Scrap fees — Education should be for all who can benefit
Support the Pension and Pay strikes
The Tories’ announcement on 19 November that they were looking into Higher Education funding is an admission that their policy of overpriced undergraduate fees and high-interest loans is unpopular and unsustainable.Their motive is self-interest. Greening and May have not suddenly discovered the downside of their own policies. But at the last election, by championing the abolition of fees and the return of the maintenance grant, Jeremy Corbyn’s Labour Party nearly stormed to victory.
So rather than dismantle this corrupting edifice, the Tories will tinker around the edges. Within a few years of the fees-and-loans market being set up, Vice Chancellors are now completely financially dependent on it.
The Willets Plan
In 2010, Conservative HE minister ‘Two Brains’ David Willets had a plan. The first element was scrapping the old £3,000 fee, and replacing it with a new fee of up to £9,000, backed by student loans of a special type. These loans were unlike normal loans (including those previous Student Loan Company ones). These would have a high rate of interest (3% above RPI), but were treated more like a tax than a loan. Special terms could be attached to the loan – not having to pay it back until wages reached a certain point, not counting towards credit scores, and so on. But the high rate of interest means that if you are expecting to earn above the threshold, the quicker the loan can be paid off the less you pay. And if you are wealthy, it is better not to get the loan at all.
The loans programme is unsustainable. The Treasury has hidden the debt mountain from public statements of government borrowing, and created special rules to support it. Already the predicted rate of return is around half – so half will be paid by taxpayers anyway. It is becoming more expensive, not less, for the taxpayer.
Willets always intended that universities would set up differential ‘market’ fees, and there would be price competition between universities.
This is an idea the ‘Free Market’ Tories are now revisiting, but instead of universities setting the price, the Tories are toying with the idea that their new Quango, the Office for Students, will do it.
The Willets plan had other elements. In 2011 the Tories abolished or reduced the ‘block grant’ – a government allocation to university departments for underpinning teaching irrespective of student numbers. The Tories expected a single-party government and intended to introduce the other parts of the plan in one go, but Coalition with the Liberal Democrats and the NUS/UCU demonstration in November 2010 compelled them to implement the plan in stages.
In 2014 the Tories removed most limits on student numbers (with exceptions for medicine and some other restricted subjects). Universities and departments could compete for undergraduates. ‘Winners’ would grow and ‘losers’ shrink – an essential free market idea. But this also had the effect that 18-year old’s undergraduate “student choice” and the cost of teaching substituted any academic assessment of quality. If a course was cheap to teach and popular, it was good.
The proportion of middle-class students has increased, and students have tended to select degrees perceived to be easier, choosing Arts and Humanities over STEM subjects. If you are paying £27,000 plus, you had better get your degree!
The Government’s problem is that student choices are not the choices the Government wants!
Finally, in 2017, the Tories’ introduced legislation to let the market run truly free. This was the HE Bill, now known as the Higher Education and Research Act 2017 (HERA). The Act allows private companies with no track record in education to set up as universities on equal terms. It lets them write their own degrees with no up-front quality control. And it allows universities to declare bankruptcy and shut down courses overnight. Whereas fees and loans created a tax-payer backed source of income for private companies, until 2017, for profit universities were limited to recruiting small numbers of students. Existing universities faced new competition, and some may even consider going fully private.
Removing limits on undergraduate recruitment has unleashed a tidal wave of competition. Provided universities have space to teach and accommodate students, they could expand and take market share from other universities.
Expansion in one college has meant cuts elsewhere.
Further education has been hammered by huge cuts. The Tories have cut funding for adult education, skills and the very things Greening now advocates in her ‘review’. They abolished the EMA. Before the last election the Tories were even planning FE fees. As a result, FE has lost two thirds of courses, and waves of job losses and mergers. Unsurprisingly, some FE colleges have also tried to get into the HE undergraduate market, but they face competition from existing universities.
The first effect of the £9,000 fee is the realisation by students that if they were going to get into debt they had better get a degree with a good brand name.
Thus students with offers from London Metropolitan would go to King’s College instead. But the logic of chasing profit is to spend as little as possible once the customer has paid. So King’s, UCL, and the rest increasingly rely on postgraduate students to teach.
Within these universities, scientific research is now increasingly deprioritised, as the return on investment in research is much smaller than teaching.
In London, the first victim of this student fee gold rush was London Metropolitan, which shrank by two-thirds in a decade, shedding jobs every year. Westminster University is now going through similar wholesale job losses and course closures. Campuses have been closed across the country. Last year Manchester Metropolitan announced the closure of the Crewe campus, with a loss of hundreds of jobs. Brighton University is facing the closure of one of its campuses.
