Treasury plan seeks to put ‘competitive pressures’ on universities

That the Treasury sets the course of higher education policy these days is no longer news. But in its recent Productivity Plan was another important, possibly transformative, announcement.

Alongside changes to the planning system and more talk of the “northern powerhouse” were plans on “opening the market” in English higher education “to new and alternative providers”.

The overall aim of the changes, says the Treasury in the document, is to bring in new providers who “stimulate competition and innovation, increase choice for students, and deliver better value for money”.

The government plans to “introduce a clearer and faster route to degree-awarding powers for those assessed to offer the best quality education”, as well as to “explore options to allow the best providers to offer degrees independently of existing institutions before they obtain degree-awarding powers”, according to the document.

This will mean changes to current rules on degree-awarding powers, under which new entrants must offer degrees validated by a university for four years before they are eligible to gain their own degree-awarding powers.

Observers see the changes as possibly creating a bigger role for Pearson, said to be under consideration by the government to run any new awarding body; or as helping private providers, most notably the New College of the Humanities, progress quicker and attract investors more easily.

Either way, the Treasury’s goal is to create more competition for universities.

Critics such as the University and College Union argue that the Productivity Plan shows that the government has failed to heed the lessons of its expansion of private providers in the last Parliament. The explosion in for-profit colleges recruiting students with public funding on to sub-degree Higher National Diploma and Higher National Certificate courses, awarded by Pearson’s examinations arm Edexcel, was condemned by MPs on the Public Accounts Committee.

One vice-chancellor at a traditional university, speaking anonymously, described the policies in the Productivity Plan as “dangerous” and as heralding the “Americanisation” of private provision in England.

But Paul Kirkham, chief executive of the for-profit Institute of Contemporary Music Performance, said of the current picture in higher education: “The problem is a lack of innovation and forward-looking change in the models of delivery.

“While it is absolutely essential that student protection measures are properly in place, if no publicly funded institution ever fails and there is limited new entry to the sector, then we have stagnation and protectionism, not innovation and true competition.”

Mr Kirkham likened the current system – in which new providers wishing to offer degrees must find a university to validate these degrees – to a “small independent grocery shop” being told that in order to open up “you need to get a licence from Tesco. That can’t be right.”

Some read the Treasury’s words on allowing “the best” to offer degrees before they secure degree-awarding powers as a reference to ideas – already proposed by the government for sub-degree vocational qualifications – to create an equivalent of the old Council for National Academic Awards, which awarded degrees at polytechnics.

Mr Kirkham said that the creation of a new awarding body, along the lines of a University of London model, but which was not a provider itself, “would ensure the validating body does not make decisions which are anti-competitive”.

Carl Lygo, vice-chancellor of for-profit owned BPP University, said: “It's crazy that BPP had to create an entire university just because it wanted one master’s degree programme just over a decade ago. It strikes me as sensible for the government to be looking at the old CNAA-type awards body provided there is robust quality review and we do not end up with a similar situation as to HNDs.”

But Nick Hillman, director of the Higher Education Policy Institute, said that the Treasury may not have been referring to the CNAA idea.

He suggested that it might instead have been referring to “the New College of the Humanities problem – how do you get a new high-quality institution off the ground quickly? A faster process [to degree-awarding powers] would encourage investors.”

If a private provider can award and create its own degrees, it has the potential to expand, making it more attractive to investors. And in a self-fulfilling cycle, investment makes it possible for a private provider to expand.

Fast track wanted

Times Higher Education reported last year that NCH was seeking a £10 million investment from potential corporate investors, which could have amounted to a takeover. No public announcement was ever made on investors coming forward.

The college, which charges fees of £18,000 a year and was established by the philosopher A. C. Grayling, recently announced that it is to offer degrees validated by Southampton Solent University from the autumn. The college wants to secure its own degree-awarding powers, and a validation agreement is the only route to that under the current rules. But that is a four-year process.

The NCH is said to have significant lobbying influence on the Treasury, which is said, in turn, to see the college as a starting point in much of its thinking on private providers.

Jeremy Gibbs, the chief executive of NCH, said: “If we can do it [secure degree-awarding powers] in a way that is sustainable and in a way that maintains quality, we’d like to do it faster than that.”

The Treasury’s Productivity Plan could make that happen. Pearson, with £844 million to spend on its education business after selling the Financial Times, is also likely to welcome a faster route to degree-awarding powers, which would benefit its own fledging provider, Pearson College.

Mr Hillman suggested that the Treasury’s aim in creating extra competition for universities is “quality and efficiency”, rather than downward pressure on fees.

While universities are autonomous, the Treasury view is that “you can do something indirectly” about their cost base on factors such as pensions, Mr Hillman said.

“Academics at BPP are not in the USS [Universities Superannuation Scheme used by pre-92 universities],” he added. “There is a bit of a view in government that the bigger alternative providers are, the more competitive pressures” will be created for universities, Mr Hillman said.

Meanwhile, Aldwyn Cooper, vice-chancellor of the private, charitable Regent’s University London, said that he welcomed the government’s commitment to “widening the range of high-quality higher education providers”.

But he said that he would “adamantly not support creating faster and less demanding routes to gaining degree-awarding powers or university title. It is our strong control of quality assurance that is respected internationally and ensures the adequate quality controls that are in place to protect the UK higher education brand, which is respected globally.”  

To some, there is also another problem on the quality issue: the government’s plan to further encourage private provision comes as the quality assurance system is under review. Therefore, is it a risky time to attempt a radical opening-up of the sector to private providers? As so often in higher education, it looks like the Treasury will make the call.

john.morgan@tesglobal.com