2010 University Tuition Fees - The Choices Facing Northern Ireland
Professor Gerry McKenna
There has been much comment recently on the complex issue of university funding and student tuition fees. Some of the comments have been balanced, realistic and fair; others have been alarmist, and sometimes disingenuous. The reality is that university student numbers have increased greatly over the past 50 years from a time when only 6% of young people went to university. Participation rates in higher education for 18–21 year olds grew rapidly during the 1990s and are now over 40% throughout the United Kingdom, and close to 50% in Northern Ireland. Most observers believe that the growth in university participation has been a positive development of benefit to society overall. High quality university education is of enormous value to the economic, social and cultural development of any region. These benefits are not only confined to the impact of science, engineering and professional graduates, but also through the humanities and social sciences in developing a more mature, understanding and civilized society. This was reflected in the Blair government determining that 50% of 18-30 year olds should experience the benefits of higher education. However, even in the period of economic growth and prosperity experienced in the early part of the current century, the government concluded that the expansion could not all be financed from the public purse. In recognition of the significantly increased earning power of graduates, it was decided, reluctantly, that they must contribute to the costs of their education. First came the introduction of a flat-rate £1,000 contribution by students and the establishment of student loans for maintenance. Then came the introduction, in 2006, of variable fees repayable through income-contingent loans such that universities could charge tuition fees of up to £3,000 (currently £3,290) per year. Repayment begins at salary levels of £15,000.The higher fees brought a government imposed requirement that bursaries of at least 10% of the additional fee income should be made available to students from the lower socio-economic groups; in fact 26% of the additional income is currently used for this purpose across the UK higher education system. Interestingly, and to the surprise of many, the increase in fees brought no diminution in demand from economically disadvantaged groups.
The issues of university funding and tuition fees were, unsurprisingly, not permanently resolved by the measures implemented in 2006. Some commentators and politicians questioned the wisdom of having an arbitrarily determined 50% participation-rate target. Others were critical of what they referred to as ‘mickey mouse’ degree programmes on offer at some institutions. These arguments were reinforced by the decision by government to allow many lowly ranking further education institutions in the UK to take on degree awarding powers and the title of ‘university’, with little evidence of the scholarship and research traditionally associated with university status. In parallel with this, many universities were claiming that they were underfunded for teaching and that, in the absence of additional government funding, fees should rise substantially. Some wished the rise to be limited and fixed, others that it should be determined by a combination of the ‘market’ and the actual costs. This led to the establishment in 2008 by the outgoing Labour government of a review group chaired by Lord Browne of Madingley to look in to the future financing of higher education in England.
The recently published Browne report, although notionally confined to England, will have profound significance for the entire United Kingdom. It reflects the deterioration in public finances and the need to reduce public spending. The report recommended that the block grant from government for university teaching should be reduced by some 80% and that the shortfall should be met by increased student fees to, on average, £7,000 per year. It is difficult not to conclude that the Browne review group took the view that, inter alia, this approach would inevitably rid the system of weak and questionable degree programmes and academically weak universities. Under their recommendations, universities would be free to set their fees relative to their costs and reputations, and according to what the market would bear. These recommendations have not been endorsed entirely by the current government. It is now proposed that all university degree programmes should incur tuition fees of £6,000 per annum, and that some universities may charge up to £9,000, subject to having, an as yet undefined, support system to widen access to economically disadvantaged groups. Interestingly, the highly regarded Higher Education Policy Unit based in Oxford has predicted that all reputable universities will move fairly rapidly to a £9,000 annual fee charge, since to do otherwise would imply offering a lower quality product – a perception which would be self-fulfilling. While this regime will not be replicated compulsorily in Northern Ireland or the other devolved regions, the cuts for universities in England will be translated, proportionately, through the Barnett formula into the block grants to Scotland, Wales and Northern Ireland. This leaves the Northern Ireland Executive and Assembly with difficult choices, each with considerable consequences for our two universities, future students, and the region as a whole.
Before considering the funding options it is worth noting the benefits which accrued in the 1990s and the early years of the current century from the two universities adopting a relatively common approach to funding and sharing general philosophical values. Despite maintaining fiercely their autonomy and independence, it was accepted then by both university administrations and their governing bodies that if Northern Ireland was to compete effectively internationally, and thus serve the region to the fullest, its best university departments and outstanding academics must be funded on a comparable scale with their competitors elsewhere. This shared approach led inter alia to: the development of the Northern Ireland Science Park; the reversal of the block grant funding cuts in research imposed in 1997; the development of the highly successful £100 million Support Programme for University Research (SPUR); the establishment of the Northern Ireland Centre for Entrepreneurship; the University Challenge Fund (to support spin-out companies); the formation of Universities Ireland which involved, for the first time, the 9 Irish universities working together in pursuit of common goals; and the highly important US-Ireland R&D Alliance which has been of great benefit to Northern Ireland. It also led to both universities increasing greatly their international standing, with consequent benefits to Northern Ireland overall. It is to be hoped that, despite recent rhetoric, the two universities can adopt a similarly united and visionary response to the current funding challenge.
