Category: UK Government

  • A government running out of road still sets the economic weather for higher education

    A government running out of road still sets the economic weather for higher education

    For a party that it’s become fashionable to criticise for failing to have prepared for power, Labour has in fact set an awful lot of ambitious policy machinery into motion over the last 16 months.

    There’s barely been a month go by without some large-scale reform to how the country is governed, organised, and understood as a sum of diverse parts and competing pressures, and we’ve had our work cut out thinking through the implications of each for the higher education sector: from devolution to industrial strategy, from health reform to an explicit tying together of skills and migration (which has barely got started yet), from a new communities strategy to belatedly moving skills policy to the Department for Work and Pensions.

    Whatever your views on the merits and mechanics of these, and the many other initiatives that different departments have launched, they are all downright interesting – and pose a plethora of questions for how higher education fits in and demonstrates value.

    But all need time. The overall ambitions of devolution are still on their starting blocks as councils pitch their ideas for new geographies; the industrial strategy was explicitly badged as bearing fruit in 2035; the NHS workforce plan that should really have been alongside the 10-year health plan has been delayed to the spring – and so on and so on. No-one involved in pulling together all these long-term reforms did so under the assumption that all the pieces would be in place within one parliamentary term.

    Yet here we now are, with the commentariat consensus being that both Keir Starmer and Rachel Reeves are toast, and public sentiment pointing emphatically in that direction as well – though this is not to say the party cannot regain momentum under a new leader. The sector is already asking questions about how to prepare for a Reform government (as discussed in the most recent instalment of our new HE Influence newsletter, I should mention).

    The post-16 white paper presented a somewhat upbeat vision of what the government would like higher education’s role to feel like across the country, but was weaker on any kind of immediate reform, proposing instead that traditionally glacial changes to research funding, a piece-by-piece strengthening of the Office for Students’ remit, and putting FE, HE and business in the same room would do much of the heavy lifting, given time and goodwill.

    All this feels like a recipe for the sector to retreat to more comfortable home territory over the next few years, fighting battles over the international student levy, the size of teaching grants, and the shape of the REF, and gradually giving up on pushing for a central role in the government’s overall vision for the country, given the increasing probability that dreams like a planned and unswerving industrial strategy will all be swept away in 2029.

    Quite what’s to be done about all this is a question for another day – with the Budget looming on Wednesday, and admittedly still three and a half years in office remaining for Labour, the other thing that’s worth reflecting on is quite how much the choices the Chancellor makes around tax, public spending, debt, and general macroeconomics will determine the success – or otherwise – of higher education institutions in England over the next few years. These big tickets items all impact the sector deeply, however much the temptation might be to throw one’s hands up in the air, snipe about a “tax” on overseas recruitment, and start looking at what opposition parties can be convinced of.

    Labour on labour

    There’s a pretty strong case to be made for the most consequential policy decision for universities since Labour came to power being the decision to hike employer national insurance contributions in last autumn’s budget. Clearly it has cost universities a small fortune, and the move also sucked up a sizeable slice of the government’s various funding “boosts” for schools and FE colleges – and the NHS and elsewhere – leaving less putative generosity to go around.

    But perhaps most importantly of all, the ENICs rise has decimated the labour market for young people – in the court of public opinion at least – by making new hires and part-time workers more expensive, all while AI is supposedly making them obsolete.

    The result is that university graduates – and the institutions ever more judged on those graduates’ success – are seen to be in a right old state. The Guardian was the latest to take a run at this last week, with tales of qualified grads banging their heads against the job application wall, accompanied by analysis from the paper demonstrating that almost half of all jobs lost since Labour came to power were among the under-25s. Down in the small print we see that this is driven almost entirely via reduced employment of 16- and 17-year-olds, but the vibes aren’t good, even if less hyperbolic analysis from the likes of the Institute of Student Employers and Prospects Luminate paints merely a concerning, rather than cataclysmic, picture.

    The sad fact is that, longer term, this deluge of negative publicity about the value of a degree – alongside a necessary tailing off of the supposed “graduate premium” as a viable sector talking point as the minimum wage heads ever up – will inevitably move from being fodder for anti-HE journalists to actually driving changes in young people’s decision-making (even if a tight jobs market in the short-term often pushes graduates back towards postgraduate study) and scar the sector’s ability to make its case for its value.

    The result is that keeping a watchful eye on Labour’s economic moves around the costs associated with employment – both on Wednesday and beyond – has become a matter of some importance for higher education. Further increases in the national living wage over the next few years, lower-profile changes to business taxation, and even wildcards like any surprise revenue-raising changes to the growth and skills levy, all hold the possibility of making this problem worse. All while leading to higher costs for universities and making it harder for students to work alongside their studies, despite this being ever more necessary.

    Pound in pocket

    Rachel Reeves finally taking the plunge with an income tax rise, as a good proportion of the Labour backbenches were calling for, seems to have definitively fallen off the table for the Budget – with a handful of consequences worth noting for the sector.

    First, it will almost certainly mean that future spring and autumn statements will be equally fraught, as the Treasury fails to leave clear blue water between its spending plans and its spending rules. By not maintaining a sensible “headroom”, public finances will remain permanently at the mercy of external shocks and OBR downgrades, and we’ll probably be back here in less than six months’ time wondering what levers will need to be pulled. At least at some point in the Parliament, said levers will end up being haircuts to departmental budgets rather than new taxes or further borrowing.

    Following on from this, the use of a basket of smaller revenue-raising measures to partially fill the gap left by not raising income tax increases the likelihood that this shortfall gets filled by employment-related measures – that is, all the issues we’ve been over above, which have serious consequences for universities as large employers who are not quite in the public sector (as may be the case this week if rumoured changes to salary sacrifice rules go ahead).

    And the other effect that an income tax rise would have achieved, which the “smorgasbord” approach will not to the same extent, is bringing down inflation.

    Inflation is arguably the most serious financial threat that higher education institutions face. Even if many within the sector, both in internal conversations and public pronouncements, are often quite happy to let audiences believe that measures like the dependants ban are what’s most responsible for blowing a hole in HE finances, the fundamentals weren’t sound even before the post-pandemic recruitment glut.

    While tuition fees and maintenance loans in England (and, at least for one year, Wales) are now linked to inflation, or more precisely to inflation forecasts – Office for Budget Responsibility predictions on Wednesday will set the levels for 2026–27 – the idea of any measures to compensate for all the shortfalls baked in over several years of rocketing price rises appears to have been permanently nixed.

    And it’s worth bearing in mind that the index link does not mean that either student maintenance or teaching funding will actually keep pace with inflation in the coming years. For one thing, OBR forecasts have repeatedly underestimated inflation, and there’s no corrective mechanism in the system. For student maintenance, even if predictions come true, other features of the system mean that the average, rather than maximum, maintenance loan continues to be worth less each year.

    For teaching funding, it’s important to stress that Labour has in no way committed to keeping the overall package inflation-proofed. While tuition fees are the major part here, other elements such as high-cost subject funding took a real-terms tumble this year, and no-one is predicting that the reforming the Strategic Priorities Grant means upward movement on how much it’s worth – the reverse is far likelier, given DfE’s commitments elsewhere.

    University staff have had a decade or more of below inflation pay rises, and there doesn’t seem any serious capacity or appetite among higher education employers to do fundamental work here – the year-on-year squabbles will continue, and high levels of inflation over the coming years will eat further into staff remuneration and the attractiveness of higher education careers.

    And inflation-linked rises in tuition fees will also change applicant behaviour. One thing we’ll start getting a sense of on Wednesday will be the likelihood of when fees will cross the (supposedly) psychologically important barrier of £10,000. Back in March, the OBR was expecting RPIX to run at 2.7 per cent in Q1 2027, and 2.8 per cent in Q1 2028, which would lead to tuition fee caps of around £9,790 in 2026–27 and around £10,065 in 2027–28. We won’t know for certain until autumn 2026, but the picture will start to come into focus.

    Now the significance of fees being materially above, rather than roughly equal to, £10k is perhaps overstated. But DfE isn’t really sure – it has reportedly commissioned modelling on how students will respond to rises, but the results aren’t due until the spring.

