REPORT 1 | EDUCATION COMMISSION
In 2010 the Con-Dem government passedlegislation that ended the provision of theblock grants that supplied funds for teachingprovision in the humanities and socialsciences and simultaneously introducedtuition fees capped at an astoundingly high£9,000 per year. In forcing universities torely on tuition fees rather than state grantsfor income, universities have been putinto a position where they now competeto attract a maximum number of studentsat a maximum tuition amount in order tosurvive. Students, provided with loans bythe state, become consumers selecting aneducation product not unlike shoppingat the supermarket. But this strategy ofmarketisation also has other insidiouseffects.Prior to 2012 universities had limits on thenumbers of students they were permittedto admit based on the size of block grantsfor teaching they were provided by thestate. While these caps on admissions haveremained, the government introduced anexception so that there are no limits onindividual institutions admitting studentswith A-level grades of AAB or higher.In practice, this means that universitiesadmitting students with top A-level gradeshave effectively had their caps on studentnumbers removed. While we do not yethave any hard data on the Fall 2012 intake,we know anecdotally that there has beena large rise in student intake in someuniversities conventionally consideredpart of an ‘elite’ (e.g., Durham, Bristol),other less ‘elite’ institutions have seen theirstudent numbers decrease substantially,especially in humanities and social sciencecourses. It is clear to most observersthat the removal of block grants and theremoval of limits on recruitment will
lead to continued stratication between
universities (including the emergence of adivide between research-and-teaching andteaching-only universities), major budgetcuts to all but a few top universities, and infact, many universities will be threatenedwith bankruptcy in coming years.David Willetts, minister for Universities andScience, and the architect behind the newtuition fee regime, has suggested that inthe near future universities will be allottedstudent numbers based on their RAB charge(Resource Accounting & Budgeting). Thismeans that universities would be rankedand evaluated according to the rates atwhich their graduates repay their massivestudent loans. This would further entrench
the stratication between ‘elite’ universities
(where wealthier students are more likely torepay loans) and further reduce funding touniversities serving those of us who are lessprivileged. It would also have the effect ofshifting the institutional aim of universitiesfrom teaching students to think critically toteaching students to get a job, any job... sothat they are able to pay back their loans.This will also undoubtedly lead to furthercuts to courses that aren’t self-explicitlyvocational in the humanities and socialsciences in particular, and these subjectswill increasingly be the preserve only ofthose able and willing to pay massive feesto elitist and exclusive institutions such asthe aforementioned New College for theHumanities.
The Entrance of PrivateProviders
The replacement of block grants forteaching to universities with high tuitionfees as the primary source of income alsohas a further subtle yet menacing effect– it opens the door much more widely toprivate universities. Before Fall 2012 privateuniversities and other private providers ofhigher education were not able to accessstate funds for teaching students (thesewere businesses not schools after all!).This was because only public universitiesreceived the block grant for teaching whileprivate institutions didn’t qualify for thisfunding. But now students can spendtheir government-backed loans at privateinstitutions. Combined with increasedtuition fees, this has created a level
playing eld where private universities
and corporations can effectively competewith public universities. In order to ensurethat this was the case, David Willetts alsochanged legislation so that private highereducation corporations didn’t have to payVAT on student fees. It’s also important tonote that the removal of VAT in this caseseems to have been a response from arequest from the massive “Big Four” global
accounting rm KPMG.
There are currently six private corporationsthat have been awarded the power to grant
degrees to students in the UK – these are
Buckingham, the College of Law, the IFSSchool of Finance, Ashridge Business
School and BPP. There are a further ve
that are currently seeking degree awardingpowers (DAPs) and we can expect thatthese numbers will grow in coming years.Private colleges providing degrees in avariety of subjects have received upwardsof £25 million in state-subsidised studentloans since increased tuition fees wereintroduced. While these institutions are
often technically non-prot, they tend to
incorporate themselves into a series ofinstitutions wherein the university itself
may be non-prot but it simply pays
another ostensibly separate institution forservices rendered such as student services
or housing in order to channel protswhile maintaining its non-prot status.
In short, the increase in tuition fees andremoval of the block grant has meant thatwe now effectively have a publicly fundededucation system that subsidises privateeducation corporations.There has also been a large increase inpartnerships between public universitiesand large private corporations (often run
by private equity funds) in the UK in recent
years. For example, the private LondonSchool of Business and Finance (LSBF)has a substantial joint venture agreement(i.e., a new joint business) with LondonMetropolitan University. It has also beenrumoured that LSBF would like to purchaseLondon Met. A number of universities planto introduce public-private partnershipswhere private corporations would be paidthrough state-subsidised loans to provideservices such as estate management,administrative support and even teachingin some cases. Until recent problems
with the UK Border Agency, London Met
planned to privatise all of its servicesoutside of teaching. Moreover, its Vice-Chancellor foresees a near future wherepublic universities are privatised.While the government has been workingclosely with massive FTSE 100 companies
such as Goldman Sachs, Pearson and Serco
to expand public-private partnershipsacross the higher education sector, it is
important to note that private equity rmshave already gained a signicant foothold
in the education sector. Over the past few
years private equity rms increasinglyprovide a signicant fraction of adult andvocational education provision in the UK.
For instance, in the academic year 2011-12the government’s Skills Funding Agencygave over £300 million to a range of
companies backed by just ve private equity
funds to provide vocational education toadults. Private equity-backed educationcorporations now take up 9% of thegovernment’s entire adult learning budget.
Given that 27% of the Conservative Party’s
funds come from private equity funds andthe accordant close links the party has withprivate equity, we can expect that numberto grow. We can also expect that privateequity funds will increasingly seek to enter
a now potentially very protable university
sector as they themselves have stated they’dlike to. These funds are already accessing
The Creation of a Higher Education Market