Return to 'Facing up to reality'

Yet more statistical evidence suggesting the introduction of ‘top-up’ tuition fees of £3,000 a year has not deterred students from applying to university:

The latest snapshot of application figures to full-time undergraduate courses at UK higher education institutions from UCAS shows that 446,765 people have so far applied to start courses in 2007. This compares with 424,560 in 2006 and represents a rise of 5.2%.

All very well, you say, but what about those from poorer income groups? Well, the number of students from the bottom three socio-economic groups applying has increased from 71,709 in 2006 to 76,258 this year. That’s an increase of 6.3% - over and above the general trend.

I shan’t rehearse, yet again, my arguments in favour of market tuition fees for universities. But I do look forward to reading the NUS reaction to these figures. This is what they said back in February:

We have welcomed the overall rise in applications as news that prospective students continue to recognise the value of education despite the annual price tag of up to £3,000. However, UCAS have failed to release information regarding applications from students from under-represented and debt averse backgrounds and we are now pushing for these statistics to be made public. This is the real litmus test of the impact of top up fees - a drop in this group would be extremely serious even in the context of an overall increase and would directly contradict the Government’s own widening participation agenda which appears to have stalled.

What of the litmus test now?

As I wrote back in February:

The Labour Government was hypocritical to introduce tuition fees, having explicitly ruled them out in its 1997 manifesto; and even more hypocritical to introduce top-up fees having explicitly ruled them out in its 2001 manifesto. As a result, parents were given less time than they should have been to prepare for their introduction, and many have found it harder to fund their kids through education as a direct result.

But it is the right policy - indeed, the only policy - which will give our universities any chance of standing on their own two feet. The Lib Dems need to start facing up to that reality.

Gold star for Boris

It pains me to write it, but Boris Johnson’s ideas for British higher education - outlined in today’s Grauniad - are light years ahead of current Lib Dem policy. Once you get past the usual ‘What-ho!’ flummery, his vision for the value of universities is spot-on:

Call me starry-eyed, but I still think the main point of a university education is to achieve a personal intellectual transformation, and who knows, an emotional and spiritual transformation as well. The evidence seems to be that this transformation is, additionally, of huge economic importance. If Universities UK says our universities contribute £45bn to the economy, I am not going to quibble.

If you ask what is our Conservative vision for the future of these universities, it is that Britain should be the Athens of the global economy, the place any intelligent person might think of going for a civilised and valuable education - just as people across the ancient world would go to study in Athens.

Boris brings out a crucial aspect too frequently ignored by the Lib Dems. Higher education is now a global enterprise - British universities now compete for talent, both among students and academics, on an international basis. Without the resources to compete, our domestic universities will become increasingly marginalised, and increasingly unable to serve the needs of our own population. This would be a tragedy for the British economy. But, as importantly, it would jeopardise the opportunities of future students who need access to educational excellence.

Lib Dems are (rightly) concerned to talk about the value of a free higher education - and tuition ‘fees’ are now, in effect, free at the point of use, repayable only after graduation and once a student is earning a living wage. It’s a point Boris faces head on:

Anyone who has faced an audience of students lately will know that feelings are still running high, and that the increase in applications this year is by no means held to be reassuring ("Why are you introducing this irrelevant statistic?" as one young Dave Spart testily interrupted). We need to crack on with the debate; we need to educate and inform. But any further reform of the fee regime must satisfy some difficult tests. It must encourage the widening of participation, enable needs-blind admission and it must be done in such a way as to avoid a huge increase in public spending.

It’s a debate which needs to be had, and had honestly.

Why the UK's universities are dwarfed by Stanford

Here’s a rather frightening statistic… the ‘Ross Group’ of 75 universities in the UK raised £450m in donations during 2004-05 (the most recent year for which figures are available).

Sounds pretty impressive, doesn’t it?

However, it is rather put in perspective by Stanford University, which raised US$911m in 2006 - that’s £464m at today’s exchange rates.

In other words, Stanford raised more philanthropic gifts last year than the rest of the British higher education system combined.

And even that stark fact paints our universities in an overly flattering light. Oxford and Cambridge universities collectively benefited from £185m of that estimated £450m. The top 10 US universities raised an eye-watering £2.14bn between them.

Small wonder, then, that though the UK and USA governments spend roughly the same proportion of GDP on higher education, private giving means the overall investment in universities in America (2.7% of GDP) is more than double that in Britain (1.1%).

