left to my own devices – occasional thoughts on higher education

Scarcity of a product tends to increase its price.  Given that, commentary on the failings of the market-led approach to UK (and particularly English) higher education should currently be at rock bottom prices.

While there’s still plenty of demand for this product, driven not least by the ongoing instances of the failings of the chosen market-driven approach (e.g. announcements of mass redundancies and institutional takeovers), it still feels like the volume of such commentary available at the moment (to which I’ve contributed myself) constitutes significant over-supply.  However, even when a saturated market has dragged down the price of a product category, there can still be a specific new product that has value.

the price

John Blake’s recent Blood, Toil and Tears published by the Post-18 project is one such new entry, making a strident and in many ways persuasive case that:

For thirty years, successive governments have attempted to manage the [higher education] system through a single mechanism: student choice driving competition between providers. This mechanism has failed, by every metric its architects set for it, and its failure is structural, not incidental. [p.1]

Much of Blake’s diagnosis and prognosis, if not perhaps all of the recommended course of treatment, will resonate strongly with many in the sector.  There was, though, one element of the analysis that feels as though it needs, if not disagreeing with, then at least nuancing.

Among many striking arguments in the paper is the statement that in English higher education:

The price mechanism is broken. Every institution charges the maximum fee, every time, because the architecture of the system divorced the sticker price from the experienced cost. David Willetts insisted the £9,000 fee would apply only “in exceptional circumstances”; by 2014, all but two of 123 universities charged it for at least some courses. [p.5]

On one level of course Blake is right.

The sector twice managed to sell the Brooklyn Bridge to successive governments: convincing first Labour in 2004, and then the Coalition in 2011, that if they raised the cap on the home undergraduate fee then different universities would charge different fees.  The phrase at the time was ‘variable fees’.  And entirely predictably all universities instead set their fees at the maximum.  So while price competition is ruthless on unregulated fees (home postgraduate, and international fees), it is and always has been non-existent for home undergraduates.

the real price

That, though, is the obvious price mechanism in the home undergraduate market.  However, there is also the real price mechanism, where competition is red in tooth and claw.  And that, of course, is entry qualifications/tariff.

Yes, student fees are real money paid by students through their loan payments (or for the fortunate few, paid upfront from familial resources).

But when students apply and enter universities they are also spending the academic currency they have accumulated in the form of their previous qualifications and/or experience.  While not money this is still a very real currency, and a currency the exchange of which is as central to undergraduate applications and admissions as the monetary fee exchange.

Setting entry qualifications is a question of a university deciding on the knowledge, skills and attributes required to be in a position to engage with and benefit from a programme.  But it is also a question of deciding what price the market will bear, in terms of entry qualifications, to recruit the number of students a university wishes to recruit.  And the answer to these questions is carefully calibrated at all stages (offer/confirmation/clearing), rising and falling in lock step with the laws of supply and demand.

There is a finely tuned and highly sensitive pricing mechanism for home undergraduate programmes, it’s just that its measure is UCAS points not pounds, shillings and pence.  And for the majority of universities the market pressure in the past few years has been downwards.

This isn’t a bug of the system established in England from 2012, it’s a feature.  As David Willets told the House of Commons in 2013: ‘the variation in applications between universities is what happens when the money goes with the student.  That is a key feature of our reforms’.  And when that happens, universities will compete on price – and as that doesn’t happen through fees, it happens through entry qualifications.

the cost

And of course that’s exactly what we’re seeing play out in the UK sector now, in ever more consequential ways.  All the reports about the changes in the patterns of home undergraduate recruitment as more highly ranked institutions recruit more such students (£), placing pressure on those below, are in effect a price war taking place in the sector.  It’s just that the price mechanism isn’t the obvious one.