the business secretary told the audience. “It is not a change in policy. We are investigating options.”
Mr Cable criticised the previous Labour government, arguing that it had focused too much on “completely artificial” targets for student numbers.
“I do not believe we should be setting targets or ceilings,” he said.
He added that the government “should remove any barriers of funding” between full- and part-time study, and look to provide technical apprenticeships in further education “rather than degrees”.
There was further criticism for Labour over the “current lack of incentives for teaching” in the funding system, along with approval for greater research concentration.
“We need to move away from a position where prestige is associated almost entirely with research performance,” Mr Cable said. “Of course, we must back internationally excellent research. But what we can’t afford is a system in which everybody tries to do everything – badly and at high cost.”
On the question of how universities could “do more with less”, Mr Cable said one approach would be to “let the market operate more freely”.
“What that means is a greater range of higher education providers,” he added. “To make this work, we need to remove some big institutional barriers, such as the boundaries we erect around the institutions that can, and can’t, receive public funds.”
But Mr Cable said that new providers could award their degrees through traditional institutions.
Key points from speech
Business secretary Vince Cable on allowing universities to fail:
“Logically, it must…be a system with less protection for inefficient institutions. Government’s concern must be for the students – not for any particular institution that has failed to manage its costs.”
On quotas for state-school pupils:
“I do not want to repeat Gordon Brown’s mistake of trying to dictate Oxbridge admissions for particular individuals, but we will need to encourage more radical options…What would be the pros and cons of colleges reserving places for a certain number of pupils from each of a wide range of schools?”
On the 50 per cent target:
“The Labour government set an ambition for 50 per cent participation. Some of us have long questioned whether this was sensible as well as affordable…The debate about numbers is an artificial one. We should not be setting targets, or ceilings for that matter.”
On private providers:
“How does the system deliver better outcomes with less state funding overall? One approach is to allow the market to operate more freely…We need to remove some big institutional barriers, such as the boundaries we erect around the institutions which can, and can’t, receive public funds.”
On top-up fees:
“We already have a form of graduate tax. The problem is that it is a fixed sum – a poll tax – regardless of the income of the graduate.”
On Lord Browne’s review:
“I am interested in looking at the feasibility of changing the system of financing student tuition so that the repayment mechanism is variable graduate contributions tied to earnings.”
See the 22 July issue of Times Higher Education for a full analysis.