Category: The Market

  • When tuition fee payments are suspended, what happens to students left behind?

    When tuition fee payments are suspended, what happens to students left behind?

    Whilst there may be good reasons for suspending tuition fee payments to “safeguard public funding and ensure students’ interests are protected”, decisions taken to safeguard the public purse often risk overlooking the individual students who are left behind.

    In April 2024 the Office for Students (OfS) opened an investigation in relation to Applied Business Academy (ABA) to consider whether it had complied with requirements to provide accurate information about its students, and whether it had effective management and governance arrangements in place.

    In September 2024, the Department for Education (DfE) instructed the Student Loans Company to suspend all tuition fee payments to ABA, until OfS had completed its investigation. On 27 September, ABA asked the OfS to remove it from the Register because it was no longer able to provide higher education. A decision to permanently close ABA was made on 22 October 2024 and liquidators were appointed.

    On 2 April 2025 OfS published a summary of its investigation. We understand around 300 current and prospective students were on courses partnered with universities who supported students through the closure and offered who were offered individual guidance sessions setting out options which included transfer to complete study as per the student protection plans.

    The other group of students

    However, there were also students who were studying for a Level 5 Diploma in Education and Training (DET) awarded by City and Guilds and some awarded by Organisation for Hospitality and Tourism Management (OTHM) – both at the time eligible for student loan finance. According to the OfS investigation this number looks to be just over 2,000.

    The route to raise complaints and seek redress for these students is different to the route for students on courses partnered with universities. As set out in the section of our Good Practice Framework that covers partnership arrangements, awarding universities and delivery partners will both be members of the OIA, so that students can benefit from a route to independent review of both party’s responsibilities. Where only one partner is a member of the OIA, our remit to review issues of concern to students is more limited.

    As the shape of the HE sector has changed, our legislation has been amended several times to bring as many delivery bodies and awarding institutions accessing public money as possible within our membership, to ensure that all students have access to an independent review of their complaints. But not all Awarding Organisations are currently OIA members, even where these courses are eligible for student finance.

    Access and risk

    There are clearly benefits to students of having access to student finance to access non- universities-awarded courses such as HND, HNC and level 4 or 5 courses with a Higher Technical Qualification approval. But we are concerned that the current arrangements may be inequitable, given that some students cannot seek an independent review of some awarding organisations’ acts or omissions.

    We have sought to close this gap by agreeing with Ofqual that awarding organisations being in membership of the OIA Scheme is compatible with Ofqual regulation and opening our Non-Qualifying membership up for awarding organisations.

    The impact on students of the different arrangements materialises further in cases of provider closure. In previous provider closure cases either the university has proactively put in place appropriate options or if they wanted to raise a complaint, the OIA could look at what the university’s role is in resolving this.

    As things stand, students at a delivery partner that ceases to operate at short notice, on courses awarded by an organisation that is not an OIA member, may find themselves with no clear independent route for complaints and redress. In our experience, students studying at HE level via a non-university awarded route and accessing higher education student finance, have no real understanding of this difference from those on a university awarded course.

    In the case of ABA, we have received a small number of complaints from students on the DET course, who are not able to access any financial remedy since ABA has gone into liquidation and the only option is for the students to become an unsecured creditor against ABA.

    We understand that where City and Guilds has received the work of students, there was not sufficient evidence for them to confirm the qualification requirements had been met for any student. This has been particularly difficult news for some students, many of whom believed that they had passed the course and were simply awaiting receipt of their certificate. They are unable to access further funding to re-take the year, compensation or travel costs to complete their studies.

    In the current financial climate and where franchise provision is coming under more scrutiny, it’s hard to imagine there will not be more students in this situation at a provider impacted by a closure. Alongside this the Lifelong Learning Entitlement (LLE) will potentially open more level 4 and 5 “non university” awarded courses where students may be unable to seek independent redress.

    Whilst we completely agree that protecting public funds is important, we mustn’t forget that there is a real and significant human cost for the genuine students, sometimes with few sources of personal support to help them navigate their limited options, left behind.

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  • Hindsight is a wonderful thing – but foresight is better

    Hindsight is a wonderful thing – but foresight is better

    If students think that they’ve made the wrong choice – either of course, university or both – depending on how deep in they are, there’s often not much that can be done.

    That’s a problem – one that has appeared to be considerable in successive waves of the HEPI/Advance HE Student Academic Experience Survey, despite higher education policy in the last decade supposedly making it both easier to choose, and easier to switch.

    “Regret” in the SAES – measured by asking students if they had a second chance to start again, knowing what they know now, what they would do, has been running at between 35 and 42 per cent since 2018.

    The pandemic will have hit that – but it’s still a large proportion of (in this case) undergraduates given that most of them will be paying for those decisions for decades to come.

