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YA Higher Education funding rant
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One of the mailing lists that I read has had a discussion on the government's proposals for the introduction of differential tuition fees in higher education that has been raging for the last week and a half. During the course of this, someone asked the question: "how has the government been able to pay for university fees for so many years and it's only now when "we're putting more into education" that they can't?"

I was a little taken aback by this, and so wrote the following response.


The Government has historically been able to pay for higher education for two reasons:

1. Participation used to be much, much lower than it is now.

The postwar history of UK higher education begins with the Butler Education Act in 1944 which provided public education to age 18. The increasing numbers of qualified school leavers led the Barlow Report of 1946 to recommend a doubling of student numbers in HE to meet the rising demands of industry and science.

By 1961, 5% of young people received higher education. The first major rise after this followed the publication of the Robbins Report in 1963, which led to a substantial increase in UK HE funding (under Wilson's Labour government) and the establishment of the new universities of the late 1960s:

The New Universities : 'Green-Field'
Sussex (1961) York (1963) East Anglia (1964) Essex (1961) Kent (1964) Lancaster (1964) Warwick (1965) Stirling (1967)
The New Universities : upgraded Colleges of Advanced Technology
Aston (1966) Bath (1966) Bradford (1966) Brunel (1966) City (1966) Heriot-Watt (1966) Loughborough (1966) Salford (1967) Strathclyde (1964) Surrey (1966)

[taken from http://www.hefce.ac.uk/pubs/hefce/1994/m2_94.htm]

During the late 1980s and early 1990s, HE was expanded yet further, predominantly within the polytechnic sector (coinciding with the Further and Higher Education Act of 1992, by which many polytechnics achieved university status). This continued at an accelerating rate during the mid 1990s - to see just how numbers have risen, consider the following:

Year Full-time students in higher education
(including polytechnics)
1960 just under 200,000
1970 just over 400,000
1980 almost the same
1990 about 650,000
1997 about 1,160,000

2. As participation increased, funding per student head has decreased.

This is a generalisation; during the immediate post-Robbins years, funding increased, but this was largely capital spending. The 1980s saw quite dramatic falls in funding (justified through the Research Assessment Exercise and the Teaching Quality Assessment). The majority of the shortfall has been made up from staff salaries; the Association of University Teachers (AUT) notes that:

"In all, the UK's average full-time earnings have risen by 44% over inflation since 1981, yet average pay for university academic and related staff has risen, at most, by just 7%."

Taken over the longer term, salaries in universities have fallen in real terms to a level which almost beggars belief. Salaries in UK HE are also not comparable to those overseas: the average starting salary for a junior lecturer in the UK is less than £20,000, compared to over £30,000 in the US. Meanwhile, the staff:student ratio has fallen from 1:9 in the 1970s to worse than 1:20 now (expected to fall as far as 1:23 by 2010). More work for less pay seems to be the message.

(Richard Gombrich gives a good account of this)

By 1997, the UK had fallen below the OECD mean per-capita funding [taken from http://www.aut.org.uk/media/html/losingvitalinvestment1.html] There was a paper in the Economic Journal this February [mirror] which gives a good overview of the financial plight of UK HE.

As that paper notes, UK HE now has a huge problem with staff recruitment and retention. The staff:student ratio has been pushed as low as it can go without impacting on the quality of teaching, so you can't increase student numbers without also increasing staff numbers. In addition, you've also pushed academic salaries as low as they can go; you're already having problems filling the vacancies that you already have because the salaries aren't competitive with those in industry or overseas (particularly in science and engineering subjects), so you'll need to increase staff salaries as well as staff numbers.

Meanwhile, you'll need somewhere to put all these extra bodies, and you'll need to start replacing the older university buildings that are falling down as a result of neglect through underfunding. The proportion of GDP which has gone towards HE has been systematically eroded, while those for other ends have increased to take up the slack, so you need to increase government revenue just to prop up HE, let alone pay for its expansion.

Today's Grauniad carried a letter which put this point more succinctly, if also more brutally. (reproduced below to defend against the future vagaries of the Guardian's website)

Hurrah for the increase to £20,000 in annual earnings before repayment of student fees kicks in. It has taken me a first-class degree, a prestigious PhD studentship to Oxbridge, a Medical Research Council fellowship, an academic appointment to a Russell Group university, followed by a highly competitive research grant and a move to an elite London establishment, to reach that princely sum.
The risible state of university finances is why I and my colleagues will be sticking up two fingers to junior common room protests. When Tarquin and Jemima bugger off to the City to earn in one year what takes me 10 or more, will they be prepared to pay a 50% tax rate for higher education? I don't think so. The rest of you, go and do the maths. The poor pay nothing, the rest a 1% increase in lifetime tax burden. Who pays for the current shambles? I do.
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I do have to say, I've spent the last few years kicking myself that I never took out a student loan. Since leaving University five years ago, I have at no point earned over the repayment threshold. In the meantime, I could have been happily earning interest on a tidy sum, that would have got me through a couple of very hairy patches in my life.

I took one out only in my third year - the smallest of the three loan amounts - and just before the end of the summer term (I bought my first PC with it, now languishing in The Cupboard). I started paying the loan off while I was working in Cambridge, and continued to do so while a postgrad in Edinburgh and Southampton, since £10 per month was such a measly sum.


(Deleted comment)

A graduate tax (with a lower bound) is the most equitable and progressive way of raising revenue from university graduates. It was recommended by the Dearing Report in 1997 (the National Committee of Inquiry into Higher Education). Particularly worth reading are chapters 20 and 21, which lay out the argument for a graduate tax and propose mechanisms for implementing its collection.

Of course, this never happened. As the Economic Journal article notes, a graduate tax would take 43 years to reach a steady state (in which contributions via the tax were sufficient to fund HE), according to figures supplied by the CVCP (now Universities UK). I doubt that any government would be willing to commit to a scheme which needed to be left for that long in order to work. Always tweak, tweak, tweak, and mind the next general election. The article also points out that a tax raised from graduates for the funding of HE is of no use unless the revenues from that tax are hypotheticated (ringfenced) purely for HE. Too much of a temptation to spend them on the panic of the day, otherwise...


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