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UK Education Commission Report 1

UK Education Commission Report 1

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Published by: SamAnderson on Nov 21, 2012
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12/04/2012

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REPORT NO.1
 
FOOT IN THE DOOR:PROFIT AND PUBLICEDUCATION
 A report by The Education Commission
I
t is now almost two years since the ConDem government passed the Education Act2010. We now know that around three quarters of English universities have elected tocharge students the maximum possible fee of £9,000 per year for the privilege of theirattendance in courses.In fact, while the government publicly presumed when it passed education legislation inDecember 2010 that £9,000 fees would be very exceptional, it is estimated that the averageannual tuition fee is well over £8,000. We know that the Education Maintenance Allowance(EMA) has been annulled thus closing the doors to higher education for thousands. And weknow that the New College for the Humanities, an elite private university, began offeringcourses in September 2012 while charging £18,000 per year. In other words, we have ageneral sense that the higher education system in England as it has existed is under attack,if not fucked. We hold no nostalgia for this system as it has existed. The university isexclusive, disciplinary and its primary raison d’etre is to train and reproduce workers andknowledge for the purpose of the accumulation of capital. Nonetheless, we are concernedthat the privatisation and enclosure of higher education is entering a new phase. In thisshort report we seek to understand the effects of recent higher education legislation alongwith migration and border controls in education and likely near-future scenarios. Our
intent is to briey map the current terrain in higher education.
Released on 21 November 2012 to coincide withthe National Union of Students demonstrationsin central London.
 
REPORT 1 | EDUCATION COMMISSION
2
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 stratication 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 stratication 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-prot, they tend to
incorporate themselves into a series ofinstitutions wherein the university itself
may be non-prot but it simply pays
another ostensibly separate institution forservices rendered such as student services
or housing in order to channel protswhile maintaining its non-prot 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 signicant foothold
in the education sector. Over the past few
years private equity rms increasinglyprovide a signicant 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 protable university
sector as they themselves have stated they’dlike to. These funds are already accessing
The Creation of a Higher Education Market
 
3
EDUCATION COMMISSION | REPORT 1
state subsidies in the form of student loansthrough private universities they control.The recent sale of the private College ofLaw suggests a future where large private
equity rms buy and sell universities,
cut costs and execute mass layoffs in the
interests of prots, just as they do with any
other business.
Student Loans and BadAccounting 
While it’s not clear whether it was doneintentionally or whether the Con-Demgovernment were simply naive, some verypoor accounting means further cuts touniversity budgets are inevitable. Whenthe government replaced direct grants touniversities with massive tuition fees backedby state loans in 2010 they estimated thatmost universities would charge well belowthe £9,000 maximum. They also estimatedthat repayment rates would be relativelyhigh. In other words, the government under-estimated tuition rates and over-estimatedthe average earnings of graduates, meaningthat as loans will begin to have to be repaidin a few years time, the higher educationbudget will be smaller than presumed andplanned for. We can expect that this willform a rationale for further cuts to alreadybeleaguered institutions.If students read their student loanagreements carefully, they will also notea clause that states that their loans maybe transferred from the government to
other providers. Given the expected rise
in the cost of student loans against initialgovernment predictions, it is very possiblethat loans will be sold to private banksor investors in the near future in orderto cut government costs. Presumably,this would start with the most ‘valuable’loans (of medical students likely to repayfor example) and then broaden to create amassive student loan market, not unlikethe United States, where student debt is amassive social problem (not least becausein the US student loans are the only typeof loan where the individual cannot declarebankruptcy).
Privatisation Processes andImmigration Policies
Processes of privatisation in higher
education intersect with current UK
immigration policies in inconsistent andsometimes contradictory ways, and wemention them here because any struggle
against one must recognise the inuenceand signicance of the other. Universities
have become increasingly dependent oninternational student fees as other sourcesof revenue dwindle or disappear; at thesame time, international students are
being put off from studying in the UK
by increasingly draconian immigrationpolicies. In an increasingly competitivetransnational education market, the
asco of the UK Border Agency’s (UKBA)
revocation of London Met’s capacity tosponsor foreign students drew attentionto the ConDem government’s apparent
willingness to punish bona de students for
problems emanating from their universityadministration (2600 current students were
initially given 60 days either to nd placesat other universities or to leave the UK). As
noted above, prior to the recent problems
with the UKBA, London Met planned
to privatise all of its services outside of
teaching. Following the UKBA debacle,
the companies that were in negotiationswith London Met about taking up thesecontracts pulled out. At SOAS, staff andstudent unions have been engaged in along struggle to bring its cleaning servicesback in-house, a struggle that achievedadditional visibility in summer 2009 whenthe company sub-contracted to provide
cleaning staff facilitated the high-prole
arrest of a number of cleaners for allegedlyworking without proper documentation.
Conclusions
The picture we have sought to paint of thecurrent status of higher education provision
in the UK, despite all the acronyms and
complexity of institutional arrangementsand governance structures, is a relativelysimple one. The raising of tuition fees wasonly a relatively small step (with massiverepercussions) towards a broader strategy of
drawing out as much prot as possible from
what are still mostly public institutions. Thenew student loans system creates a terrain
where it is suddenly very protable and very
desirable for large corporations to extractmoney from the state by being able to drawon state subsidies. This is happening in twobroad ways. First, it is becoming more and
more protable and there are less and less
restrictions on totally private universities.Unless we resist these institutions they willquickly begin to proliferate. We should takeinspiration from the very powerful protestsand resistance that students have producedagainst the New College for the Humanitiesin recent months.Second, privatisation is happeningincrementally within public institutionsthrough the provision of services likecatering and marketing, land managementand so on. It is likely that once largecorporations have their foot in the door
they will continue to extract prots from
universities in any way they can, includingthrough the provision of teaching just asthey already are in adult education. It isnot only not inconceivable, it is lookingincreasingly likely that our universities
could soon be run by investment rms likeGoldman Sachs.

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