Andrew McGettigan is a freelance writer and researcher on philosophy, the arts and education. He also sits on the advisory board of the Intergenerational Foundation, for which he produced the report False Accounting? Why Higher Education Reforms Don’t Add Up. Mr McGettigan has written and spoken extensively against the privatisation and marketization of England’s Higher Education Institutions. In light of the potential influence of Westminster reforms on Scottish universities, I met with Mr McGettigan and asked him to explain what is happening.
You can find his blog Critical Education at http://andrewmcgettigan.org.
GL: Can you give a quick overview of what’s happening in England’s universities at the moment?
AM: Well, in September we’ll see the new cohort arrive. They will be the ones who face the higher tuition fees. It looks like on average, after fee waivers, being something like £8,100 per student. That’s an increase from £3,375.
No one’s quite sure yet how the change in fees has affected places available in certain courses. We have an idea about general applications overall across the nation. And they’ve fallen. In particular institutions like The University of Creative Arts which has lost 30% of its applicants on previous years. The University of Creative Arts specializes in design, fine art, fashion. It might be these kinds of subjects where higher fees are a disincentive for students to apply. But because of the way UCAS presents the results we either get an overview of applications by subject across the country, or we get an overview of applications by institution. We haven’t yet had that cross-tabulated. Also we don’t yet know whether applicants are going to behave in the same way they have before and accept those offers, or if, say, they get an offer from their fourth choice and it’s £9,000, maybe they decide, ‘Actually, it’s not worth going’. We just don’t know yet.
Alongside that institutions are gearing up for the next few years, the big issue being that the government’s planned new regulatory framework for higher education, which was meant to be put before parliament in this session, has been pulled, possibly until 2015. This is hugely disconcerting for universities. Now we’re in this strange limbo or interregnum period where we know the government wants to change the old system; we saw plans for what they wanted to do, but legislation that they would have had to put in place to achieve those plans has been withdrawn for reasons unknown, although we can have a number of guesses.
GL: Why do you think the Higher Education Bill has been withdrawn?
AM: I think the government had a single package of reforms in mind. As part of that they were proposing two things which I imagine were unpalatable to the Liberal Democrats. The first was giving degree-awarding powers to Pearson. Pearson is an educational publisher, a massive, UK-based multinational conglomerate, which also runs the Edexcel examination board in England, and so already owns a company that validates BTECs, HNDs and HNCs. Pearson have no academics and they do no teaching themselves: they just examine and publish course materials. This would have been a complete transformation of what we understand a degree to be.
I think the government’s still keen on this, primarily because Pearson has the ability to roll out low-cost provision and undercut the established universities. And the big problem with the university funding system as proposed by the government is its expense. It’s going to be very expensive for the taxpayer. The government thought it had the power to control fees. It didn’t. It’s had to bring in some new complicated market reforms. They haven’t really had the desired effect. What it would really like to do is introduce some serious competition to the universities by having a cheap mass provider. Pearson could probably run degrees for under £6,000 in collaboration with FE colleges.
The second main problem was the proposal to make it easier for universities to change their legal status. Currently, in England universities and higher education institutions have a variety of legal forms. Some of them are chartered corporations. In the eyes of the law these institutions are treated like persons. They’re legal entities in their own right. The majority of ex-polytechnics are, by contrast, statutory corporations. They can only do what they’ve been given powers in statute to do.
However, the Government didn’t explain what safeguards were in place that would prevent universities changing to any corporate form of their choosing, which is what it said in the White Paper, including to a company limited by shares or a profit-seeking form. Those concerns, which the government hasn’t responded to adequately, indicate to me that they were thinking of something much more radical along these lines. We recently saw the purchase of College of Law by a private equity company. College of Law is effectively a private university. It also has a royal charter and it’s a charity. It was just bought for £200 million by a private equity company which will effectively convert it from a charity into a profit-generating entity which distributes profits back up to its private equity owners.
The White Paper seemed to make that same process easier for what we would understand to be a public university. At the moment there are lots of checks and balances. There are complicated legal procedures that you’d have to do, and they’re unclear, because there’s not been a precedent set. What I think the White Paper was thinking to do was to rationalize and simplify this whole process.
GL: Do you think it will affect the quality of the education that they’re offering, their for-profit nature?
AM: That’s always a complicated question because in the short term what the private equity company has is the ability to inject large amounts of investment into the institution. The College of Law was bought for £200 million. The company that bought it may also have other money at its disposal to invest in the institution and overhaul facilities, transforming the student experience in the short term. But in the long run it will have to make back those costs somehow by generating a surplus and then paying off the original investment. Quite what the business model is for doing that can vary. You could go the way of the Ryanair model: cut back on the costs, offer a mass cheap product. People then have the option to buy in their additional extras for more student experience. For example, you could just have class and hand-outs, and if you want access to the library or a students’ sports club you pay a bit more. There are various models.
