Friday, November 26, 2010

Ed comments on my modest proposals

My modest proposals sparked a rash of comments on Facebook. Here is a response by an old friend, Ed Maxfield, which was too long for FB, so I'm posting it here. Ed is Senior Communications Officer for Universities UK but his comments here are made entirely in a personal capacity.

The first thing to say is this is not an argument about whether politicians should stick to the promises they make/the pledges they sign. That is an entirely legitimate but different question.
Now, a parable. In the 1960s a large number of well meaning politicians on the left were staunch defenders of the grammar school system because, based on their own personal experience, they offered bright working class kids an opportunity for social mobility. Unfortunately the model suffered from three fatal weaknesses. The first was that it was predicated on a model of the economy that was rapidly becoming out of date: it trained a small number of people to do professional jobs and a large number people to do technical jobs at a time when manufacturing industry was declining and the service sector was growing.
The second weakness was that the system was structured horizontally. It worked fine if the world was based around an economy that kept people in their place and in return guaranteed them a job for life. But in truth the economy and the aspirations of people were changing. Business was increasingly becoming organised vertically – what was needed was more people equipped with the mental skills to add value to a business so that bright people could rise through the ranks however they entered the jobs market (increasingly, changing employer and sector numerous times).
The third weakness was how tightly rationed places among the elite schools were. The rich didn’t mind - they could pay for a solution by sending their children to private schools. What finally killed grammar schools was that the expanding middle class found that its kids couldn’t get into grammar schools because there weren’t enough places. The system failed to meet their aspirations and was running the risk of reversing social mobility.
Back to the present, then, and your proposals for higher education. There are three: that higher education should be free at the point of delivery for students and funded wholly from general taxation, through an increase in the basic rate of income tax and a change in the threshold for the higher rate; that there should be a programme of forced ‘mergers and even closures of some universities’; that there should be a training levy on firms over a certain size to part fund universities.
Let me deal with the third one first. I have no problem with the business community making a larger contribution to the cost of higher education. Indeed, Richard Lambert, outgoing DG of the CBI made exactly that point in a speech recently. But why fall back on generalised compulsion? Modern universities already have extensive links with businesses providing services that those businesses pay for: research, bespoke training etc. Some employers already provide bursaries to pay the costs of higher education for students they want to employ as graduates. And there is an extensive range of sandwich courses of course. If you compelled all businesses to pay, regardless of their graduate employment needs wouldn’t you risk removing some key incentives in the system? At the moment employers get what they judge they need for their business. It’s quite likely that businesses will respond to higher fees by increasing the number of bursaries available to ensure they have enough appropriately trained graduates coming into their business. It’s also quite possible that they will respond by increasing graduate salaries (I believe there is some evidence of this from the US but I haven’t been able to locate it). I don’t see what ‘ill’ you are trying to correct here by using state compulsion that would do better than the current system of freely entered into contracts. At worst it would remove an existing incentive for universities to make their courses relevant by giving them a pot of money with no strings attached. Or you would rely on government bureaucrats planning the future needs of the economy and directing money into courses selected by those bureaucrats on the basis of those projections.
Your second assertion is that there should be a forced merger and closure of universities, presumably to cut costs. Shall I overlook the fact that universities are independent institutions so you would be proposing to nationalise them first?
OK, I shall. But even then, the first question has to be: which universities would you close? Manchester, perhaps, that employs half the people in John Leech’s constituency and educates the other half? Or maybe Exeter which helps to fund the only higher education presence in Cornwall? Or do we really mean the new universities because, of course, they are not proper universities. Derby, for instance, which has a well defined mission to recruit students locally in an area with traditionally low levels of progression to HE and which has established fantastic links with local businesses to help graduates into employment.
There is a very good publication that you can find on the Universities UK website that sets out the impact of universities on regional economies. As well as educating thousands of people who go on to generally pay more taxes than the average (and be healthier and happier and live longer), they employ thousands of people (only about half of whom are academics), they provide research outputs and ‘knowledge transfer’ that benefits local employers, and they generate millions of pounds of income for local businesses from book binders to carpet fitters to late night corner shops.
Now, I suspect that what you really mean is that there are too many people doing ‘Mickey Mouse Degrees’ so we should restrict the number of places available. Let’s not overlook the fact that doing that will also result in bankruptcies and job losses at universities. But let’s take a slightly wider view. And here we begin come back to those grammar schools.
You could, indeed, decide that there are too many people going to university and that we would be better providing more apprenticeships. The problem is that the future economy is demanding more graduates not fewer. Recent research from the Commission for Education and Skills tells us that between 2007 and 2017 just under 2.2 million jobs in the three occupational groups most likely to require graduate level skills will be created in the UK – this is compared to a net loss of 220,000 jobs in other, less skilled groups. Furthermore, the skills that graduates acquire are highly transferable. They help graduates to progress upwards. An apprenticeship is fine but what if the skill you learn from it is redundant in 10 years time? And will it provide you with the skills to become the marketing director, the finance director or the CEO? It is no accident that our major economic competitors are all increasing the number of people they educate at university.
