As expected, the proposals in the Coalition Agreement concerning universities and further education were typically vague and non-committal.  However some significant reforms have been introduced.  First, the cap on tuition fees was lifted from £3,000 to £9,000.  Second, students attending private universities are now eligible for a state-funded loan of £6,000. And third, part time students are now also eligible to apply for a student loan.  These reforms will go some way to level the playing field across the sector and will hopefully help to attract private investment from both home and abroad.

Unfortunately, because each new student still costs the government thousands of pounds each year and because the government itself has limited funds, it is now difficult to expand the supply of university places in order to meet the increase in demand, which successive governments have helped to create by encouraging more people to attend university.  The inevitable result is that over 200,000 A-level students have missed out on a university place each year.  This represents an extraordinary and unprecedented level of rationing in one of the UK’s most important service sectors.

We are therefore left in the current situation in which the government can no longer afford to increase public subsidies, while at the same time it continues to restrict universities from raising extra income by raising tuition fees above £9,000. This is despite the fact that both the government and the universities agree that extra investment in higher education is required and that some students (and their families) would be prepared to pay higher tuition fees, if only the government would allow universities to increase them.  It is clear that something has gone horribly wrong when the government starts to fine universities for taking on additional students!

Despite introducing the above reforms the current government has unfortunately followed in the footsteps of all previous governments and has failed to recognise one very simple but significant point – there is no such thing as a public university in the UK.   Instead all universities are private institutions which are supposed to share the following characteristics: a legally independent corporate structure; charitable status; and accountability through a governing body which carries ultimate responsibility for all aspects of the institution.  To be clear, they are all legally recognised as private and not public institutions and the government has failed to take this into account when intervening in the sector.  Until this fact is recognised, government intervention across the sector will continue to: undermine the autonomy and independence of private institutions; completely disrupt and distort the pricing system; lead to the widespread rationing of university places; restrict private investment from home and abroad; crowd out for-profit institutions, entrepreneurial talent and philanthropic donations; restrict competition and innovation throughout the sector and last but not least continue to fuel qualification inflation. 

It used to be said that because higher education plays such an important role in our social and economic life, it can’t simply left to the chaos of the market.  However, many people are now beginning to question whether the endless stream of misguided and contradictory government interventions is proving to be even worse.

This article by J.B. Stanfield appeared in The House Magazine (18 October 2012), which is distributed widely in both Houses of Parliament.

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