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ENGLANDâ€™S NEW MARKET BASED SYSTEM OF STUDENT EDUCATION: An Initial Report

Research & Occasional Paper Series: CSHE.7.13 UNIVERSITY OF CALIFORNIA, BERKELEY http://cshe.berkeley.edu/ ENGLAND’S NEW MARKET BASED SYSTEM OF STUDENT EDUCATION: An Initial Report April 2013 Roger Brown Liverpool Hope University ABSTRACT Copyright 2013 Roger Brown, all rights reserved. In 2012 the Conservative-Liberal Democrat Government introduced a number of reforms to the higher education system in England. The main change was to abolish direct state subsidies for the teaching of most subjects, and replace them with a state- subsidised tuition fee of up to £9,000 (US $13,700). A number of other changes were also made, all with the aim of increasing institutional competition and consumer choice. The Government believes the reforms are necessary to assure financial sustainability, raise quality and enhance social mobility. This paper assesses the early impact of the reforms. It concludes that, on the evidence so far, none of the Government’s declared objectives is likely to be met. A. INTRODUCTION From the start of the current 2012-13 academic year English universities and colleges have been operating a new and more market-based system. The limit on the tuition fees charged by institutions to undergraduates has been raised to £9,000 (from £3,375). Full-time students will continue to be able to borrow the monies needed to pay for tuition and maintenance, with repayments to the Government on an income-contingent basis; part-time students will be eligible for fee loans for the first time. There will also be full or partial non-repayable maintenance grants for full-time students from households with an annual income of up to £42,000 in 2012-13. The revenue raised from fees will meet the full costs of tuition apart from a few ‘strategically important and vulnerable’ subjects (science, technology, engineering, mathematics and modern languages) where direct subsidies in the form of grants to institutions will continue. At the same time, controls have been lifted on a significant proportion of the student places funded by the Government. There have also been moves to increase competition from further education colleges and private, non-publicly funded institutions. This paper reports on the early impact of the changes and assesses how far they suggest that the Government’s aims in introducing the reforms will be realised. B. BACKGROUND The new competitive regime for English higher education was described in an earlier paper in this series (Brown, 2011). Briefly, the UK has had tuition fees for Home and European Union (EU) students since 1998, when an up-front charge was first levied. In 2006, in England, variable fees of £3,000 for full-time undergraduate degree courses were introduced. The fees were intended to be variable between institutions (and subjects) – hence their name – but in practice almost every institution charged the full amount for most subjects from the outset. Institutions continued to receive direct state subsidies for the balance – in practice, the greater part – of the costs of teaching. These came in the form of unhypothecated state grants from the Higher Education Funding Council for England (HEFCE). Students could borrow the money to pay the fee from the Government and repay the loan once they had graduated and were earning an income of £15,000 (US $9,870) or more. The new regime was extremely controversial, with the Government getting the necessary legislation through the House of Commons by only a few votes. The main concern of those who opposed the legislation was the potential impact on participation, especially of those from less favoured socioeconomic backgrounds. Accordingly, the Government agreed that the whole regime should be independently reviewed after three years. This review was conducted in 2009-10 by a committee chaired by Lord Browne of Madingley, the former Chief Executive of British Petroleum. It found that the higher level of fee had so far had little impact on participation. It recommended that there should be no statutory limit on the level of the full-time undergraduate fee, but that institutions charging more than £6,000 should