    All in all, there’s a whole host of reasons why Budget decisions and their effect on inflation, as well as the OBR forecasts themselves, have become heavily intertwined with the future behaviour and wellbeing of higher education staff and students.

    Gilt trips

    Perhaps the most overlooked publication of the last few years for really understanding how the Treasury thinks about higher education is the Institute for Fiscal Studies analysis of how the interplay between interest rates and Treasury gilts affect the cost of student loans.

    In a nutshell, it costs far more for the government to borrow than it used to (the 15-year gilt yield has continued to rise since the IFS did its sums in January 2024), and so it’s very reluctant to allow for too much expansion in the student loan book – it’s a far cry from when the broad strokes of student finance were put in place by the coalition government, and this was basically thought of as free money.

    This goes a long way to explain why the government is so reticent to use the student loan book in any radical way – and thus we see things like a real-terms freeze in tuition fees being presented as if it’s an almost saint-like act of generosity to the sector, or the foundering of DfE’s tepid-but-probably-genuine desire to properly boost maintenance loans.

    We’re waiting for the specifics (hopefully) of maintenance grant implementation on Wednesday, but the cost of government borrowing feels like it has played a role in the last year of behind-the-scenes policy deliberations here. In the run-up to last autumn’s Budget, there was plenty of speculation, and government nods to the press, about the potential for movement on the overall maintenance package and grants in particular. Clearly the battle with the Treasury was lost, and DfE was told to come up with an alternate source of funding – hence the international student levy. What we don’t yet know is to what extent grants will replace, rather than supplement, loans – if what we see is a switch from one to the other, the expense to the public purse of borrowing is a likely primary driver, especially given the hidden costs associated with annual tuition fee rises. While the sector isn’t really getting any more money in real terms, this isn’t to say that the government’s finances are not being stretched by indexing fees.

    What this all means is that, unfortunately, the sector needs to keep an eye on the gilts market. The supposed flip-flop on raising income tax has already done some damage here, and the government repeatedly needing to borrow more than it expected to is another issue. There’s a wider question of perceived government competence around balancing the books that drives behaviour too – confidence is in short supply as it is, and it will get worse if the Starmer era implodes. This all equates to longer-term uncertainty about the use of the student loan book.

    Even if you’ve given up on the Labour government in its current form, and are pinning hopes on a future government being more receptive to calls for support and investment in both universities and students, Number 10 and the current Treasury team are still setting the economic weather. While much of the sector will be waiting for the moment Rachel Reeves stops speaking on Wednesday to see the fee levy policy paper – assuming there is one, and the can doesn’t get kicked – there are many reasons to think the wider public finances are a much more important determinant of the future of higher education. And it’s one that isn’t painting a particularly cheery picture at the moment.

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  • What is in the post-16 education and skills white paper for higher education?

    What is in the post-16 education and skills white paper for higher education?

    The government’s post-16 education and skills white paper is jointly fronted by the Department for Education, Department for Science, Innovation and Technology, and Department for Work and Pensions – and is accordingly ambitious in scope.

    Spanning proposals to address the number of NEET young people to widening access to postgraduate study, the plans break down into three key areas: joining up skills and employment throughout the system including through Skills England and funding reform; reforms in the further education/college sector; and reforms in the higher education sector. It’s the last of these we are concerned with here.

    The headlines

    Introducing the white paper in the House of Commons, Secretary of State for Education Bridget Phillipson announced the critical information many have been waiting for: a commitment to increase tuition fees and maintenance loans by predicted inflation for the next two years, and to legislate to make the fee increase automatic in future.

    The white paper arrives against the backdrop of the government’s new target for two-thirds under-25 participation in higher-level learning, but that target itself is fundamentally about the stuff the government has been talking about from the beginning: tackling skills shortages to support growth; and offering more, and broader, opportunities for post-16 education and training.

    Within all of that higher education emerges as a critical “strategic asset” – but nevertheless in need of reform, summed up as follows:

    Our ambition is to have a more sustainable, more specialised and more efficient sector, better aligned with the needs of the economy.

    In practice, if the government were to have its way (and that’s a big if) the outcome would be a fair bit of sector consolidation, with a more stratified sector incorporating fewer highly research-active institutions, operating within a regional ecosystem in which different types of institutions coordinate around an education offer that remains competitive in terms of subject and qualification choice, but attentive to regional skills needs.

    What’s missing, arguably, is the heavy policy lifting to make that real. As the text of the white paper suggests:

    The changes outlined here mark the beginning of a journey. We want to continue working with the sector to consider how best we can support greater specialisation in the future.

    Critically, what is not included here is anything on the pointier end of financial sustainability ie management of institutional insolvency or a special administration regime – the working assumption is that autonomous institutions will be able to identify opportunities to innovate, whether individually or in collaboration. That may be true, but while the risks of specialisation outweigh the prospective rewards, the government can encourage all it wants, but institutions will most likely continue to recruit to the courses that they believe there is a market for.

    What there does appear to be is a generalised vote of confidence in the Office for Students (OfS) – no proposals to tear up the Higher Education and Research Act here. In fact, when the parliamentary schedule allows, OfS is set to get more powers, particularly to crack down on low quality – and will now become the regulator for all provision at level 4 and above. Critically, OfS’ definition of quality will be given teeth both in the form of permission – or otherwise – to increase fees or issue restrictions on growth in student numbers.

    All together now

    In terms of strategic ambition, there are five objectives for the sector: economic growth, a high quality experience, national capability via specific research and skills development, regional impact, and an increase in international standing. International, these translate into global standing, nationally to government goals on growth, security and skills, regionally to meeting skills needs through collaboration, and at provider level, to specialisation and efficiency.

    Providers are challenged to:

    specialise in areas of strength within a more collaborative system, with clearer roles for teaching- and research-intensive institutions with areas of specialist advantage, and stronger access and participation.

    The argument is that too many providers are trying to sustain too broad a base of offering to the same student demographics rather than focusing on their core strengths. From the outset, however, it is clarified that higher education providers are autonomous and “it is not for government to impose these changes.” So institutions will be encouraged to innovate, to specialise and to collaborate rather than obliged to, with OfS tasked with working out what might help.

    The sting in the tail, however, is that the government intends to use research funding to drive some of this differentiation in the form of a “more strategic distribution of research activity,” which essentially means concentrating research funding which will have the knock-on impact that those who lose out will be obliged to revise their business models.

    In theory this could mean greater efficiency in the research system with better cost recovery, and more sharing of grants, facilities, and equipment. The idea here is because of the close relationship between research and teaching specialisation in one will drive specialisation in the other. And, just to be sure, providers are asked to align incentives for academics for research excellence and teaching excellence and to diversify recognition for research performance to include mentoring, peer review, commercialisation activities and public engagement.

    Sustainable footing

    That commitment to inflationary fee and maintenance loan rises – baked in for the first two years, with the intent to make it automatic in the longer term via legislation when parliamentary time allows – covers all provision with the exception of classroom-based foundation years – these will stick at £5,670 through 2026–27 and 2027–28 at least.

    There’s a big caveat – future fee uplifts will be conditional on providers achieving a “higher quality threshold” via the OfS’ quality regime. This isn’t spelled out, but it is reasonable to assume given the recent consultation that this might be new TEF silver and gold.

    The long-standing debate on full cost recovery appears to be tilting in support of costs, which the paper recognises “may result in funding a lower volume of research but at a more sustainable level.” The ask for providers here is effective collaboration and shared resources (again), and a commitment to to cost grants accurately. There’s a wider interest in improving research grant cost recovery alongside this – mostly stuff we already know about (equipment funded at 80 per cent of costs, a higher capital equipment threshold, confirmation that matched funding from providers is not required for UKRI) but there’s also wider research into costs (including on the sustainability of PhD programmes) underway.

    Dual support will remain (QR funding will stay), but there will be a modification of what the government expects in return – the idea for research generally is to stick to three priorities: curiosity-driven, delivering government priorities (missions, the industrial strategy), and targeted commercialisation and scale up support. There’s more on streamlining bureaucracy, including improvements to the way the Transparent Approach to Costing (TRAC) is used for assurance.

