Source: Ray Tang / Rex
David Willetts clashed with a Russell Group vice-chancellor at a high-profile meeting after concerns were raised about the expansion of student numbers, Times Higher Education understands.
The government’s decision to abolish the student number cap for England, revealed in Chancellor George Osborne’s Autumn Statement on 5 December, led to a clash of views when the universities and science minister attended a Universities UK board meeting the next day.
The meeting came amid fierce criticism of the expansion move by the Russell Group, which appears to have been sidelined in the formation of the policy.
Meanwhile, it has been suggested that the Treasury’s published figures fail to give the full story on the policy’s stated financing – via the sale of pre-2012 student loans.
The UUK meeting, which was not open to the press or the public, was attended by vice-chancellors and other senior sector figures.
Michael Arthur, the University College London provost and former Russell Group chair, is understood to have been the first vice-chancellor to speak. He is said to have asked Mr Willetts for a guarantee that if the sale of student loans did not cover the cost of expansion, no funds would be taken from the science and research budget to meet the shortfall.
Professor Arthur is also said to have highlighted an analysis by the Institute for Fiscal Studies that described funding expansion by the sale of student loans as “nonsense” in economic terms.
Mr Willetts is understood to have replied that he was astonished to hear such a negative reaction to the announcement. One source described Mr Willetts’ answer as showing a degree of irritation.
THE put that account of the meeting to the minister, who replied: “I wouldn’t get into the detail.”
He added later in the interview: “My view is everybody in [higher education] should welcome the fact there is now this historic opportunity: the transformational experience of going to university will be available to more young people than ever before.”
Asked how the Treasury had been persuaded to allow the expansion, Mr Willetts said that while entering higher education was “not simply an economic decision…when the Treasury looks at how you raise the long-term performance of an economy and improve productivity, having more graduates in the workforce is one of the most powerful single levers that a government has at its disposal”.
On the day of the Autumn Statement, the University Alliance emailed a press statement welcoming expansion at 11.59am – little more than five minutes after Mr Osborne had made the announcement and three hours ahead of a fiercely critical response from the Russell Group.
Libby Hackett, the University Alliance’s chief executive, told THE that the group had been “working closely with the government to build the evidence base around this”.
She said the “groundbreaking” move was “something the sector has a moral obligation to support, exactly because it will get opposition and scepticism from other parts of society”.
But many have raised concerns about the funding of the policy.
Nick Barr, professor of public economics at the London School of Economics and one of the architects of the 2006 fee reforms, said the removal of the cap was good news.
However, “the bad news is the lack of any action to reduce the level of income at which graduates start to repay loans (£21,000)”, he added.
“As a result, loans continue to be a fiscal black hole.”
Meanwhile, Andrew McGettigan, author of The Great University Gamble, suggests on his blog that the Autumn Statement documents fail to account for the lost income arising from the sale of student loans, leading to a £1.7 billion shortfall in the Treasury’s costings over three years.
However, Emran Mian, director of the Social Market Foundation thinktank, said that the “scorecard” of tax and spend measures in the Autumn Statement published by the Treasury “doesn’t try to offset” expansion costs with the sale of student loans.
He suggested that Mr Osborne’s claim in the statement that expansion would be funded by the sale of the loan book was “a rhetorical flourish” and that in reality it would be financed by a variety of means.
Mr Willetts said that expansion could continue to be funded longer term by the sale of post-2012 student loans – a step not yet announced by the government.
Expansive in scope: ‘Man who wrote Browne’ backs abolition and advent of true competition
The removal of student number controls at individual universities could result in some institutions expanding by 25 per cent while others head into “free fall”, driving down tuition fees.
That is the view of Emran Mian, director of the Social Market Foundation thinktank, who was secretary to the 2010 Browne Review (some in the sector describe him as “the man who wrote Browne”).
He sees a connection between the review – which advocated expansion to aid the economy and to create competition on teaching quality – and last week’s announcement.
“If, via the review process and the decision…made after it [to raise fees], government had not rebalanced the burden of funding between the public purse and the graduate, then expansion simply would have been impossible in the current fiscal environment,” Mr Mian said.
With the system-wide numbers cap in England abolished, Mr Mian said the ramifications for individual institutions would be great.
Removing institutional caps would, he predicted, spark “really significant” expansion among some middle-ranking universities of up to 25 per cent. That would “put real pressure on [institutions] at the bottom of the distribution”, he argued.
Mr Mian said this would also pose a “big question” for ministers and for England’s funding council: “Will they allow numbers in some universities to go into free fall, if that’s what competition does?”
One beneficial effect of competition could be that “the universities that might start to feel a bit squeezed could drop their prices”, he added.
David Willetts, the universities and science minister, tested the ground on the argument for expansion in a pamphlet for the Social Market Foundation published in October – generating little press criticism in the process.
“Maybe that helped them to have the political courage to go through with the change,” Mr Mian said.
For George Osborne and Mr Willetts to support expansion is “courageous” because “large parts of their own party and…the press” do not support it, he argued.
But is Mr Mian comfortable with expanding the Browne-inspired student loans system?
“It’s sustainable not just for the current numbers of students but for the expanded system, too,” he insisted.
Timeline: the rise and fall of the student numbers cap
The concept of maximum aggregate student number allocations is spawned, with the aim of controlling public expenditure on student support
Tony Blair, then prime minister, sets a target for 50 per cent of young Britons to enter higher education despite the annual cap
“Tolerance limits” are introduced to give universities more flexibility within the cap, while universities seeking significant expansion are allowed to bid for extra places
The coalition’s higher education White Paper expresses ministers’ desire to move away from quotas
Confirmation that London Metropolitan University had been fined £5.9 million by the Higher Education Funding Council for England for over-recruitment the previous year
Introduction of the AAB system, which allows institutions to recruit unlimited numbers of students with those grades or better at A level or the equivalent
AAB becomes ABB
Chancellor George Osborne announces that student number controls are to be abolished by 2015‑16.