The choices for the Northern Ireland Executive and Assembly are obvious:
- 1. Northern Ireland could follow England as previously, and increase fees accordingly. This would allow the local universities to continue to compete on equal funding terms with their relevant counterparts in Great Britain.
- 2. The current cap on student fees (£3,290) could remain with broadly similar support mechanisms for student support as currently exist remaining in place. However, in order to protect our universities’ current level of funding, and given the new funding assumptions for higher education included in the Barnett formula-driven Northern Ireland block grant, this would require a transfer of many tens of £millions from other government departments to the Department for Employment and Learning.
- 3. A hybrid of the above could be introduced with the local universities being capped at a higher figure (say £5,000). Again the Executive and Assembly would have to make the same choice as in 2. above. In either of the solutions requiring funding transfers from other sections of the block grant, politically difficult at a time of decreasing public spending overall, a failure to provide a fully adequate transfer would erode our universities’ comparative positions with their counterparts in Great Britain. The stark alternative is to accept an inevitably lower quality university system in Northern Ireland with obvious consequences for the future reputation, nationally and internationally, of its universities, its graduates, and for the competitiveness of the region. It should also be clear that any regional subsidy to the Northern Ireland universities, even if adequate to compensate for a lower fees regime, would almost certainly preclude any expansion of student numbers overall and might require a significant reduction.
This raises questions as to what role we wish our universities to perform in the future. It presents great challenges for a relatively new devolved administration at a time of economic austerity unprecedented within the memory span of most of the population.
The traditional role of universities is to provide high quality undergraduate and postgraduate education and to conduct research. Over the last 30 years, as developed economies have become increasingly knowledge-based, universities have also been encouraged to be more pro-active in knowledge transfer through exploitation of research findings and innovations beneficial to economic, social and cultural wellbeing. It is accepted generally that performance in each of these areas is dependent upon adequate resources being available.
Much has been made of the issue that raising the level of student fees would act as a barrier to potential entrants from disadvantaged backgrounds. The two Northern Ireland universities have comparable and admirable records in widening access. This however is a reflection of the socio-economic structure of the region and it is important to note that, in recent years, both have slipped in the UK league tables for this performance measure. In the current English funding model there is no upfront payment of fees proposed, and repayment of student loans under the government proposals will only begin at salaries of £21,000 or over (up from the current £15,000), with greater interest being charged as salaries increase. This should, in theory, reduce the likelihood of students from poorer backgrounds being deterred from aspiring to entry to the very best universities. As referred to earlier, it is noteworthy, if surprising, that the introduction of the current rate of student fees has not reduced demand from the lower socio-economic groups, so the impact of further increases on widening access would not necessarily be disproportionately negative relative to the population as a whole. Tellingly, it should also be noted that the abolition of student fees in the Irish Republic (a policy that is almost certain to be reversed due to prevailing economic circumstances) has yielded no significant increase in participation rates from the lower socio-economic groups. What would occur inevitably from an increase in fees would be greater selectivity by students as to their preferred programmes and universities. Given the greater earning power of graduates over their working lifetimes and its relationship to what and where they have studied, it is likely that choices will be made on the basis of perceived quality rather than whether fees are cheaper at one institution relative to another. In such a situation it is easy to envisage a number of weaker UK universities failing with no prospect of bail-out by a financially overstretched government.