    A single line says the government will seek to “better understand concerns” about the Teacher’s Pension Scheme, which is used in providers formerly in local government control and where costs are rising well beyond the capacity of institutions to address them (which the government already knows).

    But again, there’s pro for the quid, in the form of expectations of higher education institutions to deliver efficiency.

    We knew that government was worried about HE governance and its general capability to deliver strategic change and sustainable operating models, and so the white paper confirms, with signals that OfS will consult on strengthening its condition of registration on governance, and endorsement of the current Committee of University Chairs governance review, which will strengthen its (voluntary) Code of Governance.

    There’s a note of thanks to the UUK Efficiency and Transformation Taskforce, endorsement of plans to develop an efficiency maturity model, and a wish to see more visibility for good collaboration practice (hats off to N8 and the Midlands Innovation partnership).

    In turn, the government will help make the Student Loans Company more efficient, foster closer relationships between OfS and UKRI on regulation and the delivery of the broader strategic aims of government, and strengthen OfS financial monitoring of the sector. OfS will be delivering a reformed regulatory framework that is focused on “driving out pockets of poor performance.”

    Access and student experience

    Much of the section on access and participation is taken up with reiterating student finance arrangement – LLE, targeted grants – but there is also a basket of other ideas and proposals, including reform to OfS’ approach to access and participation to be (even) more risk-based, consideration of patterns of PhD participation and access to postgraduate study, and notes on student accommodation, harassment, the extension of the mental health taskforce for another year with a new student support champion, and the existing funding to tackle antisemitism.

    Higher education cold spots and contextual admissions will be the main topics of conversation at a task and finish group to be chaired by University of Derby vice chancellor Kathryn Mitchell bringing together sector experts, charities, OfS, and UCAS.

    There is a recap of the details of the Lifelong Learning Entitlement, with an emphasis that available provision will expand beyond the priority areas in future. As has been widely acknowledged, this removes the distinction between full and part-time study – it will be possible to study multiple courses and modules at the same time. And there is a reminder that even if you have used up your (four year full-time) allocation, there will still be money available for priority courses.

    On that, there are some indications about the relationship between the LLE and the Growth and Skills Levy – the former will allow students to draw down loans to take modular courses at level 4 or above, particularly in FE colleges, while the latter will allow employer funding for “short courses.” Curiously, the only mention of apprenticeships is in relation to a new form of short course provision dubbed “apprenticeship units” designed to tackle critical skills shortages, tacit confirmation, perhaps, that the apprenticeship model may be too unwieldy and too challenging to scale to deliver on those critical areas at the pace required.

    Finally – first announced in 2010 – there is movement on creating an Alternative Student Finance scheme for those who are unable or unwilling to participate in the main scheme (primarily those individuals who consider themselves subject to Sharia law), which will launch “as soon as possible” after the introduction of the Lifelong Learning Entitlement (LLE) in January 2027.

    About growth

    The strategic priorities grant (which is the bits of OfS funding that currently include the stuff on high-cost subjects) will be reformed – as highlighted in the last grant letter to OfS, and with the groundwork on data collection achieved via the reforms to HESES.

    Those of a certain vintage will recall the ability for students to leave their degree with a certificate (L4) after year one and a diploma (L5) after year two – there’s a consultation pending on making student support for traditional (level 6) degrees conditional on doing something similar. A part of the hope here is allowing transferability between providers, though there is nothing on facilitating this kind of transfer (something that English higher education has traditionally struggled with). This comes alongside the established focus on levels 4 and 5 in higher technical qualifications (HTQs) – the twist here is that OfS will be able to bestow HTQ awarding powers in the same way it does degree awarding powers (or, cynically, foundation degree awarding powers) – with the designation process for HTQ courses becoming more flexible.

    Providers get “clearer expectations” around involvement in Local Skills Improvement Plans (LSIPs), which will cover technical skills needs between levels 4 and 8. This will be supported by a market-monitoring function within Skills England which will spot gaps between supply and demand nationally and locally.

    There’s a restatement of some research announcements in this bit – the protection of overall funding, access to horizon europe, and the protection of curiosity-driven research (UKRI gets a strategic objective year), work with public sector research establishments, and the increase to the maximum stipend.

    On commercialisation and scale-up, some UKRI funding will pivot towards government priorities (as in the industrial strategy) and a rethink of the way innovation funding is used to drive growth. And universities are encouraged to develop civic plans that align with their strengths and priorities.

    Finally in this section we get some lines on international standing – again this is mostly restatement of stuff like the Global Talent Visa reforms, but adding a hint of a refresh to the International Education Strategy. Recruitment must be sustainable and not put providers at undue risk, and there will be tighter enforcement of visa approvals via strengthening requirements on universities.

    Quality

    Teaching quality remains a core agenda, with the paper noting that:

    Among students who found their university experience worse than they had expected, teaching quality was among the most commonly cited reasons. Improving transparency about course quality is essential.

    The government will “consider options” to increase the capacity of OfS to conduct quality investigations, with the hoped-for outcome being that it can respond more rapidly to identified risks. Again, when parliamentary time allows, OfS will gain additional powers to intervene in cases of low quality, including imposing limitations on student numbers.

    The plans consulted on last year, which would make larger franchise providers register with OfS in order to access funding, will go ahead – while OfS will prioritise franchise investigations ahead of getting strengthened statutory powers to intervene “decisively” on this issue including stronger powers of entry, and the ability to make interim sanctions. And there’s more to come on tackling abuse of the system by recruitment agents – sharpening up access to student finance, and reinforced investigative powers for OfS.

    White papers traditionally include a section on improving applicant information, and this one is no different: the government welcomes the offer rates and historic grades on UCAS, and wants to add graduate outcomes information and completion rates from Discover Uni to what is on offer there.

    The time-honoured system of external examiners – where academics from elsewhere assure the quality and standards of provision at a provider – is up for debate, with an evidence base being built on the “effectiveness or otherwise” of this approach to feed into an OfS programme of reform that will also include employer views as part of a wider look at degree awarding powers.

    And there’s a progress 8 style measure (basically something akin to learning gain) in the offing, with the government and OfS working together on this.

    Finally in this section, a section on freedom of speech on campus summarises the changes made to the measures in the Higher Education (Freedom of Speech) Act, adding a note on the tension between these duties and a right not to be threatened, harassed, or intimidated.

    What happens now

    There’s a lot to digest in this white paper, with a lot of the proposals themselves requiring extensive action and further development – and we’ve not even covered the broader post-16 skills plans here, such as the new V levels. What’s missing though is a defined legislative agenda or timescale – indeed, this is not a traditional white paper in that it is not presented for public consultation at all. In that sense it is closer to what the Labour manifesto originally promised, which was a comprehensive post-16 education strategy, and it’s probably in that vein it should be read.

    With that in mind, it’s probably best to view the overall direction of travel as locked in – assuming this government can stick around long enough to realise some of its ambitions in practice. But there is still a great deal of work to be done to put flesh on the bones of these various proposals – and while some of these plans may go against the traditional sector grain, figuring out how to make them work in practice offers an opportunity to look again at what bits of higher education are critical to preserve – and what hitherto sacred cows can safely be allowed to slide into obscurity.

    Join the authors and the rest of Team Wonkhe at the Festival of Higher Education on 11-12 November in London where we’ll be digesting the government’s agenda for HE alongside a multitude of sector experts and commentators. Find out more and book your ticket here. 

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  • A joined up post-16 system requires system-level thinking combined with local action

    A joined up post-16 system requires system-level thinking combined with local action

    There have been so many conversations and speculations and recommendations aired about the forthcoming post-16 skills and education white paper that you’d be forgiven for thinking it already had been published months ago.

    But no, it’s expected this week some time – possibly as early as Monday – and so for everyone’s sanity it’s worth rehearsing some of the framing drivers and intentions behind it, clearing the deck before the thing finally arrives and we start digesting the policy detail.

    The policy ambition is clear: a coherent and coordinated post-16 “tertiary” sector in England, that offers viable pathways to young people and adult learners through the various levels of education and into employment, contributing to economic growth through providing the skilled individuals the country needs.

    The political challenge is also real: with Reform snapping at Labour’s heels, the belief that the UK can “grow its own” skills, and offer opportunity and the prospect of economic security to its young people across the country must become embedded in the national psyche if the government is to see off the threat.