What I think is more likely is that they want to use the caché of a UK institution to roll out a programme overseas. The game that private equity companies are really interested in is not necessarily the UK market, which may be a bit overregulated, but if they can get British degree-awarding powers, that gives them an advantage if they want to open a campus in, say, Africa, or Asia. Then there may be much more of an opportunity to offer a completely different kind of education but still validate it with a UK degree. Now that’s where I think there’s big opportunity for profit to be made. And I think it’s probably those things that a number of institutions are looking at. It is the ‘Great Game’ for a new global education market.
GL: Are student loans from the Government available to for-profit degrees awarders?
AM: In principle, yes. The Government is running a shadow process which it calls “designation”. We have the established universities where, by right, all their students have access to the loans provided by the student loans company, and we also have a number of very small private colleges. On a case-by-case basis the government has been approving courses at these places. Their students can then get maintenance grants and maintenance loans on the same terms as students anywhere else. From this September, they can also access up to £6,000 towards their annual tuition fees. Currently, we think there are about 10,000 students in that situation, and it’s likely to increase. Some of those students are at colleges which are owned by private equity companies.
This is a huge issue because you’re providing risk-free money to an institution that’s not a charity. There are a lot of private education providers which are charities, but there are also private education providers which distribute profits to their owners or to their shareholders. In the student loans system you’ve got three parties – you’ve got the students, you’ve got the Student Loans Company, and you’ve got the university. A student enters into a relationship with the Student Loans Company, the Student Loans Company pays the fees to that university, and then the university is out of the loop because the debt relationship is between the student and the Student Loans Company. That is risk free money. It doesn’t even have to chase its creditors. It never even has to call a bailiff or get any bad debts. The government is doing that all on the institution’s behalf. You can see why that arrangement is so attractive for companies.
This is what you’ve seen in the States. The for-profits make the most use of this kind of federal loan and basically have become recruitment mills. Not degree mills: recruitment mills. Most universities would enrol in September and maybe January: these universities have been enrolling every month because they get money from the Federal Government when people enrol, and then it’s the Federal Government and the student who have the debt relationship. These places have very low completion rates. At the University of Phoenix something like 11% to 15% of students complete after six years. The university is taking the money, and the students aren’t finishing. And where’s that money gone? Most of these companies are spending more on recruitment and marketing than they do on tuition.
David Willets knows about this but he thinks we have the appropriate regulatory checks and balances. I think we have more than they do in the States, but he’s still talking to the exact same companies who are pulling this stunt over there. He’s talking to them about coming over and doing it here.
GL: But if someone has a degree from this kind of university, don’t employers know that you don’t have a good degree; that someone gave you a book and put on a tape for you and you wrote an exam?
AM: The problem is that companies like Pearson actually have quite good standing with employers. They’re going to start a degree in September, validated by Royal Holloway, in business and entrepreneurship. It’s worth having a look at, <pearsoncollege.com>. BT, Cisco and Atos have helped write the content. In that circumstance employers may think that’s a much better qualification. That’s the argument for it. Their argument is we can do it better than universities can.
GL: Do you think students are deciding whether to go to university based on some kind of cost-benefit analysis?
AM: I don’t know. I mean there’s just not enough research on it. You hear anecdotes, but the loans scheme is so complicated I’m not sure how much more it can be than just gut instinct for most people, particularly if you don’t have a family that’s able to finance you independently. There are lots of complications about the loans scheme, but for the average graduate, whether you’ve gone to an institution that charges £6,000 or £9,000 will never show up on your repayments. That difference of £3,000 is most likely going to be written off at the end of the 30 years, if, and this is the huge if, we assume a policy environment for 30 years where there’s no politics and we have the same loan scheme and the economy of the previous 30 years looks like the economy of the next 30 years. And the government of 2046 keeps the promise made by this government and writes off the outstanding balances of those students who first went to university in 2012.
GL: Might the loan scheme change? Could that affect current borrowers?
AM: Yes. Previously there was a relationship between what was in the statute and what was in the contract. There was a relative amount of protection in the statute so the stuff in the loan agreement used to be positioned quite differently. But the Government has removed that protection from the statute. So suddenly this looks much more precarious.
The Government can now set market rates of interest – they’re not now low interest loans, for example. The issue then is not whether the government is allowed to change the terms: it’s a question of political will. You would have very little comeback or redress if a government, say 20 years down the line, facing a fiscal crisis, said, “Well, look at that. There’s £150 billion on the outstanding student loan balances. It’s debt they owe us, we lent them that money, we paid their university fees. We could go back and raise the repayment rate or extend the write-off period to 40 years not 30 years. Or we can freeze the repayment threshold.” All of these things can be done because the terms of the contract read: “You must agree to repay your loan in line with the regulations that apply at the time the repayments are due and as they are amended. The regulations may be replaced by later regulations.”