If this doesn’t worry us, it should do. There are two principal effects:

1. British universities have less money to spend on their students.
   Edinburgh, which is Britain’s third wealthiest university, can boast £9,100 of endowment per student - which means they can invest roughly £450 a year in each student’s education (assuming a 5% income return on its investments). Princeton, though, has £830,700 of endowment per student - the equivalent of £41,500 a year to invest in each student’s education.
   Guess which university will be able to afford to offer the best education?
   
   
2. Success generates success: the higher the endowment, the greater the risk (and therefore profit) a university can take in managing its assets.
   The average annualised return on endowment investments in the wealthiest 10 UK universities between 1994 and 2005 was 7% - it was 12% for the US’s wealthiest 10. Which means that (because the US universities were starting from a higher base) the absolute gap has widened - by £12.5bn in just the last three years.
   Guess which country will be able to afford to offer the best education?

It is a myth that US universities have always been rich: 25 years ago, Harvard was the only US university with an endowment of US$1bn. Now there are 56 such institutions. Europe has only two, Oxford and Cambridge.

The recent announcement by Tony Blair of matched government funding for donations to universities is, therefore, welcome. But, as can be clearly seen, it’s just a start.

And, of course, none of this is helped by the fact that most of the top British universities currently have to use much of what endowment income they do sweat to offset the losses they make on teaching undergraduates because of the government cap on tuition fees.

There is an obvious deal to be done here.

In return for UK universities being able to start charging (incrementally) a more realistic price for the cost of the education they provide, the government might reasonably expect increasing amounts of endowment income to be designated for student financial assistance to ensure the poorest in society can still afford to apply.

It’s what happens in the US - which is, in part, why many more Americans have the opportunity to experience higher education than we Brits do.

* The boring declaration of interest: I’m an educational fundraiser for St Anne’s College in Oxford.

Stats extracted from the Council for Aid to Education report, Data & Trends on Giving to Education (Feb 2007); and the Sutton Trust’s report, Univerity Fundraising - an update (Dec 2006).

Facing up to facts

This time last year, then Lib Dem education spokesman Ed Davey - noting the drop in applications to English universities from English students - commented:

“This decline in university applicants shows student fees are already beginning to bite.”

I wonder what his successor, Sarah Teather, will say in response to the news today that applications have risen by 7.2% this year?

The reason for last year’s downward blip was evident to anyone who looked at the figures - 2005 had been a bumper year for applications (up 9.7% in England) as prospective students sensibly sought to apply to univerities before top-up fees kicked-in. It was unsurprising that 2006 saw a correction.

The Labour Government was hypocritical to introduce tuition fees, having explicitly ruled them out in its 1997 manifesto; and even more hypocritical to introduce top-up fees having explicitly ruled them out in its 2001 manifesto. As a result, parents were given less time than they should have been to prepare for their introduction, and many have found it harder to fund their kids through education as a direct result.

But it is the right policy - indeed, the only policy - which will give our universities any chance of standing on their own two feet. The Lib Dems need to start facing up to that reality.

Oxford reaps reward of its conservative myopia

Last month those who care about these things - which seemed to be most of the British media - were greatly exercised by the governance proposals put forward by the University of Oxford’s Vice-Chancellor, John Hood. Dr Hood’s plan to try and drag the University kicking and screaming into the modern world was defeated by the University’s Congregation, the so-called ‘Parliament of dons’.

Those of us who supported his reforms (the ‘Hoodies’) argued they were the best way in which the University could maintain and enhance its independence from government, and retain its position as a top 10 global university in the increasingly competitive world of higher education.

The joyless conservatives who prefer Oxford to stick in the mud seem to think the University has no reason to be accountable to the outside world - even though the government (and, therefore, the British tax-payer) is the biggest single investor, and even though the University’s charitable status confers on it huge tax advantages. They were warned that unless Oxford proved itself capable of reforming itself from within, it risked having reform imposed from outside.

Well, HEFCE (the Higher Education Funding Council for England) has now fired the first warning shot across the University’s bows. A letter from its Chief Executive, Professor David Eastwood, to Dr Hood makes clear HEFCE’s disappointment with Oxford’s backward-looking rejection of the Vice-Chancellor’s governance reforms:

As you know, HEFCE is the single biggest investor in the University and we assume the lead regulatory role on behalf of all your public sector funders. We set the accountability framework for the HE sector, and within that framework it is a condition of grant that the University has a sound system of governance. We look to the University, its Council, and its Audit and Scrutiny Committee to provide assurance about the system of governance.

Under the recently-rejected proposal the membership of Council would have fallen from 25 to 15 with seven internal members and seven lay, plus a lay chair. The adoption of this arrangement would have given the Council a lay majority for the first time. There is, we believe, a broad consensus across all sectors that corporate governance is enhanced by the external membership and, more particularly, by the discipline and advocacy that non-executives and externals bring to the corporate life and governance of a university.