    The politics and policy combine in the Prime Minister’s announcement at Labour Party Conference of an eye-catching new target for two thirds of young people to participate in some form of higher-level learning. That positions next week’s white paper as a longer term systemic shift rather than, say, a strategy for tackling youth unemployment in this parliament – though it’s clear there is also an ambition for the two to go hand in hand, with skills policy now sitting across both DfE and DWP.

    Insert tab a into slot b

    The aspiration to achieve a more joined up and functioning system is laudable – in the best of all possible worlds steering a middle course between the worst excesses and predatory behaviours of the free market, and an overly controlling hand from Whitehall. But the more you try to unpick what’s happening right now, the more you see how fragmented the current “system” is, with incentives and accountabilities all over the place. That’s why you can have brilliant FE and HE institutions delivering life-changing education opportunities, at the same time as the system as a whole seems to be grinding its gears.

    Last week, a report from the Association of Colleges and Universities UK Delivering a joined-up post-16 skills system showcased some of the really great regional collaborations already in place between FE colleges and universities, and also set out some of the barriers to collaboration including financial pressures causing different providers to chase the same students in the same subjects rather than strategically differentiating their offer; and different regulatory and student finance systems for different kinds of learners and qualifications creating complexity in the system.

    But it’s not only about the willingness and capability of different kinds of provider to coordinate with each other. It’s about the perennial urge of policymakers to tinker with qualifications and set up new kinds of provider creating additional complexity – and the complicating role of private training and HE provision operating “close to market” which can have a distorting effect on what “public” institutions are able to offer. It’s about the lack of join-up even within government departments, never mind across them. It’s also about the pervasiveness of the cultural dichotomy (and hierarchy) between perceptions of white-collar/professional and blue-collar/manual work, and the ill-informed class distinctions and capability-based assumptions underpinning them.

    Some of this fragmentation can be addressed through system-wide harmonisation – such as the intent through the Lifelong Learning Entitlement (LLE) to implement one system of funding for all level 4–6 courses, and bringing all courses in that group under the regulatory purview of the Office for Students. AoC and UUK have also identified a number of areas where potential overlaps could be resolved through system-wide coordination: between OfS, Skills England, and mayoral strategic authorities; between the LLE and the Growth and Skills Levy; and between local skills improvement plans and the (national) industrial strategy. It would be odd indeed if the white paper did not make provision for this kind of coordination.

    But even with efforts to coordinate and harmonise, in any system there is naturally occurring variation – in how employers in different industries are thinking about, reporting, and investing in skills, and at what levels, in the expectations and tolerance of different prospective students for study load, learning environment, scale of the costs of learning, and support needs, and in the relationship between a place, its economy and its people. The implications of those variations are best understood by the people who are closest to the problem.

    The future is emergent

    Complex systems have emergent properties, ie the stuff that happens because lots of actors responded to the world as they saw it but that could not necessarily have been predicted. Policy is always generating unforeseen outcomes. And it doesn’t matter how many data wonks and uber-brains you have in the Civil Service, they’ll still not be able to plot every possible outcome as any given policy intervention works its way through the system.

    So for a system to work you need good quality feedback loops in which insight arrives in a timely way on the desks of responsible actors who have the capability, opportunity and motivation to adapt in light of them. In the post-16 system that’s about education and civic leaders being really good at listening to their students, their communities and to employers – and investing in quality in civic leadership (and identifying and ejecting bad apples) should be one of the ways that a post-16 skills system can be made to work.

    But good leaders need to be afforded the opportunity to decide what their response will be to the specifics of the needs they have identified and be trusted, to some degree, to act in the public interest. So from a Whitehall perspective the question the white paper needs to answer is not only how the different bits of the system ought to join up, but whether the people who are instrumental in making it work themselves have the skills, information and flexibility to take action when it inevitably doesn’t.

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  • The PM’s announcement on higher level participation is a win for the HE sector

    The PM’s announcement on higher level participation is a win for the HE sector

    You could read “abolishing the 50 per cent participation target” as a vote of no-confidence in higher education, a knee-jerk appeal to culturally conservative working-class voters. But that would be both a political/tactical mistake and a fundamental misreading of the policy landscape.

    To recap: in his leader’s speech to Labour Party Conference on Tuesday, Prime Minister Keir Starmer announced that two thirds of people under 25 should participate in higher level learning, whether in the form of academic, technical, or work-based training, with at least ten per cent pursuing technical education or apprenticeships by 2040.

    So let’s start by acknowledging, as DK does elsewhere on the site, that the 50 per cent participation target has a totemic status in public discourse about higher education that far outweighs its contemporary relevance. And, further, that party conference speeches are a time for broad strokes and vibes-based narrativising for the party faithful, and soundbites for the small segment of the public that is paying attention, not for detailed policy discussions.

    An analysis of Starmer’s speech on Labour List suggests, for example, that the new target signals a decisive break with New Labour, something that most younger voters, including many in the post-compulsory education sector, don’t give the proverbial crap about.

    True North

    What this announcement does is, finally, give the sector something positive to rally around. Universities UK advocated nearly exactly this target in its blueprint for the new government, almost exactly a year ago, suggesting that there should be a target of 70 per cent participation in tertiary education at level four and above by 2040. Setting aside the 3.333 percentage point difference, that’s a win, and a clear vote of confidence in the post-compulsory sector.

    Higher education is slowly recovering from its long-standing case of main character syndrome. Anyone reading the policy runes knows that the direction of travel is towards building a mixed tertiary economy, informed if not actively driven by skills needs data. That approach tallies with broader questions about the costs and financing of dominant models of (residential, full time) higher education, the capacity of the economy to absorb successive cohorts of graduates in ways that meet their expectations, and the problematic political implications of creating a hollowed out labour market in which it it is ever-more difficult to be economically or culturally secure without a degree.

    The difference between the last government and this one is that it’s trying to find a way to critique the equity and sustainability of all this without suggesting that higher education itself is somehow culturally suspect, or some kind of economic Ponzi scheme. Many in the sector have at times in recent years raged at the notion that in order to promote technical and work-based education options you have to attack “university” education. Clearly not only are both important but they are often pretty much the same exact thing.

    What has been missing hitherto, though, is any kind of clear sense from government about what it thinks the solution is. There have been signals about greater coordination, clarification of the roles of different kinds of institution, and some recent signals around the desirability of “specialisation” – and there’s been some hard knocks for higher education providers on funding. None of it adds up to much, with policy detail promised in the forthcoming post-16 education and skills white paper.

    Answers on a postcard

    But now, the essay question is clear: what will it take to deliver two-thirds higher level learning on that scale?

    And to answer that question, you need to look at both supply and demand. On the supply side, there’s indications that the market alone will struggle to deliver the diversity of offer that might be required, particularly where provision is untested, expensive, and risky. Coordination and collaboration could help to address some of those issues by creating scale and pooling risk, and in some areas of the country, or industries, there may be an appetite to start to tackle those challenges spontaneously. However, to achieve a meaningful step change, policy intervention may be required to give providers confidence that developing new provision is not going to ultimately damage their own sustainability.

    But it is on the demand side that the challenge really lies – and it’s worth noting that with nearly a million young people not in education, employment or training, the model in which exam results at age 16 or 18 determine your whole future is, objectively, whack. But you can offer all the tantalising innovative learning opportunities you want, if people feel they can’t afford it, or don’t have the time or energy to invest, or can’t see an outcome, or just don’t think it’ll be that interesting, or have to stop working to access it, they just won’t come. Far more thought has to be given to what might motivate young people to take up education and training opportunities, and the right kind of targeted funding put in place to make that real.

    The other big existential question is scaling work-based education opportunities. Lots of young people are interested in apprenticeships, and lots of higher education providers are keen to offer them; the challenge is about employers being able to accommodate them. It might be about looking to existing practice in teacher education or health education, or about reimagining how work-based learning should be configured and funded, but it’s going to take, probably, industry-specific workforce strategies that are simultaneously very robust on the education and skills needs while being somewhat agnostic on the delivery mechanism. There may need to be a gentle loosening of the conditions on which something is designated an apprenticeship.