And there is another massive problem with restricting the number of places available at university: you risk restricting access to the better off and throwing social mobility into reverse. Simply put, the evidence shows that universities level out opportunity – the further you progress through higher education the less where you came from matters to what you achieve. But rich parents can afford to put dumb kids into the best schools. Either by paying directly for private education or by paying higher house prices to live in the right catchment area.
Would it not be better to remove government control of numbers at university altogether as Lord Browne in his original proposal suggested? That way students can make their own choices about the appropriate level and method of education for them. That would seem to me to be an altogether more liberal approach. I can do no better than to quote our own higher education minister, David Willetts:
“The attitude towards some so-called Mickey Mouse courses is a classic example of the information problem. There is an assumption that all of those courses must be useless, but when you look at the hard evidence, it’s just not the case.”
So we come to the crux of the matter. Education should be free. Free education is a noble aspiration. But what do we actually mean? We can’t mean ‘free for life for anyone who wants it and for as long as they like’ because then everyone would opt for 40 years of education and there would be no one working to pay for it.
We must mean that education is rationed. You are right to point out that education is provided by the state without charge up to the age of 18. But why stop at level 4? Why not fund everyone to do an MA or a PhD? Why not raise the education leaving age to 21 for all? And, remember, in answering those questions you cannot refer to the benefits that accrue to the individual, only to the benefits that accrue to society as a whole so you can justify funding them solely through general taxation.
The truth is that ‘the age of majority’ gives you a rough and ready guiding line about where the state should stop paying and the individual adult should start making their own decisions.
I went to university in 1985 along with about 70 or 80 thousand other people. Last year almost 400,000 people were given the opportunity to go to university. That is a fantastically good thing. But it also explains why it is so difficult for the state to fully fund a degree.
Under the government’s proposals students will not have to pay fees (unless they are from outside the EU or are engaged in part time study over a very long period). Instead, the government pays the fees and provides a loan to the students. Graduates will pay back the loan but only if they are earning over 21,000 and if they still owe money after 30 years it is written off. This is a very substantial subsidy from the state for higher education – so substantial in fact that some, like HEPI and the IFS, have questioned whether we can afford it.
That is a far better system than a graduate tax or even than funding it through general taxation because it retains the direct link between the institution and the graduate. The funding is hypothecated (so it cant be spent on Trident instead) and the institution is incentivised to maximise the value it offers to the student consumer.
There is also grant funding and universities will be compelled to take action on fair access if they want to charge a higher fee. The government could do more: it could offer ‘first year free’ deals for the less well off, for example if it chose to. You need to talk to Vince, Danny, George and Dave about what they plan to spend the money on as we come out of recession. It is a rough and ready method for recognising the public benefit of a degree and for ensuring that no one is barred from going to university because of what their family earns. But I dont believe that nationalising university funding will provide a better system.
And there is one final piece of the jigsaw that has not yet been revealed. Understandably the NUS (and the media) talk in terms of 9,000 a year fees being a given. But surely students would only agree to pay that if they thought they could make a profit on it? The government will publish a White Paper next year that will probably make some radical changes on the ‘supply side’ of higher education. If more places become available (rather than the fewer you suggest) through new suppliers that is likely to drive down the market price. And dont forget, too, that the changes to the system are likely to alter the way students demand their higher education is delivered. The ‘traditional’ image of a student who leaves home at 18 or 19 to study continuously for 3 years is already barely a majority of those in higher education. With the better package on offer to part time students far more will opt for that route, combining study with employment. With higher fees it is likely that students will demand other new modes of delivery. The private university of Buckingham, for instance, delivers its degrees over two years and has some of the highest student satisfaction rates among students of any UK university.
Modern universities are no longer finishing schools for the intellectual elite. They are engine rooms of the economy. We should celebrate the huge opportunities on offer, not restrict them. We should enable students to make their own choices not have politicians make them for them. We cant revisit Brideshead, and nor should we try.

1 comment:

TAGilbert said...

1. You say you want people to start to pay at the age of majority. Does this imply you favour paying for sixth form if that is reduced to 16, as per party policy?
2. You say 18 year olds will only pay £9000 if they calculate that it will pay more in benefit than that. I went to Cambridge in 1984, from a debt-averse non university background. But I don't think I would have been capable of making an informed decision as to how university would benefit me. No-one I knew had ever been. Even the requirements Clegg is proposing for greater access have not been defined. We are being sold a pig in a poke.
3. Paying back 9000 a year cannot be said to be fairer than paying back 3200, even if the threshold is higher! Especially with added interest, as the Govt is proposing.
4.My real beef with the Govt is that those with wealth and privilege contribute LESS than the squeezed middle (to coin a phrase!), because they pay it off quicker and pay less interest. If there had been a concerted effort to close tax loopholes and off-shore havens and properly collect income tax from high earners, some of what you say would make sense. But I'm afraid that I think Alan Sugar and David Beckham and Fred Jarvis should contribute more to HE than a £35k a year high school teacher.