    To work out what to do about it, we’d need research on what lies behind the figures – and now a research collaboration between Bristol University, HEPI and Advance HE (along with a steering group including UCAS and UCL’s COSMO project) has produced some – all under the careful eye of former Office for Students CEO turned Professor of Practice in Higher Education Policy, Nicola Dandridge.

    Via two surveys, each of 2,000 students (one for students and graduates), The benefits of hindsight tells us only 2-3 per cent felt higher education was the wrong path altogether – it’s the choices within that that are the issue.

    Similar (enough) to the SAES, 65 per cent of undergraduates were happy with their institution and course choices. 10 per cent would study the same subject at a different university, 6 per cent would change courses at the same institution, 6 per cent would do both, and the rest would have preferred an apprenticeship, a gap year, or direct employment.

    If you’re thinking that that would improve post-graduation, there’s bad news – only 48 per cent of graduate respondents (aged 25-30) were happy with their original decisions, while 15 per cent would have chosen a different course at the same institution, 11 per cent the same course elsewhere, and 12 per cent both – with a further 8 per cent wishing they’d chosen an apprenticeship.

    Why? Students primarily cited “happiness” and better “fit” as reasons for wanting different choices, with 40 per cent acknowledging insufficient research. Graduates, unsurprisingly, were more concerned with career opportunities, with a similar percentage suggesting they needed better career guidance.

    Under the microscope there are two things – the structures and support for choice, and the structures and support for transfer. Neither come out well.

    I travelled each and every highway

    The report kicks off with some historical and international comparisons.

    A HEFCE report from 2016 surveyed graduates 3.5 years after graduation and found 32 per cent would have chosen a different subject, 21 per cent a different institution with ethnic minority graduates most likely to express choice regret.

    International surveys show varying levels of choice satisfaction – 83 per cent of Irish students and 73 per cent of Dutch students report they’d have chosen the same institution or program again.

    OfS analysis from 2021 suggested that less than 3 per cent transfer to different providers (with fewer than half transferring credits), and a 2016 DfE study said that 23 per cent of students who changed providers found the process difficult or very difficult. The data stopped being returned in September 2021 when DfE asked the OfS to stop in the interests of reducing burden.

    Anyway, the results. Among those who would have made different choices, 85 per cent say they would have made a significant difference in their lives, with regret increasing by year of study – 25 per cent of first-years versus 41 per cent of third-years.

    Satisfaction varied by region too – 74 per cent in Scotland vs. 64 per cent in England – as well as by subject, health related students were 10 points happier than social science students.

    For graduates, those employed in highly skilled occupations or pursuing further education reported greater satisfaction with their choices than those in less skilled positions or unemployed.

    You can read all of that, along with various other splits by region, stage and so on, in two ways – either a lot of regret isn’t about the course at all, or a lot of it is about the extent to which a student believed a course might set them up for the labour market, and then (at least a few years on), failed.

    Cracked up to be

    The focus group findings fill in some of the statistical blanks. Learning-related concerns were prominent – with students expressing disappointment about course content, teaching quality, and facilities. One lamented inadequate professional knowledge development:

    I found that the knowledge they had to offer, the experiences of the tutors themselves, and the actual equipment and facilities weren’t that great.

    Many noted discrepancies between university marketing and reality, with one observing:

    I think the way that it was sold is not quite exactly how it is now.

    Resource constraints were also cited, with one student describing how financial issues at their university led to their course being “gutted” with many modules eliminated.

    Career limitations emerged as another regret, particularly among STEM graduates struggling to find employment. One explained her degree’s narrow academic focus rather than industry-relevant skills, and cost of living concerns also featured, with one student regretting moving to Bristol, which they discovered was:

    …the second most expensive for rent outside of London.

    And as seen in studies on value for money (not least the one commissioned by Nicola Dandridge when OfS was set up), financial pressures intensified students’ critical assessment of their education:

    The fact that I’m so aware of the cost of it makes me think more critically.

    Much of that intensifies in the graduate results. Career limitations emerge as a dominant theme – with many lamenting overly specialized degrees that restrict employment options:

    I regret the course that I picked: it’s too specialised. It has limited where I can work – I can work on a children’s ward and nothing else.”

    Several pointed to insufficient internship opportunities as hindering their career progression. One theatre studies graduate wished that employability had been emphasised more – another regretted not completing a placement year.

    Making good choices

    On the assumption that getting the choice right to start with would have helped, for those in the regret camp, 41 per cent of undergraduates thought they should have researched more themselves.

    Students reported universities presenting misleading information at open days and in prospectuses, failing to provide detailed module information, and “putting on a show” that didn’t accurately reflect the actual experience.