    The point is, whatever the optics around “50 per cent participation” this moment should be an invigorating one, causing the sector’s finest minds to focus on what the answer to the question is. This is a sector that has always been in the business of changing lives. Now it’s time to show it can change how it thinks about how to do that.

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  • UK’s international fee levy could slash enrolments by over 77k

    UK’s international fee levy could slash enrolments by over 77k

    Some 16,100 international students could be deterred from studying in the UK in the first year universities are levied 6% of all their international student fees, comes the stark warning from a new report from the think tank Public First.

    Should the government make good on the proposal – outlined in the immigration white paper earlier this year – this figure could rocket to more than 77,000 students in the first five years of its implementation, the report predicts.

    The government expects universities to pass the increased costs onto international students themselves by raising fees. But Public First cautioned that such a move would have catastrophic consequences by driving international students away, hitting the UK’s economy by £2.2 billion over five years and leading to a reduction of 135,000 university places for domestic students.

    The think tank projected that a 6.38% international student fee increase – necessary for universities to pass on the entire cost of the levy – would have a far greater impact on students’ decision to study in the UK than the government has anticipated.

    This is because the government’s forecasts were based on data for EU students. However, Public First noted that price elasticity of demand for non-EU students is greater than their EU counterparts – meaning they would be more likely to be look elsewhere if they found UK fees too expensive.

    Jonathan Simons, partner at Public First and author of the report, noted that the projected impact of the levy “is much more severe than had been predicted previously”.

    It is not widely understood just how much our economy is supported by international students and it’s really crucial that any policy that could affect international student numbers is considered through this lens

    Jonathan Simons, Public First

    “This, of course, will hit our universities, around 40% of whom are already in deficit, and that could lead to a further loss of jobs, a loss of university places for UK students and a loss of vital research investment,” he added.

    “Perhaps even more significant, though, is the hit an international student levy could cause to local, regional and national economies across the UK. It is not widely understood just how much our economy is supported by international students and it’s really crucial that any policy that could affect international student numbers is considered through this lens.”

    Henri Murison, chief executive of the Northern Powerhouse Partnership and chair of the Growing Together Alliance, said that the levy was opposed by all of England’s major regional employer organisations “because the resulting decline in international students would be hugely damaging to all the regions of the country”.

    “The Chancellor should take note of the economic damage of this policy which undermines a critical UK export and we have requested an urgent meeting to raise our concerns,” he said.

    The proposed levy has been widely criticised by higher education institutions.

    Last month, a HEPI analysis predicted that UK universities could take a £621m hit if the policy goes ahead, with those situated in big metropolitan cities set to be the worst affected.

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  • Higher education mergers are a marathon not a sprint

    Higher education mergers are a marathon not a sprint

    When the announcement came last Wednesday that the universities of Kent and Greenwich are planning to merge, the two institutions did a fine job of anticipating all the obvious questions.

    In particular, announcing that the totemic decision has already been taken on who should lead the new institution – University of Greenwich vice chancellor Jane Harrington – was a pragmatic move that will save a great deal of gossip and speculation that could otherwise have derailed the discussions that will now commence on how to turn “intention to formally collaborate” to the “first-of-its-kind multi university group.”

    But even with that really tricky bit of business out of the way, there is still a lot to work through. Broadly those questions fall into two baskets: the strategic direction and the practical fine detail. Practicalities are important for giving reassurance that people’s lives aren’t about to radically change overnight; albeit there are inevitably lots of issues that are either formally unknown at this stage or which can only be tackled in light of the evolution of the final agreement and organisational structure.

    With that in mind, it is really worth emphasising that the notion of a “multi university group” is a brand new idea, given a conceptual shape in the very recent publication Radical collaboration: a playbook from KPMG and Mills & Reeve, produced under the auspices of the Universities UK transformation and efficiency taskforce. The idea of a “multi university trust” explored in that report, derived from the school sector, posits the creation of a single legal entity that can nevertheless “house” a range of distinct “trading entities” with unique “brands” each with an agreed level of local autonomy.

    It answers the question of how you take two (or more) institutions, each with their own histories and characteristics and find ways to create the strength and resilience that scale might offer, while retaining the local distinctive characteristics that staff, students, and local communities value and feel a sense of affinity to. It also, as has been noted in the coverage following the announcement, leaves an option open for other institutions to join the new structure, if there’s a case for them to do so.

    “It is very positive to see institutions taking proactive steps to finding new ways to work together,” says Sam Sanders, head of education, skills and productivity for KPMG in the UK. “The group structure proposed is a model we have seen be successful elsewhere, where brand identity is retained but you get economies of scale, meaning institutions can focus on their core activities while sharing the burden of the overheads. If it goes well it could act as a blueprint for other similar ventures.”

    Sam’s reflection is that establishing a new entity might be the most straightforward part of the process: “The complicated part is moving to a new model that simultaneously preserves the right culture in the right places while achieving the savings you might want to see in areas like IT, infrastructure, and estates. These are multi-year agendas so everyone involved needs to be prepared for that.”

    The long and winding road

    With lots to work through, it’s really important to step back, and give space to the institutions to work this out. Because the big picture is about mapping what that critical path looks like from single-institution vulnerabilities to strength in numbers – and that is a path that these institutions and their governing bodies are, to a large extent, carving out as they go, potentially doing the wider sector a service in the process as others may look to follow the same path in the future.

    “The sector response has been overwhelmingly positive,” says Jane Harrington, who is already fielding calls from heads of institution who are curious about the planned new model. Both Jane and University of Kent acting vice chancellor Georgina Randsley de Moura have experience with group structures in schools and further education, knowledge they drew on in thinking through the options for formal collaboration – starting with ten different possible models which were narrowed down to two that were explored in more depth.

    “We started with what we wanted to achieve, and then we looked for models,” says Georgina. “We kept going back to our principles: widening participation, education without boundaries, high quality teaching and research, and what will make sense for our regions. Inevitably there is some focus in the news around finances and that is an important part of the context, but this would not work if our universities didn’t have values and mission alignment.”

    “We also had examples in mind of where we don’t want to end up,” adds Jane. “You see mergers where the brand identity is lost and it takes a decade to get it back. We have, right now, two student-facing brands that are strong in their own right. And in five or ten years time it might be that we have four or five institutions that are part of this structure – we don’t think it would make sense for them to become part of one amorphous brand.”

    It’s frequently observed that bringing together two or more institutions that are facing difficult financial headwinds may simply create a larger institution with correspondingly larger challenges. So having a very clear sense strategically of where the strengths and opportunities lie, as well as the where risks and weaknesses might also be subject to force-multiplier effects, is pretty important at the outset.

    It’s clear that there is an efficiency agenda in play in the sense that merging allows for the adoption of a single set of systems and processes – an area where Jane is especially interested in curating creative thinking. But the wider opportunities afforded by scale are also compelling, especially in being more strategic about the collective skills and innovation offer to the region.

    Kent and Medway local councils and MPs have also responded enthusiastically to the universities’ proposal, the two heads of institution tell me – not least because navigating politics around different HE providers can be a headache for regional actors who want to engage higher education institutions in key regional agendas.

    “There are cold spots in our region where nobody is offering what is needed,” says Jane. “But developing new provision is much harder when you are acting alone. This region has pockets of multiple forms of deprivation: rural, urban and coastal. The capacity and scale afforded by combining means we can think strategically about how to do the regional growth work, and what our combined offer should be, including to support reskilling and upskilling.”

    Georgina makes a similar case for combining research strengths. “Our shared research areas, like health, food sustainability, and creative industries, play to regional strengths,” she says. “When research resources are constrained, by combining we can do more.”

    We can work it out

    The multi university group is not, in theory, a million miles from a federation in structure in that in federations generally there is a degree of autonomy ceded by the constituent elements to a single governing body – but in a federation each entity retains its individual legal status. A critical difference is the extent to which a sharing economy among the entities would have to be painstakingly negotiated for a federation, which could erode the value that is created in collaborating. It could also raise tricky questions around things like VAT.

    But the sheer novelty of the multi university group also raises a bunch of regulatory questions, covered in all the depth you’d expect by DK elsewhere on the site – to give a flavour, can you use the word “university” for your trading entity without that existing as a legal entity with its own degree awarding powers?

