The shift from the direct public funding of higher education to fee-based funding supported by student loans was supposed to put university finances on a stable footing and remove them from politics. Yet, after Covid-19, it is clear that fee-based systems of higher education (whether in the UK, Australia or the US) are in crisis, while those that remain publicly-funded (for example, Denmark, Germany, or Netherlands) are not.
In Britain, Universities UK has called for large bailouts to prevent the failure of some institutions and to maintain the system. Universities, it would seem, have become more beholden to politics not less, notwithstanding that government now seems unwilling to help.
The fee-based regime introduced after the financial crisis of 2008 allowed universities to by-pass the politics of austerity. It did so by shifting the burden from current taxpayers to students (and future taxpayers to meet the shortfall in loans unpaid at the end of the re-payment period).
This new regime represented a generational redistribution that was justified by claiming that education was an investment in human capital and future earnings. In other words, higher education would be marketed as a positional good and universities were allowed to compete for students on the basis of their position within rankings. Instead of ameliorating inequality, as previously imagined, universities would become integral to its reproduction.
The general widening of inequality within the population has been matched by a similar widening within higher education. There are wider differentials in academic salaries within marketized university systems when compared with those in publicly-funded systems. The professorial minimum salary is around £67K, with the average professorial salary calculated by the THE (in 2015/16) as being around £80k. Some professorial (and equivalent administrative and managerial salaries) are very considerably higher.
Within the Russell Group salary differences have also widened concurrently with the increased use of temporary and zero hours contracts and outsourced services. This is also a generational issue as older academics are protected and unfavourable contracts are imposed on early career colleagues. This ‘polarisation’ within institutions is matched by polarisation across institutions. As Alison Wolf has shown, since 2011 a higher proportion of income has accrued to the (24) Russell Group institutions compared with post-92 institutions.
What, then, are universities called to do in the current crisis? We know what Universities UK is asking for. It seeks a multi-billion pound bailout, a student number cap at present levels + 5%, Full Economic Cost (FEC) on directly-funded government research, and a doubling of QR. The first will place universities in hostage to government. The second is designed to allow Russell Group universities to recoup some of their losses on their overseas student income business model. It will put greater pressure on post-92 institutions deflecting possible closures onto institutions that serve local communities.
The government seems ideologically committed to not remove the numbers cap, in the name of social mobility, but are unwilling to address the consequences for social mobility of the closure of universities in localities dependent on their local institutions of higher education as both a source of education and of employment. Their only understanding of social mobility is one organised in terms of education as a positional good.
A doubling of QR will be monopolised by Russell Group universities, but will, in large part, be spent on maintaining high salaries. The large part of this support will sustain salaries that have been inflated by overseas student income and flaws of FEC.
In the meantime, universities are preparing to meet the immediate financial crisis with the familiar range of measures – the cutting of temporary and zero-hour positions, a freeze on posts, and the removal of postgraduate and postdoctoral scholarships – which impact most upon early career academic staff. Just as in other sectors, the actions are at the cost of younger generations. They will be condemned to the full effects of a likely recession. Cynics within the university sector reflect that this will mean that demand among home students for university places in the new academic year will likely be strong because there is little alternative. Perhaps, too, graduating students can be persuaded to take on even more debt to fund postgraduate places because the graduate job market has dried up.
Little attention has been paid to the fact that the labour market problems that will persuade students into higher education will also make it difficult for students (and their families) to support themselves. This follows from the government transfer in 2016 of a means-tested system of grants to a loan, and its failure to increase the amount that is available from its woefully inadequate level. The increase in home undergraduate and home postgraduate applications will be more likely to come from those in a position to afford the costs and will exacerbate existing inequalities.
As countries struggle with the Covid-19 economic catastrophe there are calls that consequent fiscal burdens should be shared fairly. As a leader for the Financial Times put it, “How we act now will shape humanity’s future. Death is all around us. Let us seek a resurrection into better lives for all.” We can all tell ourselves that we will vote for higher taxation and redistribution in the future, but what if the answer lies in the present within each sector? What might a higher education committed to ‘pre-distribution’, rather than redistribution look like?
First, universities should not be allowed to expand their home student numbers but should be capped in proportion to the actual volume of applicants (which may be smaller) and this cap should reflect and reverse the aggressive competitive accumulation of students of the past 5 years.
Second, if QR income is to be increased, partly in response to fears about a reduction in external funding, Full Economic Cost should be limited to a maximum salary equivalent to the professorial minimum salary at each institution. Otherwise, in so far as salaries are paid externally, there is no constraint upon universities to restrict higher salaries because they can recoup the cost. This was recognised as a problem by the Wakeham Report with regard to the indirect costs element of FEC, but applies equally to the salary element.
Third, professorial salaries could be reduced to the minimum for their grade, with lower salaries reduced to the average for the grade. This could be lifted gradually as the financial situation improves, but would in the meantime, provide a reset of UK higher education back to salary structures similar to the higher education system of European countries.
Such a re-set would also enable the justification of public support for what otherwise looks like a privileged sector. In the absence of any expected public-funding, US universities have had to announce more radical approaches to salary cuts and unpaid furloughs for staff (for example, at University of Arizona and Johns Hopkins) than anything yet proposed in the UK.
All these measures would be progressive in relation to the current distributive inequities within the system and would create sufficient funds that would enable universities to invest in early career academic posts and studentships. No doubt universities would still call for extra funds, but it would be clear that they had an intention to spend those funds in the public interest. Student fees would likely be frozen, but, given that universities have argued that they do not represent a disincentive to applicants, they would also be in a position to lobby for the restoration of funding for student maintenance and also for the proper funding of further education. Student living costs, especially for families hard-pressed after the crisis and with falling household incomes, should be a priority.
Such measures would return higher education closer to what obtained before 2010, albeit with a more radical pre-distributive twist. It would not abolish student fees, leaving that as a future possibility. But it would invest in addressing inequalities in access to universities and it would reduce the impact of the market on the stability of the system. Former Ministers for Education, David Willetts and Jo Johnson and architects of a higher education system that has been brought to its knees by Covid-19 (unlike publicly-funded schools), argue that there is nothing intrinsically wrong and that it would be a mistake to return to student numbers caps.
In 2009 the EU Commission assessed different higher education systems in Europe and the US and Japan. They compared private and public systems for teaching and research outcomes and for value for money. The Nordic systems and Netherlands did well, while private systems such as the US, did badly. However, the UK came top in all categories. Since then, the UK – more specifically, England – has moved in the direction of the US toward a less effective and efficient system (with increased cost of marketing and administration), as well as one that is less resilient to global shocks.
There is an analogy with health systems, too. No one doubts that the US has some of the world’s top hospitals, just that it has one of the world’s most inefficient and poorly performing health systems. If we listen now to the pleas of our ‘top universities’ we will threaten the effectiveness of an education system that could be returned to work for everyone and serve all communities.
John Holmwood is professor of sociology at the University of Nottingham and was co-founder of the Campaign for the Public University (a campaign that ran between 2010 and 2017 when the Higher Education Act 2017 completed the infrastructure for the marketisation of higher education in England).