Pam Tatlow in the New Statesman "A market in universities: one import the UK could do without"

(The article below was published by the New Statesman on 15 June 2010. Read the original here)

Why the US funding model will cause UK institutions more harm than good.

It is no surprise that the new Secretary of State for Business has led the charge to reduce the number of people going to university. To the chagrin of many Liberal-Democrats at the time, this is precisely what Vince Cable said in Opposition. The cut in additional student numbers will do little for the social mobility which is allegedly a lynchpin of the Coalition’s higher education agreement. Universities now have to manage a £1bn reduction in funding with David Willetts implying that student support is a burden on the taxpayer. Are these good enough reasons to transport the US model for the funding of higher education to England as David Blanchflower suggests (The case for higher university fees)?

The answer is almost certainly no. Unlike their US counterparts, the UK universities which are arguing for higher fees do not want to become private institutions. Instead they want to have their cake and eat it: taxpayer funding for teaching, research, fee loans and student support with the university then given the right to charge additional fees either upfront or funded by additional fee loans financed by bonds and commercial providers.

It is no surprise that the universities which want to compete on price and quality on the back of state funding are the ones which have the most socially exclusive profiles. By ‘quality’ they do not mean standards but quality of the ‘student experience’ based on small campuses where students study away from home and full-time. This is very far removed from the experience of the majority of the UK’s two million students, over 40% of whom study part-time, many of whom have to work to pay their way and some of whom live at home to save money.

A quasi-US style system would be certain to deliver inequity for the majority of the UK’s higher education students. Like American healthcare, it would have outcomes which would be neither as equitable nor as productive as the UK’s current system. In particular, a market based on state funding with higher tuition fees backed by private finance will have the inevitable outcome of delivering less resource to the universities which contribute most to social mobility. This is not a policy which the left would advocate for schools. Why should it be an acceptable outcome for UK universities and students?

The Westminster Government could easily create a fairer funding system. By introducing a small (1-2%) real rate of interest on student loans similar to that applied in countries such as Norway, Denmark and Sweden and by extending the period when graduates in England repay a contribution to the costs of their higher education, the Exchequer would benefit by £1bn per year. This would be enough to fund many more students, avoid the cuts in higher education imposed by the deficit hawks and even extend fee and maintenance loans to part-time students who currently still have to pay their fees upfront. Fairer funding for all is on the table if the Government (and the Opposition) want to pursue it.

Pam Tatlow is Chief Executive of the university think-tank million+.