    External pressures also significantly influenced regretted decisions with many students choosing subjects based on parental expectations rather than personal interests. Cultural expectations – particularly pronounced among Asian students – and social pressures prevented students from exploring alternatives.

    Preparing for exams whilst decision making also compromised decision quality – many selected “safer” universities based on predicted grades rather than aspirations. Timing was also a key factor in regretted decisions.

    Many wished they had taken gap years to gain clarity on their goals and undergraduates regretted looking “backwards” at subjects they enjoyed in school rather than “forwards” to potential careers. Graduates particularly lamented not understanding the labour market, wishing they better understood the importance of work experience and placements.

    Students who regretted their choices identified some things that could have helped – more transparent information about course content, better integrated career guidance, “taster courses” allowing students to experience subjects before committing, and targeted support for first-generation students.

    But 37 per cent of undergraduates and 21 per cent of graduates believed nothing would have enabled them to make different decisions – social, family, or educational influences overwhelming whatever agency they thought they should have had.

    I did what I had to do

    If students do get their choice wrong, one of the solutions – at least one promoted heavily in the last decade and the now largely abandoned duties given to the Office for Students in the Higher Education and Research Act 2017 – is transfer.

    And interestingly, the majority who regretted their choices would have transferred to another course or institution if possible – 59 per cent of undergraduates and 63 per cent of graduates.

    But multiple barriers prevented it – nearly half of undergraduates believed transferring wasn’t worth the effort and disruption. 52 per cent of graduates said a lack of information or support was their primary barrier, and many (38 per cent of graduates, 22 per cent of undergraduates) were completely unaware that transferring was an option.

    Additional barriers included financial concerns, poor timing (realizing too late), and family pressures.

    Students and graduates identified two major factors that would have enabled transfers – better information and guidance and financial support.

    Many also suggested early intervention systems – first-month “grace periods,” independent advisors, and regular check-ins with first-year students – to identify dissatisfaction before students became too established to transfer easily.

    But again, a significant minority (23 per cent undergraduates, 19 per cent graduates) believed nothing could have enabled them to transfer regardless of support offered.

    There’s some interesting demographic and characteristics splits. Students from lower participation areas reported their choices having greater consequences, higher proportions of private school students wished they attended different institutions for different courses, and Asian students were more influenced by university rankings but less by social media and career advisors.

    Worryingly disabled students showed significantly higher rates of regret and a stronger desire to transfer than the average. Focus group participants highlighted late diagnosis of neurodiversity, or a lack of disability support.

    I planned each charted course

    You do wonder whether, knowing what they know now, having looked at the results, the team would have chosen a different set of questions. What the results tell us is a lot that we already know – both about how students choose a course and university, and how they evaluate the value of that experience.

    If anything, the problem is the paradigm – the assumption in the hypothesis being that students either need to make the right choice first time, or that they need to be able to transfer if they don’t.

    Insofar as the research tests the central solutions to potential regret in both Students at the Heart of the System from 2011 and the OfS (F2) duty to facilitate transfer required via the Higher Education and Research Act 2017, it’s pretty clear that those solutions have failed.

    As such, we might expect the potential solutions on offer to at least contemplate something more radical than “do those things only better.”

    Sadly not. Students should conduct more comprehensive research earlier and consider gap years; schools should shift focus from university attendance to appropriate course/institution matching; graduate perspectives are to be incorporated into school career guidance; and universities are mildly exhorted to make sure that information is “accurate and realistic,” eradicating any “blur” with marketing and promotional material. Good luck with that.

    Meanwhile, work-related learning and the embedding of employability in the curriculum should be “scaled up in universities,” information and guidance should be available and accessible to students to support transfer arrangements, and consideration should be given to UCAS playing a “greater and more visible central coordinating function” in supporting students who wish to transfer.

    If none of that feels like it will shift the dial, that’s perhaps because there’s a dead-horse flogging aspect to them – coupled with nothing in the report that recognises the lack of incentives on universities to make much of that happen. It’s perhaps in the lone recommendation on the LLE that some better solutions might be found.

    I ate it up and spit it out

    Some of the material from students in the report looks at the balance between the theoretical and the practical, and some at (over) specialisation. Both point clearly to programme design, and flexibility within it – at just the point that providers are busy ripping choices and pathways out in favour of more efficient core module credit.

    As Jim noted in this piece on marketisation, it’s the opposite that students want – both in terms of majors and minors, and students being able to accrue credit for learning outside of their subject area through work and service.

    Clear signals to that end in the LLE would help – as would some actual rights in that space over credit transfer and accumulation. Providers that don’t want to play ball don’t have to be able to access the student finance system.

