Sustainable HE funding: lessons from Down Under for an embattled English sector

At present, the university sector in England faces not just headwinds of change, but a veritable blizzard of reform, spanning a wide range of policy areas.

The stakes in relation to the government’s impending review of higher education funding and student finance are clearly high and very much on the radar across Westminster.

Putting aside the important financial implications for the sector, and individual graduates, that are bound up in the forthcoming review, there are also more fundamental questions being asked in the unfolding national debate. These include what the optimal level of participation in higher education should be, as well as issues about the quality and diversity of provision on offer and, linked to this, the intrinsic value to the individual and society of an undergraduate degree in the 21st century.

Last week, I gave evidence to the House of Lords Economic Affairs Committee in relation to its inquiry into the economics of higher education, further education and technical education. The committee is a highly experienced, intellectually formidable grouping, with two former chancellors of the Exchequer, three former permanent secretaries and a significant number of distinguished industry and public sector leaders included in its membership.

They asked astute, challenging questions seeking to draw out how well served students and employers are in this day and age by university provision. They wanted to test the received wisdom that a greater proportion of degree-level educated graduates will fuel national productivity.

The sector shouldn’t fear this scrutiny, especially from critical friends such as those on the committee who, in my view, clearly do want universities to still be going strong in a century’s time and believe that they can play a valuable role in enhancing prosperity and social mobility. 

Some committee members were concerned that the 50 per cent participation in higher education target was, in fact, undermining both the esteem and level of investment in the unit of resource connected to vocational and technical pathways outside a higher education setting.

In my view, it’s a false dichotomy to believe that there’s an either/or dynamic here.

A smart government with serious intent and a comprehensive policy agenda can increase participation in higher education while also driving major improvements in the quality, reputational calibre and participatory rates of vocational and technical education.

I also think that it’s a mistake to believe that universities aren’t responsive to the concerns and ideas of employers. In the past 15 to 20 years, I have seen a hugely increased focus by academics leaders and practitioners across a huge range of subject areas in terms of building their understanding of what particular industries, professions, and employers more generally, want to see in terms of the rounded skill set and mindset of the pipeline of graduates.

We engage at every level – from the co-design of courses, guest lecturers and professors of practice, to integrated work placements and internships. Universities are also now moving to offer degree-level apprenticeships.

We must also not underestimate the importance that employers place on the lateral thinking, analytical and communicative abilities that graduates develop over the course of a three-year programme of study. We can too easily take for granted how many employers do report that they are satisfied with the performance and innovative thinking of their graduate employees.

Of course, not every student has a uniformly positive outcome in terms of their early labour market experience as a graduate, and we are understandably being challenged to do more to support them with the transition. But, on the whole, graduates are still more likely to earn more, have more stable patterns of employment and greater career flexibility.

Many universities also report that a growing number of graduates are showing an increased inclination to start their own business within a few years of graduating, which is also something to be proud of.

In an age where people may have several different careers across the course of 40 or 50 years of their working life, we must remind policymakers that university isn’t purely about getting a job in a particular field, or about a graduate hitting a financial milestone by a particular age in line with statistical benchmarks. That’s not how you judge the value of a degree for an individual or society.

A university education is about preparing people to live a fuller life as a citizen, where they’ll be more resilient, open to new possibilities and cultural experiences, and better prepared to interact with people from many broad walks of life and countries around the world. 

My own evidence to the select committee, in particular, focused on how the Australian and English higher education funding systems support quality provision.

My view, having held a variety of leadership roles in both countries, including serving as vice-chancellor of Monash University, Australia’s largest research-intensive institution, is that both countries’ university systems have considerable virtues and some practical drawbacks. Both have university systems that are genuinely admired – and even envied – in many parts of the world.

In Australia, the level of investment in base funding for both teaching and research isn’t yet at the optimal level, and it does mean that universities have to generate higher margins than in England to properly make up for a shortfall of public investment in research. The lack of a second substantial stream of quality related-type research funding, as provided by the Higher Education Funding Council for England, is a major problem in Australia.

More positively, Australia’s shared contribution model of funding is very well understood and has endured and evolved remarkably well over the past three decades. It’s not a source of anxiety for students or a flashpoint of major societal contention. There are three broad student fee contribution band ranges and eight clusters – the clusters are used to determine the balance of the overall tertiary education fee and the mix of public and private contribution for particular subjects.

Australia’s various “HELP” loan pool accounts are designed in a way that there’s in effect a zero rate of real interest on the loans. It also has a different repayment approach, which means that, on average, an Australian will have repaid their loan on an undergraduate degree within nine years of graduating.

If the government does seek to revisit the balance between public and private contributions to the costs of delivering undergraduate degrees and also funding the wider long-run costs involved in universities maintaining a first-rate academic environment for research-informed teaching, then it would do well to look at Australia where the level of participation has grown without major accordant political and public anxiety about the cost of going to university. 

Ed Byrne is principal of King's College London.