    The supportive noises from DfE and OfS at the time of the initial announcement should give Kent and Greenwich some degree of comfort as they work through some of these questions. The sector has been making the argument for some time now that if the government and regulator want to see institutions seizing the initiative on innovative forms of collaboration, there will need to be some legal and regulatory quarter given, up to and including making active provision for forms of collaboration that emerge without a legal playbook.

    Aside from the formal conditions for collaboration, how OfS conducts itself in this period will be watched closely by others considering similar moves. While nobody would suggest that changing structure offers an excuse for dropping the ball on quality or student experience – and both heads of institution are very clear there is no expectation of that happening – OfS now has a choice. It can choose to be highly activist in requesting reams of documentation and evidence in response to events as they unfold, from institutions already grappling with a highly complex landscape. Or it can work out an approach that offers a degree of advance clarity to the institutions what their accountabilities are in this time of transition, and how they can/should keep the regulator informed of any material risks arising to students from the process.

    Despite the generally positive response, there is no shortage of scepticism about whether a plan like the one proposed can work. The answer, of course, depends on what you think success looks like. Certainly, anyone expecting a sudden and material shrinkage in costs is bound to be disappointed. Decisions will be made along the way with which some disagree, perhaps profoundly.

    But I think what is often forgotten in these discussions is that the alternative to the decision to pursue a new structure is not to carry on in broadly the same way as before, but to pursue a different but equally radical and equally contentious course of action. If the status quo was satisfactory then there would be no case for the change. In that sense, being as useful as possible in helping these two institutions make the very best fist that they can of their new venture is the right thing for everyone to do, from government downwards.

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  • Warm words from ministers to Universities UK, but a noticeable absence of buttered parsnips

    Warm words from ministers to Universities UK, but a noticeable absence of buttered parsnips

    No fewer than three government ministers showed up to Universities UK annual conference – if you count science minister Patrick Vallance dialling in – all with only nice things to say about the importance of higher education.

    From Patrick Vallance:

    The work that you do now and your researchers and others do in the students at universities will, of course, define the shape of much of the country over the next several decades, and indeed probably for the next century.

    From minister for skills, Jacqui Smith:

    Thank you to those of you who are leading the sector and delivering all of that benefit in making our country richer, not just economically, important though that is, but socially and culturally as well.

    And from (now, following a reshuffle over the weekend, former) Secretary of State for Science, Innovation and Technology Peter Kyle:

    When I talk about being a champion in your corner, it comes from a place that is very deep, and very personal, and very conviction-oriented. It’s because a university education wasn’t a given for me – because I fought for it – that means that I always valued it so extremely highly.

    As one vice chancellor commented to me privately, it’s like being briefly in a warm bath, or basking in the glow of a sunny morning to attend events where ministers say things like these – only to step back into the chilly reality of trying to deal with all the difficulties facing higher education institutions right now.

    The weekend’s reshuffle saw Peter Kyle take the helm at the Department for Business and Trade, with Liz Kendall stepping in to replace him at the Department for Science, Innovation and Technology. Jacqui Smith retains her role as minister for skills, working across the Department for Education and the Department for Work and Pensions – either signalling a welcome opportunity for strategic join-up in a cross-government policy agenda, or a dog’s dinner waiting to happen.

    Neither seems unlikely to materially change the policy agenda for higher education in England (no, not because there isn’t one, don’t be mean) – but it could slow it down even further while ministers get to grips with their new responsibilities and reporting lines. As MP for Leicester West, Kendall has been supportive of and engaged with the higher education institutions in her constituency, so there is no immediate cause for alarm in the appointment. But everything that follows gleaned from Universities UK should probably carry the caveat that we’ll need to see how much the world has changed in the interim before drawing any firm conclusions.

    Yes, we are all individuals

    Current policy in the mix includes work across DfE and DSIT to look at the sustainability of the higher education sector. Jacqui Smith hinted that there will be more clarity on future fee levels at the same time as the publication of the post-16 education and skills white paper, but was not able to speak in much more than broad strokes about the themes of the government’s plans for higher education – collaboration, coordination, economic growth and skills, and so on. Similarly, Vallance hinted without explicitly saying it that there is a view within government that the research budget is being spread too thinly and that the presumption of broad-based research taking place in most institutions may be in the cross-hairs.

    Patrick Vallance, on the inadvisability of universities attempting to maintain a broad research base without the funding to support it:

    We can’t end up with a very, very broad range of research going on everywhere. It speaks to the question of how you get specialisation behind this and it speaks to the question of how we deal with this full economic costing versus volume [of research].

    “Specialisation” popped up elsewhere, too; witness Jacqui Smith:

    We need a post-16 system that is more able to benefit from specialisation to really drive quality, where there is a bigger focus on collaboration – within the higher education sector, but also between the higher education sector and further education partnerships at at a civic and local level, with employers, with local government, with mayors…

    And Peter Kyle:

    One of the problems is that too many universities are competing for the same pool of students at the expense of playing to their relative strengths, or truly specialising to become the go-to authority in their field rather than a bit player. In many, this is having a real effect on how resources are being prioritised.

    The theory is sound in the abstract – each institution focuses on doing the things they are already good at, and letting others do different things that they are good at, creating the space for a healthy diversity of mission, subject portfolio, and learning modality. You can even imagine the policies that might support such a shift: opening up bids for institutions to build on key specialisms or create consortia to grow demand for particular kinds of provision, for example. You could also take a stick-based approach, focusing on raising the bar to being allowed to provide in areas where the government thinks there is already over-provision.

    But you would need deep policy focus, deeper pockets, and the metaphorical political hide of a rhinoceros to pull something like that off, not least because it goes strongly against the grain of the sector and would probably cause some institutions to fall over in the process.

    Under financial pressure, vice chancellors are more likely to be thinking in terms of diversifying their offer to hedge against market instability, monitoring any signs of growth in market share among their competitors so they can do their best to grab some of it and, within course and subject areas, streamlining the offer to reduce overheads. Highly specialist provision is expensive and demand can be uncertain. And, as one vice chancellor noted privately, you don’t get the best from academics by not letting them do research, even if teaching might be considered your main strength.

    Quid pro quo or true partnership

    What strikes me in all this is that despite the warmth with which ministers talk about, and to, the sector, there is still quite a way to go to achieve the kind of partnership with government that is grounded in the will to find a common agenda and shared sense of purpose. Both sides can agree at a high level that higher education is terribly important for the country. Both, I think, can pretty much agree that while higher education as a sector continues to deliver some essential stuff for individuals, society and the economy, it would be much more optimal if the downsides of the marketised system – institutions on the financial brink, subject loss, aggressive (and sometimes predatory) recruitment behaviours, a greater degree of homogeneity of offer than might be desirable, (arguably) insufficient sensitivity of the demand-led system to the labour market – were to be reduced or disappear altogether.

    But while the framing remains transactional ie “this is the deal we will give you in return for permission to raise fees” the prospect of a deeper alliance seems remote. This may in one sense be entirely appropriate – higher education institutions are autonomous from government for a reason. But in a time of crisis there might be a case to at the very least define some shared missions or priorities.

    Jacqui Smith said that the forthcoming white paper will enact “a shift from that assumption of competition to an assumption of collaboration…[one that] requires us to think about where we put the incentives in order to promote collaboration rather than competition.” She added, in response to a question put to her by a vice chancellor, “without reverting to a sort of Soviet style planned model, the idea that there is some sort of market understanding, you described it as a “guiding mind” is something that I think we need to think hard about, and we will say more about in and post the white paper.”

    If asked how to steer a path between adopting a “Soviet style planned model” and just trying to poke the market to see if it can be moved, I’d argue that you could do worse than defining some critical areas that would benefit from collaboration in the sector, and that would require some coordination with government to move forward, and setting up some “mission boards” to drive those forward. My list would include provision of information, advice and guidance about the relationship between HE choices and future career options; student health and wellbeing; credit transfer; HE cold spots and subject gaps, for starters.