    We note, for example, that in Poland students have the actual right between 25 and 30 per cent of their credit as optional, non-core. In Latvia the minister is about to afford students the right to accrue credit across universities. In Austria, course reps have the right to input on and sign off on a programme’s electives before they are finalised for the year ahead, and in plenty of countries the right to accrue credit for learning via work and service is enshrined.

    More broadly, the lack of student rights in general in the UK – and the lack of a role for student organisations in promoting and enforcing them – is also a barrier. This kind of stuff isn’t going to happen by asking nicely. And the mis-selling thing is only going to change if, for example, OfS applies that new fairness condition to everyone, and strengthens students’ confidence to complain.

    Some of the material is about age – and I’m reminded that across the OECD, the UK has pretty much the youngest entrants and youngest Bachelor’s graduates. The first of those is about everyone in the system normalising a pause – the second is about a credit and student finance system that allows pauses, setbacks, reductions in study intensity and other wheezes that would prevent a student from thinking that they weren’t able to experience what they wanted through no fault of their own.

    Naturally, the stuff on costs needs tightening up – the woeful state of information that both encourages fiscal illusions and reduces any effort in getting those costs down – and the idea that rent or other participation costs can’t be properly researched at least at subject level through some of the national survey infrastructure that we have now is endlessly frustrating. The fact that the UK is one of the few countries in Europe where students have to keep paying their rent if they’ve dropped out means that bigger structural solutions are required.

    There are some ironies in the incentives currently hurled at universities that the report misses too. Anyone that thinks that regret, as described here, will improve while OfS is dangling damocles over continuation is naive; anyone that thinks that similar stats for PG would be improved when our “big sell” is getting a Master’s done in a year and UKVI looks down on changing course, is also kidding themselves. And a student finance system that continues to treat adults as dependent (the means test in the maintenance loan) almost guarantees that parents will hold more sway than their children.

    But as we talked about at The Secret Life of Students, reimagining what “full-time” study means in an era when most students must work to survive is arguably the most important task. If we force students to choose between earning, learning, and contributing, there’s going to be regret – over “fit” and happiness, work experience, skills acquisition and the inability to stop and think in general.

    Hindsight is a wonderful thing, but foresight is better. Unless central government sets itself the task of slowing down both the initial choice and the experience itself – supported by a framework of structural change and actual student agency – we expect that the relentless efficiency demanded of both students and their universities in a mass system will continue to overwhelm whatever OfS does on DiscoverUni or whatever providers think a lonely webpage is doing on the facilitation of transfer.

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  • DfE and OfS are running out of road on regulating a “free market” effectively

    DfE and OfS are running out of road on regulating a “free market” effectively

    On The Wonkhe Show, Public First’s Jonathan Simons offers up a critique of the way the higher education sector has been organised in recent years.

    He says that despite being more pro-market than most, he’s increasingly come to the view that the sector needs greater stewardship.

    He says that the theory of change embedded in the Higher Education and Research Act 2017 – that we should have more providers, and that greater choice and contestability and composition will raise standards – has worked in some instances.

    But he adds that it is now “reasonably clear” that the deleterious side effects of it, particularly at a time of fiscal stringency, are “now not worth a candle”:

    If we as a sector don’t start to take action on this, then the risk is that somebody who is less informed, just makes a judgment? And at the stroke of a ministerial pen, we have no franchising, or we have a profit cap, or we have student number controls. Like that is a really, really bad outcome here, but that is also the outcome we are hurtling towards, because at some point government is going to say we don’t like this and we’re just going to stop it overnight.

    Some critiques of marketisation are really just critiques of massification – and some assume that we don’t have to worry about whether students actually want to study something at all. I don’t think those are helpful.

    But it does seem to be true that the dominant civil service mindset defaults to regulated markets with light stewardship as the only way to organise things.

    Civil servants often assume that new regulatory mechanisms and contractual models can be fine-tuned to deliver better outcomes over time. But the constant tweaking of market structures leads to instability and policy churn – and bad actors nip around the complexity.

    Much of Simons’ critique was about the Sunday Times and the franchising scandal. But meanwhile, across the sector, something else is happening.

    Another one

    Underneath daily announcements on redundancies, senior managers and governing bodies are increasingly turning to data analytics firms to inform their academic portfolios.

    The advice is relatively consistent – close courses with low market share and poor demand projections, maintain and grow those showing high share or significant growth potential.

    But when every university independently follows that supposedly rational strategy, there’s a risk of stumbling into a classic economic trap – a prisoner’s dilemma where individual optimisation leads to collective failure.

    The prisoner’s dilemma, a staple of economic game theory, runs like this. Two prisoners, unable to communicate, have to decide whether to cooperate with each other or defect. Each makes the decision that seems best for their individual circumstance – but the outcome is worse for both than if they had cooperated.