What’s just happened in New Zealand is really important. New Zealand has very similar kinds of income contingent repayment loans. In the budget at the end of May, the Government said to existing borrowers, “You have been paying 10% over the repayment threshold. We’re going to put that up to 12%, because we need that money.” They changed the terms on borrowers who took out those loans 10 years ago.
GL: How is the governance in English universities dealing with these changes?
AM: I think that there’s a general problem here. University governance is made up of the management executive and something like a board of governors. The executive has day-to-day responsibility for management, but also will increasingly have responsibility for coming up with strategic plans. It’s the job of the governors to oversee those plans and also to ensure that the organisation is meeting its charitable, public interest objectives.
Now, if the management side in response to pressures to generate revenue is becoming increasingly corporate and commercial by having a corporate plan that fights for a place in the market, is the board of governors, who are there to represent a diverse community of stakeholders, really in a position to properly assess what is going on? There’s a question of capacity here. It was fine when there was lots of public money coming in to the university and all that the governors had to assess was whether that was being spent appropriately. But when it’s a question of joint ventures, of private capital, maybe even of selling the whole university – as just happened with College of Law – there’s a question about whether the current governance structures are appropriate for the new terrain? Ought there to be more involvement, not just from, say, the academics and students, but from the local community? This is the central issue as to what a public university would look like.
Owing to new pressures, one is increasingly having to talk about these institutions in a way that severs them from any local responsibility. In this context, one thing that interests me about Middlesex University, for example, is the way in which it has sold off all of its sites across North London, while at the same time building campuses in Dubai, Mauritius, and trying to go into India. That was traditionally a local polytechnic owned by the borough. Since 1988 it’s been an independent charity. The question is, have those decisions really been in the best interests of the local people living in those boroughs? There’s no higher education footprint in Haringey now, which was a source of much controversy. It’s quite striking when you consider the size of Haringey as a London borough. I think it’s got around 250,000 people in it and no higher education institution. It’s those kinds of questions about how a university system benefits the country and localities that clash with decisions about what’s in the best interest of perpetuating our institutions – how can our institutions generate more revenue. If, increasingly, overseas looks like the source of income, then I think there’s a fundamental conflict there. That’s where there’s a question of governance, but also a question of democratic accountability.
GL: Do you think it’s too late to go back?
AM: It might be too late if you were concerned about keeping the top 30 institutions within a public education system. I think some of them are already much more independent and much more private in that sense than the others. The nation may be better served by saying, “Okay, we let you become Harvard and Yale. We let you charge the fees you want. Run your own things. But then we take the public money that used to go to you and we redirect it to other kinds of institution.” It would be a different shift.
I suppose I’m far more concerned about the existence of a mass higher education system in the country. This is something I’m thinking about but haven’t written about yet. I’m looking currently at the history of the polytechnics. There was a two-stage process by which they became universities. In the first stage they were owned by the local education authorities. In 1988, with the Education Reform Act, they were taken out of local education and turned into private charities. And then in 1992 they were brought into the funding regime that universities had. It’s that first move which I think is the most interesting.
The argument always was that they were owned by the local education authority in the same way that schools were, so they were part of a local education system. I think universities should be far more part of local life. I suppose the thing we’ve allowed to get out of hand is going away from home for 3 years of full-time study as the general model of education; almost as a rite of passage in some regards. The idea that the Polytechnics were originally planned to provide is of an urban, civic university that’s engaged with local business, is thinking seriously about training for employment, and general education, and that people can come in and come out of throughout life. If you want to go study archaeology you can do. You don’t necessarily have to do a three-year degree, but you can try it. There’s ways in and ways to engage with it.
It would take a brave politician to suggest this. What you would need to create something different would be the Labour Party to find some kind of backbone and to realise that markets in education don’t work.
GL: And if they don’t?
AM: The real danger is if institutions start to go bust and then the proposed solution is à la the NHS. Will we bring in a profit-making company to manage these? Then I think we really could just see the destruction of capacity. In the White Paper the Government said it’s no longer prepared to act as the backer of last resort for an unviable university. This is exactly what they’ve said in the NHS: “We’re no longer prepared to act, because you can’t have a market if you don’t have proper penalties.” Whether that’s bluff I don’t know, but I don’t like the tone. I think it’s the wrong tone.
There are various reports issued by Policy Exchange which is a think-tank very close to the Conservative Party. There was one they wrote called “Sink or Swim” which said London has too many universities; we should see mergers and we should allow institutions to go bankrupt. There may be an argument for that, but the big issue is that none of these discussions are being held in public. They’re all being presented as technocratic solutions to a funding problem: “We have to cut the grant and replace it with higher fees and higher loans because it reduces the deficit.” But, in fact, it’s not a temporary measure. It’s being treated as the occasion for the wholesale reform of higher education. The more profound transformations are masked by debates about higher fees.