Sector failing efficiency test

October 19, 2001

Universities are on average 14 per cent less efficient than they could be, a study by the National Institute of Economic and Social Research reported this week.

The study found that, on average, universities had costs nearly a seventh higher than those of the most efficient universities.

It also said that the introduction of undergraduate tuition fees had not significantly cut inefficiency by making universities more competitive.

The study is among the first to allow the comparison of efficiency by type of institution. It takes into account the different roles of higher education institutions, for instance the relative weight attached to teaching and research.

The 14 per cent average represents "net inefficiency" after variables are taken into account. Net efficiency may be explained by a number of things, including managerial inefficiency. Crude gross efficiency would measure only things such as the number of firsts and upper seconds an institution awards.

But researcher Philip Stevens factored in data including the proportion of poor students and mature students at an institution. He said such factors were likely to raise efficiency because poor and mature students tend to have fewer and lower entry qualifications than traditional students.

If substantial numbers of non-traditional entrants gain degrees, the institution has added significant value to their educational status. In other words, the difference between the input (measured in A-level points) and output (the proportion gaining degrees) is large. This denotes efficiency.

Conversely, a factor such as the proportion of students gaining firsts is, in isolation, judged to increase an institution's inefficiency because it reflects particularly high-quality teaching, which is a costly service.

Staff profiles can also affect efficiency, Mr Stevens said. Universities with a high proportion of staff aged over 50 but relatively few professors are likely to be less efficient. This may be because older staff who are not promoted may be less efficient or because institutions with more professors attract more talented academics and are consequently more efficient, Mr Stevens said. The more staff active in the research assessment exercise, the more efficient the institution.

Another NIESR study showed that student-support policies are polarising higher education along lines of wealth and social class with the poorest undergraduates opting for new universities.

It exposes a "circle of decline" in which poor students are forced to work more during term-time and in which new universities are more supportive of that need for paid employment while studying.

Details: www.niesr.ac.uk

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