    I witnessed it unfold a couple of weeks ago. On a Zoom call, I watched four SU officers (under the Chatham House rule, obvs) from the same region simultaneously share that their university was planning to expand their computer science provision while quietly admitting they were “reviewing the viability” of their modern languages departments.

    It did sound like, on probing, that their universities were all responding to the same market intelligence, provided by the same consultancies, using the same metrics.

    Each university, acting independently and rationally to maximise its own market position, makes decisions that seem optimal when viewed in isolation. Close the underperforming philosophy department. Expand the business school. Withdraw from modern languages. Double down on computer science.

    But when every university follows the same market-share playbook, the collective result risks the sector becoming a monoculture, with some subjects vanishing from entire regions or parts of the tariff tables – despite their broader societal value.

    The implications of coordination failure aren’t just theoretical – they are reshaping the physical and intellectual geography of education in real time.

    Let’s imagine three post-92 universities in the North East and Yorkshire each offered degrees in East Asian languages, all with modest enrolment. Each institution, following market share analysis, determines that the subject falls below their viability threshold of 40 students per cohort. Acting independently, all three close their departments, creating a subject desert that now forces students in the region to relocate hundreds of miles to pursue their interest.

    The spatial mismatch of Hotelling’s Location Model means students having to travel further or relocate entirely – disproportionately affecting those from lower-income backgrounds.

    And once a subject disappears from a region, bringing it back becomes extraordinarily difficult. Unlike a coffee shop that can quickly return to a high street when demand reappears, universities face significant barriers to re-entry. The sunk costs of hiring specialist staff, establishing facilities, securing accreditation, and rebuilding reputation create path dependencies that lock in those decisions for generations.

    The Matthew effect and blind spots

    Market-driven restructuring doesn’t affect all providers equally. Higher education in the UK operates as a form of monopolistic competition, with stratified tiers of universities differentiated by reputation, research intensity, and selectivity.

    The Matthew effect – where advantages accumulate to those already advantaged – means that elite universities with strong brands and secure finances can maintain niche subjects even with smaller cohorts.

    Meanwhile universities lower in the prestige hierarchy – often serving more diverse and less privileged student populations – find themselves disproportionately pressured to cut anything deemed financially marginal.

    Elite concentration means higher-ranking universities are likely to become regional monopolists in certain subjects – reducing accessibility for students who can’t meet their entry requirements.

    Are we really comfortable with a system where studying philosophy becomes the preserve of those with the highest A-level results, while those with more modest prior attainment are funnelled exclusively toward subjects deemed to have immediate market value?

    Markets are remarkable mechanisms for allocating resources efficiently in many contexts. But higher education generates significant positive externalities – benefits that extend beyond the individual student to society at large. Knowledge spillovers, regional economic development, civic engagement, and cultural enrichment represent value that market signals alone fail to capture.

    Market failure is especially acute for subjects with high social utility but lower immediate market demand. Philosophy develops critical thinking capabilities essential for a functioning democracy. Modern languages facilitate international cooperation. Area studies provide crucial cultural competence for diplomacy and global business. And so on.

    When market share becomes a dominant decision criterion, broader societal benefits remain invisible on the balance sheet. The market doesn’t price in what we collectively lose when the last medieval history department in a region closes, or when the study of non-European languages becomes accessible only to those in London and Oxbridge.

    And market analysis often assumes static demand curves – failing to account for latent demand – students who might have applied had a subject remained available in their region.

    Demand for higher education isn’t exogenous – it’s endogenously shaped by availability itself. You can’t desire what you don’t know exists. Hence the huge growth in franchised Business Degrees pushed by domestic agents.

    Collective irrationality

    What’s rational for an individual university becomes irrational for the system as a whole. Demand and share advice makes perfect sense for a single institution seeking to optimise its portfolio. But when universally applied, it creates what economists call aggregate coordination failure – local optimisations generating system-wide inefficiencies.

    The long-term consequences extend beyond subject availability. Regional labour markets may face skill shortages in key areas. Cultural and intellectual diversity diminishes. Social mobility narrows as subject access becomes increasingly determined by prior academic advantage. The public good function of universities – to serve society broadly, not just commercially viable market segments – erodes.

    But the consequences of market-driven strategies extend beyond immediate subject availability. If we look at long-term societal impacts, we end up with a diminished talent pool in crucial but less popular fields – from rare languages to theoretical physics – creating intellectual gaps that can take generations to refill.

    An innovative economy – which thrives on unexpected connections between diverse knowledge domains – suffers when some disciplines disappear from regions or become accessible only to the most privileged students.