    Collaboration and coordination doesn’t come about because the government says we would like to see more of this; it happens because there is a value(s)-based rationale for it and some meaningful convening of activity. So maybe the forthcoming white paper could set out some of those agendas as a way of setting the government free from what is obviously a very difficult policy quandary. Or maybe, on the assumption the government probably doesn’t have the scale of will and bandwidth it might need to drive the changes it might, in principle like to see, the sector needs to take the lead and get on and do it anyway.

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  • What’s coming up for HE policy in 2025–26

    What’s coming up for HE policy in 2025–26

    It was early November 2024 when Secretary of State for Education Bridget Philipson issued her edict to heads of institution in England, confirming the government’s plans to increase the undergraduate fee threshold to £9,535 from 2025–26, and setting out her five priorities for higher education.

    Ten months on and there remains not a great deal of additional flesh on those bones. The planned summer white paper on post-16 education and skills, incorporating HE reform, has been pushed to the autumn. In the interim, while the Office for Students (OfS) has stepped up its work on financial sustainability, it’s clear that the government is not minded to ride to the rescue of the sector at system level, whatever it might decide to do about financially challenged institutions.

    The Spending Review was accompanied by the announcement of a further squeeze on the Strategic Priorities Grant. The immigration white paper proposed a six per cent levy on international fees. The prospect of an ongoing annual inflationary fee threshold uplift remains unconfirmed. And the rollout of the Lifelong Learning Entitlement, while potentially paradigm-shifting in the long term, offers mostly short-term pain and expense for rather limited gains.

    This area is getting greyer

    Though ministers probably wouldn’t articulate it like this, at stake is the status of higher education as a “public realm” sector. It’s not currently politically or economically advantageous for government to be seen to take seriously the sector’s financial concerns even where there are signs of systemic weakness in the funding model. That pragmatic (or cynical, if you prefer) position is bolstered by a regulatory framework that views higher education providers primarily through the lens of service provision to students rather than as public institutions providing a range of public goods in places.

    Yet for a government that is politically and economically concerned with the provision of public goods in places, nor is it especially politically palatable to lean into the notion of independent higher education providers doing whatever they can to ensure their own success and sustainability rather than acting with reference to wider common purposes.

    There’s often a strong degree of overlap between institutional interests and the public interest – arguably one critical dimension of higher education leadership is being able to locate and occupy that common ground. Two things can be true: institutions can, and do, pursue both their own self-interest and the common good, simultaneously. And discussion of abstract concepts like public and private obviously ignores the actions and motivations of individual institutions, many of whom go to quite a lot of trouble and expense to work with and for the interests of their stakeholders.

    But at system level what you think an “HE reform package” should include depends very much on how much you think the private interests of HE institutions diverge from the wider public interest, in what areas of activity, and the extent to which you think the government can or should do something about it. And I don’t think those questions have yet been resolved in the corridors of power, where arguably the locus of responsibility for “higher education” as an object of policy remains scattered.

    It is relatively easy to point to examples of where the HE market model has created areas of concern – particularly when it comes to loss of subject diversity in particular regions or localities, or a lack of a subject offer in an area of known skills gaps, or to the rising costs to students and parents of sustaining full-time study, or to the risks to academic quality arising from particular modes of delivery or from instability in institutional finances. It’s much harder to articulate a policy settlement that articulates appropriate, measured, inexpensive and effective government intervention at system level to realign institutional and public interest where there appears to be divergence.

    In particular, when it comes to questions of “transformation” – in the sense of individual institutions changing their academic portfolio, or use of technology; in the sense of institutions joining together to create efficiencies or realise additional value from scale or coordination; and in the sense of the future overall size and shape of the sector – the role of government remains opaque. It may be possible that “transformation” will happen in response to market demand and financial pressure and be funded from private sources. It may also be possible that “transformation” will only occur with some active convening (and financing) from government. Whatever the claims made about what ought to be happening, nobody really has a firm view on how much transformation is really required, what it should look like, or whose responsibility it is to make it happen.

    It’s possibly not all that surprising, then, that what has emerged from government on higher education in the last academic year has been rather “bitty” – to use the appropriate technical term. A consultation on franchised provision here, a revision to free speech legislation there, a slide deck on preparing for the LLE over here, a cheeky new levy over there. Don’t expect a grandiose new vision for HE to emerge this year; instead turn your mind to deciding whether the sum total of all the things that will be occupying minds in the year ahead add up to something that equals a material change of state for the sector.

    It’s all coming up

    When the post-16 education and skills plus HE reform paper does show up, it will almost certainly hit some familiar notes: regional economic growth; skills; opportunity. We know there’s an appetite in government to think about “coordination” of post-16 providers in places and an aspiration to deploy a more coordinated approach to streamline everything from the regional skills offer to employer engagement.

    Policy architecture available includes the Devolution Bill, Skills England, the planned Growth and Skills Levy replacing the Apprenticeships Levy, and the Lifelong Learning Entitlement – as well as OfS’ signals on a shift to a more regional approach to widening access. There is significant support in principle for the notion of coordination for the benefit of places, but a glaring absence of ideas of how independent providers might be not only brought to the table but arrive at a consensus about who should offer what kind of education opportunity to whom.

    Also potentially in the mix for an “HE reform” package, if Bridget Phillipson’s priorities haven’t shifted in the last ten months, are academic quality, civic engagement, and efficiency. The Department for Education has not yet said what its plans are with regard to tightening up oversight of franchised provision, following its consultation earlier this year, so that may well appear also. OfS is already planning to consult on its planned new integrated quality framework in the autumn, so assuming there is effective coordination between government and the regulator there should be alignment between what the government proposes and what OfS consults on.

    One wild card to look out for is institutional governance – OfS has signalled in the past year that it has concerns about the ability of boards of governors to effectively manage financial sustainability challenges, whether that is in securing academic quality under pressure or retaining effective oversight of new partnerships and income streams, and that concern has been reinforced in communications from DfE. While it would be surprising to see government take a view on the constitution of boards or on the codes of practice they are encouraged to adhere to, it would not be entirely unexpected to see a request for OfS to further extend or strengthen regulatory oversight in this area. Elsewhere on the site, incoming Advance HE chief executive Alistair Jarvis has signalled some key priorities for development in governance within weeks of taking up the role.

    A further wild card would be something on graduate employability – previously ministers have suggested that institutions whose graduates do less well in the labour market by the current measures should cut the pay of their heads of institution. While that’s a proposal that obviously plays well for media, it doesn’t amount to a serious policy. But with (probably wildly overstated) concerns doing the rounds about graduate jobs and AI, and (much more sensible) questions about the value of graduate skills in different parts of the country feeding directly into ideas about equity of opportunity, government may well feel this is an area it wants to make a target for policymaking.

    Doing more with less

    The future of research funding seems increasingly lashed to the mast of economic growth. It is the golden thread that runs through UKRI’s latest plans, the basis of the industrial strategy, and UKRI rates financial sustainability within the research system as high risk and high likelihood.

    2025–26 is going to be about who gets paid, on what basis, and how the impact of the resulting research activity will be measured. Everyone’s favourite forever debate, the future of REF, fits neatly within this financial triangle. 2025–26 should bring certainty, if not consensus, on the shape of the next REF, even if the overall sum up for grabs is a fraction of the overall R&D budget. Given the timescales involved in REF it is likely that there will be some kind of announcement in the next few weeks on its future.

    Place is going to continue to be the primary lens through which economic growth is discussed. The Local Innovation Partnership will launch this academic year with at least £30 million for each of ten regions across the UK, including one in each of the devolved nations. The success of the industrial strategy is entirely reliant on improving productivity across the country so expect to see new funds, tweaks to existing funds, debates on devolutions deals, and a raft of place based initiatives coming from the sector.

    Once UKRI’s new mission leads are in post, along with UKRI’s new chief executive who is now in his role, the sector should have a clearer sense of how their work will align with the government’s missions. It would be refreshing if the new personnel also usher in a new era of stability across the research ecosystem. The evolving work into research evaluation may prove a useful tool in this mission.

    Of course economic growth is limited by the financial reality universities find themselves in. There is lots of concern about full economic costing (FEC) but very little action on reducing the financial burden of research. There are clear signals of reduced capital spending and following UKRI’s outgoing chief executives statement on the possibility of research consolidation it looks like frugality will continue to be a reality for many.

