English funding review warned over ‘damaging’ differential fees

Theresa May’s call for price competition rejected by sector across the board

May 4, 2018
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UK higher education bodies have united to warn the government’s funding review not to introduce differential fees in England, with both the Russell Group and MillionPlus group of post-1992 universities saying such a move would damage social mobility.

Submissions to the review of England’s post-18 education and funding also show that the influential Institute for Fiscal Studies also warns against varying fee caps on the basis of non-benchmarked graduate earnings figures.

Meanwhile, bodies across the sector, including Universities UK, GuildHE, MillionPlus, the University Alliance and the Russell Group recommend looking at Wales’ Diamond review, which created a generous system of student maintenance grants and loans, as a role model.

Launching the review led by ex-banker Philip Augar in February, prime minister Theresa May complained that the “competitive market between universities which the system of variable tuition fees envisaged has simply not emerged”, and one of the review’s questions in its call for evidence asks how the government could “create a more dynamic market in price and provision between universities and across the post-18 education landscape”.

But MillionPlus says in response that it is “not possible to create a market with a variable price signal when repayments for loans are income contingent”.

Varying fee caps by university or course according to graduate earnings is seen as an option under consideration within government.

Citing Institute for Fiscal Studies research showing that family background is the principal factor in graduate earnings, MillionPlus argues that such a system would “seriously harm the government’s ambitions to promote social mobility”.

“A move to differential fees between providers or linking fees to graduate earnings would simply transfer resources to students from better-off backgrounds and to universities who happen to be based in wealthier regions of England,” MillionPlus says.

The Russell Group says: “Introducing a system of differential fees based on cost of delivery, graduate or social return, would likely be problematic and could have negative consequences for students as well as for universities and for the broader role they play in the economy and society.”

Universities UK says in its submission that mechanisms to induce “greater variation in fees levels”, such as by cost of subject or level of graduate earnings, pose “many practical difficulties and risks”, including that poorer students “may choose cheaper courses of study to the detriment of achieving their potential”.

“Comments from ministers and MPs about forcing differential fees…are muddled and, if acted on, potentially damaging to teaching quality, the student experience and the wider economy,” says GuildHE in the summary of its submission. “It’s not clear what problem differential fees are trying to solve.”

The IFS says in its submission that it is conducting research on whether it “would be possible to introduce incentives for universities to charge fees in line with their expected value-added”.

But it also says that “using labour market earnings to judge quality is problematic because the earnings of those currently in the labour market relate to courses taken many years previously. Current earnings cannot be considered to be quality indicators for current provision.”

The IFS adds that there are “non-monetary benefits from some degrees that are not captured in earnings. It would not be desirable for universities to be judged to be low quality because they provide a supply of graduates who can perform jobs that might have low financial returns but be socially valuable.”

The review’s call for evidence did not ask a question about the level at which to set fees, and the sector representative and mission groups do not detail any proposals here.

But GuildHE says that the government should take on a greater share of the costs of higher education, and graduates less, returning to the 60:40 split balanced towards the government “that was in place before 2012”, when fees were trebled to £9,000.

The Russell Group warns against any reduction in fees “without a compensatory increase in grant funding”. It also suggests using “some of the expected underspend from the apprenticeship levy by creating a broader, flexible adult skills fund which could be used for a variety of purposes”, including support for part-time students and the reintroduction of maintenance grants for poorer students.

On living cost support for students, UUK’s submission “recommends reinstating government maintenance grants, funded by new money, targeted to those students who need them the most. This has already been achieved in Wales, where a new package of student support has been implemented, following the recommendations of the Diamond review.”

john.morgan@timeshighereducation.com

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