    Imagine your small but vibrant Slavic studies department closes following the kind of market share analysis I’ve explained – you lose not just courses but cross-disciplinary collaborations that generate innovative research projects. Your political science colleagues suddenly lacked crucial language expertise during the Ukraine crisis. Your business school’s Eastern European initiatives withered. A national “Languages and Security” project will boot you out as a partner.

    Universities don’t compete on price but on quality, reputation, and differentiation. It creates a market structure where elite institutions can maintain prestige by offering subjects regardless of immediate profitability, while less prestigious universities face intense pressure to focus only on high-demand areas.

    In the past decade, some cross-subsidy and assumptions that the Russell Group wouldn’t expand disproportionately helped. But efficiency has done what efficiency always does.

    Both of the assumptions are now gone – the RG returning to the sort of home student numbers it was forced to take when the mutant algorithm inflated A-Levels in 2020.

    Efficiency in market terms – optimising resources to meet measurable demand – conflicts directly with EDI and A&P goals like fair access and diverse provision. A system that efficiently “produces” large numbers of business graduates in large urban areas while eliminating classics, philosophy, and modern languages might satisfy immediate market metrics while failing dramatically at broader social missions.

    And that’s all made harder when, to save money, providers are reducing elective and pathway choice rather than enhancing it.

    Choice and voice

    When we visited Maynooth University last year we found structures that allow students to “combine subjects across arts and sciences to meet the challenges of tomorrow.” It responds to what we know about Gen Z demands for interdisciplinary opportunities and application – and allows research-active academics to exist where demands for full, “headline” degrees in their field are low.

    In Latvia recently, the minister demanded, and will now create the conditions to require, that all students be able to accrue some credit in different subjects in different institutions – partly facilitated by a kind of domestic Erasmus (responding in part to a concern about the emigration caused by actual Erasmus).

    Over in Denmark, one university structures its degrees around broad disciplinary areas rather than narrowly defined subjects. Roskilde maintains intellectual diversity while achieving operational efficiency – interdisciplinary foundation years, project-based learning that integrates multiple disciplines, and a streamlined portfolio of just five undergraduate degrees.

    As one student said when we were there:

    The professors teaching the classes at other universities feel a need to make their little modules this or that, practical or applied as well as grounded in theory. Here they don’t have that pressure.

    And if it’s true that we’re trapped in a reductive binary between lumbering, statist public services on the one hand, and lean, mean private innovative operators on the other, the false dichotomy paralyses our ability to imagine alternative approaches.

    As I note here, in the Netherlands there’s an alternative via its “(semi)public sector” framework, which integrates public interest accountability with institutional autonomy. Dutch universities operate with clear governance standards that empower stakeholders, mandate transparency, enforce quality improvement, and cap senior staff pay – all while receiving substantial public investment. It recognises that universities are neither purely market actors nor government departments, but entities with distinct public service obligations.

    When Belgian student services operate through distinct governance routes with direct student engagement, or when Norwegian student welfare is delivered through regional cooperative organisations, we see alternatives to both market competition and centralised planning.

    They suggest that universities could maintain subject diversity and geographical access not through either unfettered market choice or central planning mandates, but through governance structures that systematically integrate the voices of students, staff, and regional stakeholders into portfolio decisions. The prisoner’s dilemma is solved not by altering individual incentives alone, but by fundamentally reimagining how decisions are made.

    Other alternatives include better-targeted funding initiatives for strategically important subjects regardless of market demand, proper cross-institutional collaboration where universities collectively maintain subject breadth, regulatory frameworks that actually incentivise (rather than just warn against extremes in removing) geographical distribution of specialist provision, new metrics for university performance beyond enrolment and immediate graduate employment and better information for prospective students about long-term career pathways and societal value when multiple subject areas are on the degree transcript.

    Another game to play

    Game theory suggests that communication, coordination, and changing the incentive structure can transform the outcome.

    First, we need policy interventions that incentivise the public good nature of higher education, rather than just demand minimums in it. Strategic funding for subjects – and crucially, minor pathways or modules – that are deemed nationally important, regardless of their current market demand, can maintain intellectual infrastructure. Incentives for regional subject provision might ensure geographical diversity.

    Universities will need to stop using CMA as an excuse, and develop cooperative rather than competitive strategies. Regional consortia planning, subject-sharing agreements, and collaborative provision models are in the public interest, and will maintain breadth while allowing individual institutions to develop distinctive strengths.

    Flexible pathways, shared core skills, interdisciplinary integration – all may prove more resilient against market pressures than narrowly defined single-subject degrees. They allow universities to maintain intellectual diversity while achieving operational efficiency. And they’re what Gen Z say they want. Some countries’ equivalents of QAA subject benchmarking statements have 10, or 15, with no less choice of pathways across and within them. In the UK we somehow maintain 59.

