The wheels of the market can’t go round and round with all this red tape, says Sir Stuart Etherington

Freedom of demand but not supply, bureaucracy and Stalinist pay deals make progress almost impossible, says Sir Stuart Etherington

September 12, 2013

Higher education is often described in terms of the market these days, and there has undoubtedly been a shift to a consumer model in recent years.

Yet free markets rely on the free interplay of supply and demand, and in English higher education only one side of this equation is unchained.

Qualified students can choose the course that appeals to them at a price they’re willing to pay, but the suppliers – universities – are still constricted, almost to the point of immobility.

With individuals now bearing so much of the cost of their education, and less funding flowing through the Higher Education Funding Council for England, it is high time we examined the sheer volume of regulation that has accrued in universities. In my view, it is no longer justified.

University boards spend far too much of their time ploughing through reports compiled for the benefit of the legion of regulators they must keep happy.

Meanwhile, boards have too little control over factors that suppliers in any other market would consider crucial to running a successful operation. For example, they have little say over their university’s curricula. A combination of a central regulator, the Quality Assurance Agency, and undue caution over being accused of interfering in academic independence means that boards are sidelined in shaping this vital area.

While newspaper league tables and student satisfaction surveys help boards to consider the university’s academic offer, too few become involved in the details of what is being provided. Boards need to be able to take a stronger position on academic quality.

Nor can boards control a university’s costs. While they frequently deliberate over capital spend, they have no control over the majority of their cost base – the staff. Salaries and pension arrangements are beyond them, being settled nationally. It is time this most Stalinist of approaches was dismantled, and universities given the power to negotiate appropriate labour costs for their localities and institutions.

Multiple regulators demand constant updates on every aspect of operations. Such an approach over-regulates the good and misses the bad

My background is in running major charities. No charity trustees would suffer having so little control over so much of their operations. Indeed, having proper control is part of being truly accountable.

All the while, multiple regulators continue to demand constant updates on every aspect of a university’s operations. Such an approach over-regulates the good and misses the bad.

London Metropolitan University, which got itself into such difficulties in 2008 over the misreporting of student completion data, provides one clear example of catastrophic problems that were not spotted in time. A result has been a significant increase in time and cost spent on compliance issues across the sector, often compounded by outdated regulatory structures.

The make-up of governing boards would benefit from a shake-up, too. Universities need to appoint individuals with more diverse skills – both commercial and related specifically to higher education. There may be a case for less input from the university’s executive team at this level, and a greater focus on members from outside the sector, with relevant expertise.

Another area for improvement is the flow of information. I am often struck by the huge amount of formal paperwork that boards are encumbered with, when simple and succinct summaries of performance against targets are what is really needed.

There should also be an enhanced role for students’ unions in this new world, as a consumer watchdog for students who are buying the service from the university.

Of course, some fundamentally oppose the move to a consumer model in education. I am agnostic and certainly there are merits to both state-driven and consumer-driven systems. The current unwieldy mismatch between the two, however, is inefficient from both an economic and an academic point of view. You cannot have students as consumers without freedom for the market’s suppliers.

Overall, the combined burden of bureaucratic quality assurance, national pay bargaining and box-ticking regulators is clogging the wheels to an unreasonable degree.

While academic independence is a crucial principle for universities, this does not mean that boards should fear intervening to ensure that a university’s strongest work is prioritised – even if this means questioning weaker work.

At the same time, regulators should place trust in universities because they are, by and large, more than capable of running themselves. In cases where they prove less capable, students will vote with their feet.

Without giving universities the freedom to fail, we cannot give them the freedom to excel.

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