An alternative, if currently unfavoured, approach would be to recognize that the UK university system is made up of at least three broad categories of universities. There are a handful of genuinely world class universities. These include Cambridge, Oxford, University College London, Imperial College, the London School of Economics, and Manchester. Then there are a group of, perhaps, 50 universities which have a number of internationally strong departments but whose level of excellence is not replicated throughout the institution. The third group, which includes most, but not all, of the former polytechnics, and all of the relatively new ‘universities’ referred to earlier, have pockets of excellence but are essentially ‘teaching-only’ institutions. Both Northern Ireland universities would obviously belong to the second grouping. The ‘elite’ and genuinely world class group could be encouraged to become private universities with freedom to charge whatever fees they deem to be sustainable. They would receive no government support for teaching but would be required to introduce a ‘needs blind’ entry system comparable to their ‘Ivy League’ counterparts in the United States, such that students from the lower socio-economic groups would have equality of access and be subsidized appropriately. The second tier universities could have their tuition fees capped at, say, £9,000 per annum, and the bottom tier at £6,000. The proposed loans system, which is considerably more progressive than that currently in place, would apply to students at all universities. The break-off by the ‘elite’ group would, however, be vigorously resisted by some universities left in the second tier, due to their claims of having attained world class status even though this is not supported by any objective measure of performance. Nonetheless, the transition to private status by a small number of leading UK universities in order to match the funding levels of their international competitors, seems inevitable and cannot be long delayed.
Value for Money.
Increased tuition fees are likely to have a major impact on students’, and general, public opinion. While there is considerable consternation at obvious wastage of public funds by any state-funded body, including universities, this will be as naught compared to the wrath of those who, in future, will have to take out substantial personal loans to pay for such profligacy. Students and their parents will expect their fees to go largely to support the provision of high quality and dedicated academic staff and appropriate teaching and learning facilities. The recent trend in some universities to increase the number and salaries of managerial and administrative staff, while reducing academic and research posts, is an obvious target for their ire. Equally, students will recoil at the prospect of having to finance unnecessary or unduly grandiose capital projects or perks of any kind.
Most well-run universities have developed a clearly articulated and sustainable vision underpinned by a strategic plan based on all the available and projected environmental parameters. Notwithstanding surveys which have been conducted to predict the impact on demand arising from different tuition fee thresholds, the actual behaviour pattern will be clear only when personal and family choices and decisions have to be made. There remain a number of imponderables:
1. What actual effect will increased tuition fees have on demand? (It is difficult to imagine a significant fee increase not having some negative impact on applications and enrolments).
2. Will students choose lower fee (and perceived lower quality) universities or be attracted by the added value of higher projected salaries paid to graduates of more prestigious institutions?
3. Will there be a substantial skewing of demand towards programmes leading to high salaried employment and away from those with lower projected graduate earning capacity? With this in mind, how will the proposed new fees regime impact on the balance between the arts, the sciences and vocational programmes?
Despite the arguments that the average, and real, annual cost of offering a high quality university undergraduate degree programme is at least £7,000, there will be those in the private sector who will see an opportunity arising from the proposed withdrawal of most direct government funding for university teaching and taught programmes. This may allow them to enter the market and establish private universities. They will have concluded that there remains considerable ‘fat’ in the system involving unnecessary administrative costs through an overpaid and bloated administrative system in some universities. Undoubtedly they will seek to concentrate on subject areas of high demand and low cost; business studies would be one such example. For this reason there is little prospect of private universities arising in the areas of science and engineering. Nonetheless the prospect of competition emerging from the private sector is a real prospect for the future.
It is also likely that we will see an upsurge in support for part-time HE provision, much of which could be provided by distance learning. This is an area where some universities have already established an important niche. There are also likely to be calls for more degree programmes to be offered partially or wholly in the further education sector where, like the private sector, they could be provided in certain circumstances at acceptable standards and lower cost than in universities.
All of the above factors, taken together with the unpredictability of the response of potential students to major fee increases, will make long term planning projections for individual universities difficult.
The Way Forward
The challenge for the Northern Ireland Executive and Assembly is twofold:
- 1. To ensure that the quality of the two Northern Ireland universities is not eroded through having to function with less resources per student than their counterparts in Great Britain; and
- 2. To discourage any significant diminution in demand for higher education generally, or disproportionately from any socio-economic grouping.
These are challenges which will not be met by ill-considered statements which have superficial short-term populist appeal. There is no magic formula which will allow Northern Ireland to simultaneously offer a low fee, high quality university system with low government support. To suggest otherwise is disingenuous. There is a need for mature analysis and informed discussion. In reality, there is little room for manoeuvre by the NI Executive and Assembly. What little, if any, additional funds they may have at their disposal should probably be directed at support for widening access initiatives, including direct student support such as increased means-tested maintenance grants, rather than taking on the gigantic task of attempting to develop a local tuition fees regime different from the rest of the United Kingdom. Such an approach would inevitably damage not just our universities, but also the standing of Northern Ireland graduates and ultimately the region itself. No one should be under any illusion that in the global knowledge-based environment in which universities and their graduates must compete, this issue can be resolved satisfactorily and sustainably by any parochial or isolationist approach.
Position paper submitted to the Department for Employment and Learning, November 2010