    At the sector level, collaborative governance structures that overcome the coordination failure means resource-sharing for smaller subjects, and student mobility within and between regions even for those we might consider as “commuter students”.

    OfS’ regulatory framework could be reformed to incentivise and reward collaboration rather than focusing primarily on institutional competition and financial sustainability. Funding could reintroduce targeted support for strategically important subjects, informed by decent mapping of subject (at module level) deserts and cold spots.

    Most importantly, universities’ governing instruments should be reformed to explicitly recognise their status as “(semi)public sector bodies” with obligations beyond institutional self-interest – redefining success not as market share growth but as contributing to an accessible, diverse, and high-quality higher education system that serves both individual aspirations and collective needs.

    Almost every scandal other than free speech – from VC pay to gifts inducements, from franchising fraud to campus closures, from grade inflation to international agents – is arguably one of the Simons’ deleterious side effects, which are collectively rapidly starting to look overwhelming. Even free speech is said by those who think there’s a problem to be caused by “pandering” to student consumers.

    Universities survive because they serve purposes beyond market demands. They preserve and transmit knowledge across generations, challenge orthodoxies, generate unanticipated innovations, and prepare citizens for futures we can’t yet imagine.

    If they respond solely to market signals, the is risk losing what makes them distinctive and valuable. That requires bravery – seeing beyond the apparent rationality of individual market optimisation to recognise the collective value of a diverse, accessible, and geographically distributed higher education sector.

    It doesn’t mean running provision that students don’t want to study – but it does mean actively promoting valuable subjects to them if they matter, the government intervening to signal that quality can (and does) exist outside of the Russell Group, and it means structuring degrees such that some subjects and specialisms can be studied as components if not the title on the transcript.

    It also very much requires civil servants and their ministers to wean themselves off the dominant orthodoxy of regulated markets as being the best or only way to do stuff.

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  • Policy change can help manage the demand for graduate knowledge and skills

    Policy change can help manage the demand for graduate knowledge and skills

    “Our universities have a paramount place in an economy driven by knowledge and ideas.”

    These are the opening words of the 2016 white paper Success as a Knowledge Economy, which created the funding and regulatory architecture governing English higher education today. The arrangements are founded on a broad faith in the economic benefits of generating and communicating knowledge.

    This vision assumes that an increasing supply of university graduates and research, coupled with open markets that reward enterprise, leads to endogenous economic growth. That can happen anywhere because ideas are boundless and non-rivalrous, but particularly in England because our universities are among the best in the knowledge business.

    English higher education has grown by integrating the development of specific skills for the workplace alongside universally applicable knowledge. This is clear from the progress of most English universities from institutes established for professional and technical training towards university status, the absorption of training for an increasing range of professions within higher education, and the way in which universities can now articulate the workplace capabilities of all graduates, regardless of their discipline.

    Notwithstanding this, the reforms proposed in 2016 emphasised knowledge more than skills. By that time, most of the cost of teaching in English universities had been transferred to student tuition fees backed by income-contingent loans. So, the reforms mostly focused on providing confidence for the investments made by students and the risks carried by the exchequer. This would be delivered through regulation focused on issues important to students and the government, whilst positioning students as the pivotal influence on provision through competition for their choices.

    Universities would compete to increase and improve the supply of graduates. This would then enhance the capacity of businesses and public services to capitalise on innovation and new technologies, which would yield improved productivity and jobs requiring graduates. That is a crude characterisation, but it provides a starting point for understanding the new imperatives for higher education policy, which are influenced by challenges to this vision of nearly a decade ago.

    From market theory to experience in practice

    Despite an expansion of university graduates, the UK has had slow productivity growth since the recession of 2008–09. Rather than the economy growing alongside and absorbing a more highly educated workforce, there are declining returns for some courses compared with other options and concerns that AI technologies will replace roles previously reliant on graduates. Employers report sustained gaps and mismatches between the attributes they need and those embodied in the domestic workforce. Alongside this, ministers appear to be more concerned about people that do not go to university, who are shaping politics in the USA and Europe as well as the UK.

    These are common challenges for countries experiencing increasing higher education participation. The shift from elite to mass higher education is often associated with a “breakdown of consensus” and “permanent state of tension” because established assumptions are challenged by the scale and range of people encountering universities. This is particularly the case when governments place reliance on market forces, which leads to misalignment between the private choices made by individuals and the public expectations for which ministers are held to account. Universities are expected to embody historically elite modes of higher education reflected in media narratives and rankings, whilst also catering for the more diverse circumstances and practical skills needed by a broader population.

    In England, the government has told universities that it wants them to improve access, quality and efficiency, whilst also becoming more closely aligned with the needs of the economy and civil society in their local areas. These priorities may be associated with tensions that have arisen due to the drivers of university behaviour in a mass market.