    Away from home this version of Horizon Europe enters its penultimate year with the UK’s entrance to the new scheme the government’s preferred option. The ongoing trampling of academic norms in America will continue to shape UK-US partnerships while the future of UK-China research partnerships will once again be at the mercy of global politics.

    At a more institutional level an outcome on the publishers agreements negotiations between the sector and five of the major publishers looks to be coming to a head. The sector currently spends £112 million annually on Jisc negotiated agreements with the five largest publishers. A decision on whether to accept or reject the publishers proposals is due imminently. If the offer is rejected there will be significant pressure to find agreement or an alternative before the end of the current deals in 2026.

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  • UK unis could take £620m hit from international student levy

    UK unis could take £620m hit from international student levy

    Based on the latest HEPI data, the Institute estimates the levy could “hamper universities’ ability to compete with institutions in other countries,” said independent researcher Mark Fothergill, who compiled the data. 

    The proposed 6% levy on international students’ tuition fees was first introduced in the government’s highly anticipated immigration white paper, coming as a surprise to many in the sector.  

    HEPI has warned that the policy will hit both large internationally engaged universities and smaller specialist institutions. According to the analysis, the largest financial losses are expected to hit big metropolitan universities with high proportions of international students.  

    Namely, University College London (UCL), which derives 79% of its fee income from non-UK students, could be faced with financial losses of £42m. 

    Meanwhile, Manchester University and King’s College London (KCL) could also be hit with heavy losses of £27m and £22m respectively, with 19 institutions paying at least £10m. 

    Stakeholders have pointed out that while the levy is intended to raise money for the “higher education and skills system”, it is unclear if all the money will come back out of the treasury, and how it will be spent if it does. 

    “International students are the backbone of our higher education system, contributing over £10 billion in fees to English universities – around £4.50 of every £10 of fee income,” Fothergill said. 

    “No wonder the 6% levy is seen as a tax on one of the country’s best-performing sectors,” he added.  

    With more details expected in the autumn budget, universities are left with two options: pass the cost onto students and become less competitive or absorb the costs and leave less funding for teaching and research, HEPI suggested.  

    While universities haven’t announced to what extent they would try to absorb the extra costs, a reduction in international student numbers – whose fees subsidise university research – would also hamper sector finances.  

    Speaking at a conference last month, the UK skills minister Jacqui Smith maintained the government was “not levying international students directly”, suggesting it would help show students’ economic contribution to local communities.  

    The levy is a shadow looming large over universities as they prepare for the next academic year

    Nick Hillman, HEPI

    “Threatening an expensive new tax on one of the country’s most successful sectors with only a rough idea of how the money will be used seems far from ideal,” said HEPI director Nick Hillman.  

    “Currently, the levy is a shadow looming large over universities as they prepare for the next academic year,” he added.  

    Amid policy volatility in other markets, the UK has increasingly been cited by students as the most stable of the ‘big four’ study destinations, with stakeholders keen to preserve this reputation.

    “There are good reasons why Australia opted not to implement a levy when it was proposed there a couple of years ago,” warned Fothergil.  

    With the UK higher education sector already facing severe financial headwinds, Hillman said university leaders were worried the levy will be “yet another weight dragging them down in the struggle to remain globally competitive”. 

    According to OfS data, 72% of providers could be in deficit by 2025/26, with a sector-wide deficit totalling £1.6bn.  

    Alongside the levy, the government’s white paper proposed shortening the graduate route visa from two years to 18 months, and tougher Basic Compliance Assessments (BCA), with the latter set to be introduced in September.  

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  • Higher education leadership is at an inflection point – we must transform, or be transformed

    Higher education leadership is at an inflection point – we must transform, or be transformed

    At a recent “fireside chat” at a sector event, after I had outlined to those present some details of the transformational journey the University of East London (UEL) has been on in the past six years, one of those attending said to me: “Until UEL has produced Nobel Prize winners, you can’t say it has transformed.”

    While I chose not to address the comment immediately – the sharp intake of breath and rebuttals that followed from other colleagues present seemed enough at the time – it has played on my mind since.

    It wasn’t so much the comment’s narrow mindedness that shocked, but the confidence with which it was delivered. Yet, looking at the ways in which we often celebrate and highlight sector success – through league tables, mission groups, or otherwise – it is little wonder my interlocutor felt so assured in his worldview.

    Value judgement

    This experience leads me to offer this provocation: as a sector, many of our metrics are failing us, and we must embrace the task of redefining value in 21st century higher education with increased seriousness.

    If you disagree, and feel that traditional proxies such as the number of Nobel Prizes awarded to an institution should continue to count as the bellwethers for quality, you may wish to pause and consider a few uncomfortable truths.

    Yes, the UK is a global leader in scientific excellence. But we are also among the worst in the OECD for translating that science into commercial or productivity gains. The UK is a leading global research hub, producing 57 per cent more academic publications than the US in per capita terms. Yet compared to the US, the UK lags significantly behind in development and scale-up metrics like business-funded R&D, patents, venture capital and unicorns.

    Universities have been strongly incentivised to increase research volume in recent years, but as the outgoing chief executive of UKRI Ottoline Leyser recently posited to the Commons Science, Innovation and Technology committee do we need to address this relatively unstrategic expansion of research activity across a range of topics, detached from economic growth and national priorities? Our global rankings – built on proxies like Nobel Prizes – are celebrated, while our real-world economic outcomes stagnate. We excel in research, yet struggle in relevance. That disconnect comes at a cost.

    I recently contributed to a collection of essays on entrepreneurial university leadership, edited by Ceri Nursaw and published by HEPI – a collection that received a somewhat critical response in the pages of Research Professional, with the reviewer dismissing the notion of bold transformation on the basis that: “The avoidance of risk-taking is why universities have endured since the Middle Ages.”

    Yes. And the same mindset that preserved medieval institutions also kept them closed to women, divorced from industry, and indifferent to poverty for centuries. Longevity is not the same as leadership – and it’s time we stopped confusing the two. While we should all be rightfully proud of the great heritage of our sector, we’re at real risk of that pride choking progress at a critical inflection point.

    Lead or be led

    Universities UK chief executive Vivienne Stern’s recent keynote at the HEPI Annual Conference reminded us that higher education has evolved through tectonic shifts such as the industrial revolution’s technical institutes, the social revolution that admitted women, the 1960s “white heat” of technological change, and the rise of mass higher education.

    Now we are on the edge of the next seismic evolution. The question is: will the sector lead it, or be shaped by it? At the University of East London, we’ve chosen to lead by pressing ahead with a bold transformation built on a central premise that a careers-first approach can drive success in every part of the university – not on precedents that leave us scrambling for relevance in a changing world.

    Under this steam, we’ve achieved the UK’s fastest, most diversified, debt-free revenue growth. We’ve become an engine of inclusive enterprise, moving from 90th to 2nd in the UK for annual student start-ups in six years, with a more than 1,000 per cent increase in the survival of student-backed businesses. We’ve overseen a 25-point increase in positive graduate outcomes – the largest, fastest rise in graduate success – as well as ranking first in England for graduating students’ overall positivity. We use money like we use ideas: to close gaps, not widen them. To combat inequality, not entrench it.

    So, let me return to the Nobel Prize comment. The metrics that matter most to our economy and society, the achievements that tangibly improve lives, are not displayed in glass cabinets – rather those that matter most are felt every day by every member of our society. Recent polling shows what the public wants from growth: improved health and wellbeing, better education and skills, reduced trade barriers. Our government’s policy frameworks – from the industrial strategy to the AI strategy – depend on us as a sector to deliver those outcomes.

    Yet how well do our reputational rankings align with these national imperatives? How well does our regulatory framework reward the institutions that deliver on them? Are we optimising for prestige – or for purpose? We are living at a pivot point in history. The institutions that thrive through it will not be those that retreat into tradition. They will be those that rethink leadership, rewire purpose, and reinvent practice.

    Too much of higher education innovation is incremental; transformational innovation is rare. But it is happening – if we choose to see it, support it, and scale it. I urge others to join me in making the case for such a choice, because the next chapter of higher education will be written by those who act boldly now – or rewritten for those who don’t.

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