This has been reflected in reports over the years, including those from Dearing in HE and Turnbull in the private sector. The sentiment is embedded in the Lambert Report and embodied in the good practice guidance to universities published by the Committee of University Chairmen.

The University has accepted that its Council is its single governing body responsible for academic and strategic matters (albeit that Congregation remains the supreme legislative assembly) but has rejected a particular proposal that would have delivered a lay majority. HEFCE takes the view that its investment of public funds must be subject to effective governance oversight, and that this oversight needs to be largely external and demonstrably free from potential conflicts of interest.

I, of course, recognise the academic excellence of Oxford and the effectiveness of many of its operations. I also understand that opponents of reform associate success with the University's governance tradition and consider that fundamental governance changes would undermine continuing success. I consider that argument unproven, and note the performance and progress of some of your competitors who have more modem governance arrangements. I would also remind you that the University's accountability failed as recently as 2003-04 when the accounts were audited and finalised many months after the deadline.

In March of 2006 the HEFCE Assurance Service issued its report on risk management control and governance at the University. We will be following up this report by April 1, and will be seeking assurance about governance arrangements. It would be helpful if you could give this letter your attention before that time.

There will be some who argue that this is ‘government bullying’, that HEFCE has no right to try to meddle in how Oxford University runs itself. They are wrong. For as long as the University is publicly funded, those bodies which dish out taxpayers’ cash have every right to be assured that their money is being well-spent in the wider public interest. I have no doubt Oxford can prove that, in spades; but, by refusing to account for itself in the way every other charitable institution is expected to, it has weakened its position.

There is, of course, an alternative open to Oxford. It could refuse to take the public money HEFCE distributes, and set its own tuition fees at the market rate. Then the University would be free to ignore outside interference (though would still be answerable to the Charity Commission). Many of those who were most passionately agin the Vice-Chancellor’s reforms advocate precisely this.

However, if they think the University could continue to operate as it does - elevating academic self-government above business reality - in the ‘real world’ of tough global markets, without any state subsidy, they are deluding themselves. A private university would be far less tolerant of loss-making academic subjects than a publicly-funded university is able to be. Independence is not the silver bullet for Oxford as it is sometimes portrayed.

The conundrum is clear. Accept state money, and you accept the state’s right to have a say in how you are managed. Reject state money, and you accept the university must manage itself in a far tougher, leaner way.

The Vice-Chancellor saw this dilemma clearly. He proposed governance reforms which would have allowed Oxford to keep its public money, retain its academic self-government, while satisfying HEFCE that Oxford was serious about becoming more open and accountable. It would have also strengthened the University’s decision-making processes, making it easier for Oxford to become increasingly self-reliant, and less dependent on state hand-outs.

Dr Hood’s opponents are delighted at their victory. Their delight may prove short-lived, and they will have only themselves to blame.

Simon Jenkins: writing with forked pen

As the voice of Liberal England, Jonathan Calder, noted a couple of days ago , Simon Jenkins appears charmingly content to fit his voice to his readership. On Wednesday, he biffed Blair for giving parents some say in their kids’ education:

The education white paper offers a vision of a "parent-led" state secondary-school system. Its key institution is the "self-governing school free to parents", a copy of the Tories' grant-maintained school that Labour once derided. Parents will be able to control a school's "ethos and individualism". As one parent briskly put it to me, "We can keep out the blacks."… Most parents cannot and do not want to roam the country in search of the "school of their choice", even if the transport system could stand the strain. They want the school closest to where they live to be an excellent one, period.

Of course, the best state schools already have a pretty effective racial screening process: it’s called the housing market, and it means that the poorer communities too often don’t get a look in.

And of course parents would prefer their local school “to be an excellent one, period”. Who knows, though, they might even prefer the option of two excellent local schools offering different curriculums, a different ethos, different extra-curricular activities, etc.

Perhaps Mr Jenkins doesn’t feel parents should bother their little heads with such minor concerns?

But all this then made for a bizarre experience today to read Mr Jenkins’s article for The Spectator, headlined Independence for Oxford. Here we read:

The government last week proposed what is a de facto voucher scheme for English secondary schools. They can be self-governing institutions with the freedom to determine their ethos and accept [financial] contributions from parents and others. Oxford would be no different in principle.

So let me get this straight, Mr Jenkins: you are happy to champion independence for educational institutions which are free to determine their own futures when writing for The Spectator – but equally happy to diss it as terrible idea when writing for The Guardian? It's one way of achieving balance, I guess.