Meanwhile other universities are betting the farm on new expansion projects. UCL and UAL are building new campuses in Stratford; King’s expanded into Somerset House and is planning to rebuild the Strand; SOAS bought out half of Senate House, and the list goes on.
As a result, the proportion of university budgets spent on capital projects (buildings) has soared. Less and less of their expenditure is spent on staff, including both pay and pensions. The following graph is from the Alternative White Paper and shows how both UCL (a pre-92) and LMU (a post-92) — two universities from opposite ends of the wealth spectrum — are behaving very similarly when it comes to their priorities.
This rampant competition has led to a divergence of the sector between winners and losers. Most of the expansion has been by pre-92 ‘old’ universities, and most of the contraction (thus far) of the ‘post-92’ ex-polytechnics.
But pre-92 colleges are not immune to this market madness. The Open University, a pre-92 university which recruits mostly older “second-chance” and working-class students, has announced it is in deep trouble. Management claim they need to make £100m of cuts from its annual budget.
The Willets plan is wrecking education. It is reducing diversity and therefore real student choice.
The USS pension crisis: the first national battle over HE privatisation
It is not just students who are suffering. All of the universities are “sweating their assets” – their staff. Cutting the pay bill is part of a deliberate strategy to reduce the price of teaching and to maximise surpluses. Workloads are going through the roof.
Across the sector, pay has been cut by more than 13% in real terms against RPI since 2008 (see above, which also shows how the meagre 2% paid in to the scheme recently should be seen in proportion to this pay cut).
The current USS pension scheme battle was triggered by decisions by pre-92 University Managements to not put some of their large surpluses into the pension scheme. Thus (for example), University College London registered a surplus (‘a profit’) in excess of £70m last year. To pay what the UCU proposed in negotiations over Christmas would cost them £18m. The employers are choosing to keep their profits and not to pay.
The fact that universities are now allowed to go bankrupt is also undermining the USS pension scheme. Previously, universities in financial difficulty were merged, and students were taught to completion. No USS university has ever declared bankruptcy.
Now the HERA says a college can go bankrupt overnight, and the Office for Students will reallocate students to other courses. In competition for students and engaging in speculative building, the universities are increasingly seeing themselves in a Hobbesian “war of all against all”.
In November, the pre-92 employers federation, Universities UK, asked its members whether they supported the mutual rules of the USS pension scheme, where if a university goes bankrupt the remaining colleges share any pension liabilities that remain. Nearly three quarters of managers in the Oxbridge colleges replied no. Let the market rip and the devil take the hindmost.
Indeed the crisis of the USS pension scheme (the declared ‘deficit’) stems from three particular government policies. It is not a problem of the scheme itself. These are Government monetary policy (“Quantitative Easing”), Pensions Act legislation enforcing new rules on pension schemes, and the Willets HE plan leading to increased financial instability and competition. The pension crisis is, as one analyst put it, “Made in Westminster”.
- University managements could end the USS dispute by paying into the pension scheme, but they don’t want to.
- The Government could end it by recognising their responsibility for the mess, underwriting it and stopping changes going through.
- Similarly the FE employers could pay up in their dispute.
These are disputes of choice for the employers and the Government.
The attack on the staff pension scheme should matter to current students. It is another front in the general attack on higher education. But also any student who wants an academic career will be hit. If you want to benefit humanity by spending your lifetime in scientific research, it will cost you.
Pension changes have the greatest effect on the youngest, because changes roll forward in time. The generation of high student fees and debts face paying private-sector rents for life and insecurity and poverty in retirement.
The beneficiaries of the market are vice chancellors and university managers awarding themselves huge pay rises and bonuses while they gamble with the future of the universities.
Defend education — support the strikes
At the last election the Labour Party called for a “national education service” and the abolition of fees. Other public sector pension schemes are underwritten by the Government – the implication of Labour’s position is that USS should be too.
On the other hand the Tories’ current review can only tinker around the edges. Locked into the cycle of speculative greed they have unleashed in the universities, they cannot back down now.
But staff and students, parents and supporters of Higher Education are defending not just our own interests but the interests of the next generation.
With the USS and FE pay strikes we all have an opportunity to unite to defend education and all who study and work in it.
There will be opportunity to link the arguments and build solidarity in the meetings, teach-outs and demonstrations that are called in the next few weeks. We can put pressure on politicians of every party to step up and defend education.
It is time to fight for properly funded and genuinely free education.
We need to seize the time.