    In a system driven by demand from young people, there has been improved but unequal access reflecting attainment gaps in schools. This might not be such a problem if increasing participation had been accompanied by a growing economy that improves opportunities for everyone. But governments have relied on market signals, rather than sustained industrial strategies, to align an increasing supply of graduates with the capabilities necessary to capitalise on them in the workplace. This has yielded anaemic growth since the 2007 banking crash, together with suggestions that higher education expansion diminishes the prospects of people and places without universities.

    In a competitive environment, universities may be perceived to focus on recruiting students, rather than providing them with adequate support, and to invest in non-academic services, rather than the quality of teaching. These conditions may also encourage universities to seek global measures of esteem recognised by league tables, rather than serving local people and communities through the civic mission for which most were established.

    Market forces were expected to increase the diversity of provision as universities compete to serve the needs of an expanding student population. But higher education does not work like other markets, even when the price is not controlled as for undergraduates in England. Competition yields convergence around established courses and modes of learning that are understood by potential students, rather than those that may be more efficient or strategically important for the nation as a whole.

    Navigating the new policy environment

    After more than a decade of reforms encouraging competition and choice, there appears to be less faith in well-regulated market forces positioning knowledgeable graduates to drive growth. Universities are now expected to become embedded within local and national growth plans and industrial strategy sectors, which prioritise skills that can be deployed in specific settings ahead of broadly applicable knowledge. This asks universities to consider the particular needs of industry, public services and communities in their local areas, rather than demand from students alone.

    Despite these different imperatives, English higher education will continue to be financed mostly by students’ tuition fees and governed by regulatory powers designed to provide confidence for their choices. We suggest four ingredients for navigating this, which are concerned with strategy, architecture, regulation and funding.

    The government has promised a single strategy for post-16 education and a new body, Skills England, to oversee it. A more unified approach across the different parts of post-compulsory education should encourage pathways between different types of learning, and a more coherent offer for both learners and employers. But it also needs to align factors that influence the demand for graduates, such as research and innovation, with decisions that influence their supply. That requires a new mindset for education policy, which has tended to prioritise national rules ahead of local responsiveness, or indeed coherence with other sectors and parts of government.

    Delivery of a unified strategy is hampered by the fragmented and complex architecture governing post-16 education. Skills England will provide underpinning evidence, both influencing and drawing on Local Skills Improvement Plans (LSIPs), but it remains uncertain how this will be translated into measures that influence provision, particularly in universities. A unified strategy demands structures for convening universities, colleges, employers and local authorities to deliver it in local areas across the country.

    That could be addressed by extending the remit of LSIPs beyond a shopping list of skills requirements and enhancing the role of universities within them. Universities have the expertise to diagnose needs and broker responses, aligning innovation that shapes products and services with the skills needed to work with them. They will, though, only engage this full capability if local structures are accompanied by national regulatory and funding incentives, so there is a unified local body responsible for skills and innovation within a national framework.

    Regulation remains essential for providing confidence to students and taxpayers, but there could be a re-balancing of regulatory duties, so they have regard to place and promote coherence, rather than competition for individual students alone. This could influence regulatory decisions affecting neighbouring universities and colleges, as well as the ways in which university performance is measured in relation to issues such as quality and access. A clear typology of civic impact, together with indicators for measuring it, could shift the incentives for universities, particularly if there is a joined-up approach across the funding and regulation of teaching, research and knowledge exchange.

    Regulation creates the conditions for activity, but funding shapes it. Higher education tends to be a lower priority than schools within the Department for Education, and research will now be balanced alongside digital technologies within the Department for Science, Innovation and Technology. A new Lifelong Learning Entitlement and reformed Growth and Skills Levy may provide new opportunities for some universities, but any headroom for higher education spending is likely to be tied to specific goals. This will include place and industry-oriented research and innovation programmes and single-pot allocations for some MSAs, alongside the substantial public and private income universities will continue to generate in sectors such as health and defence. In this context, aligning universities with the post-16 education strategy relies on pooling different sources of finance around common goals.

    Closer alignment of this kind should not undermine the importance of knowledge or indeed create divisions with skills that are inconsistent with the character and development of English higher education to date. The shift in emphasis from knowledge towards skills reframes how the contributions of universities are articulated and valued in policy and public debate, but it need not fundamentally change their responsibility for knowledge creation and intellectual development.

    This appears to have been recognised by ministers, given the statements they have made about the positioning of foundational knowledge within strategies for schools, research and the economy. We have, though, entered a new era, which requires greater consideration of the demand for and take-up of graduates and ideas locally and nationally, and a different approach from universities in response to this.

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