The financial health of the HE sector

Grant Thornton presumably published this study primarily for marketing purposes. It serves to keep their name in front of potential clients. Whether it is a great advertisement, I rather doubt.

For a start there are some startling errors (GT claim the sector employs just 130,000 people, which would be less than 1,000 per university. HESA has a rather more believable figure of 387,430). Secondly there's the rather grab-bag assortment of contents: a bit about 2009-10 accounts, a bit about the impact of the new fee and repayment system on the  'representative' graduates, a bit of handwaving about the future of the sector, and a very vague sketch of how universities could outsource everything except the academics. The devil would be in the detail if only there was any detail there.

In which the regulators of English HE do not appear to advantage

In principle, I am sympathetic to the plight of the quangocrat. I was one myself once, and it isn't always easy to balance the interests of your many stakeholders. I've posted before about my appreciation for the precisely-tuned prose which results when these matters are handled with sufficient delicacy.

In the case of OFFA, it is vital to remember that OFFA was created for the single and sole purpose of providing political cover for fee increases. It has no powers whatsoever to compel any university to widen access or admit fairly. The two powers the Director does have are to refuse an Access Agreement or to administer small fines. The one is to extreme to be used, the other too petty to bother talking about.

Judging the debate on Labour's £6,000 fee

On the once-bitten-twice-shy principle, this blog has policy of not linking to anything written by Tim Leunig. Here, then is a link to the THE reporting disagreements between Leunig and Labour about whether the £6,000 fee policy is progressive or not. If you want to read the CentreForum analysis itself, then I direct you to Google.

Leunig's analysis is a bit of a hatchet job - in fact it reads like a rather rushed hatchet job. For instance he reports that the winners are disproportionately old which is absurd in a cohort study - both winners and losers will be the same age. What he means is that the winners will collect their winnings late in the life course because the effect of lower fees cashes out in an earlier end to repayments, not in lower repayments. He also reports that the Government is the main gainer from the proposal (because the amount of loan written off after 30 years is, on average, less), whilst simultaneously claiming that the Government will be paying out £3,000 more per student upfront (which, if I calculated correctly yesterday, isn't true). These can't both be correct statements, and in fact since the Government's 'expenditure' is the RAB charge assessed at the time the loan is made, then any write-off at the end of 30 years isn't even a paper transaction as far as Government is concerned.

Meanwhile Gareth Thomas in the THE refers to a House of Commons study which I can't find (I think this is the appropriate link, but there's nothing there) which finds 16% savings for the lowest earners. I have no idea where these come from, so for all my scepticism about Leunig I think it is too early to call this against him. Despite the title of my post, I'm not going to reach a judgement on the debate yet - if ever.

My judgement on the policy, though, is increasingly negative. It looks as if it will reduce spending on HE (at least relative to the 2012 baseline, if not the 2011 baseline) without bringing any significant benefit to students or graduates (since debts will remain extraordinarily high if everyone is charging £6k). However that judgement is subject to change if I can substantiate this 16% saving for the poorest graduates. We'll see.

Degree Awarding Powers

I was speaking yesterday to a colleague who works in quality assurance, and she reacted with scepticism to my view, often expressed on this blog, that the White Paper will make little difference to private providers and in particular is not resulting in new private providers entering the sector.

On further discussion, I understood that her view was that many existing providers will no longer need universities to validate their provision. As for UKBA purposes they have to be overseen by QAA anyway, they might as well go the whole hog and get their own degree awarding powers. This will have a big impact on her work, and a non-trivial impact our mutual employer's validation income.

On reflection, I think what i have published on this blog agrees with this view, but has tended to trivialise it as an issue. My thoughts have been far more focused on the impact of Core/Margin, because that is closer to my own professional area - Planning. Of course these providers for the most part already exist, but people such as BITE or LSBF becoming degree awarding institutions in their own right is not a completely trivial matter, and I have not given this issue enough prominence in the past.

The £6,000 fee cap

A few thoughts about the £6,000 fees cap policy announced by Labour over the weekend, and already covered in depth here, here, here and many other places.

Firstly, the policy is 'fully costed' at £750 million to be sourced from higher corporate taxes and higher repayments by very wealthy graduates. I think institutions will find this disappointing. According to OFFA (who ought to know) the average post-waiver fee is currently £8,161. Cutting this to £6,000 will save the taxpayer the RAB charge (about £650 per student). The £750 million then needs to be split across all 1,226,950 FT Home and EU undergraduate students to make about £611 more. £6,000+£611+£648=£7,259 so, even with a generous rounding margin, this isn't enough to restore the fee income institutions are hoping for. It may be enough to restore historic funding levels.

Secondly I follow William Cullerne Brown in seeing this as likely to be one stage on the journey towards a formal abandonment of the graduate tax policy. Pure graduate taxes are, in my view, unworkable in English HE which is why politicians tend to move away from them as they approach power. However I can't find any clear statement about the future of the student number cap. John Denham is quoted as wanting to move away from the 'pernicious' core/margin model, but doesn't specify what he is moving towards - an end to numbers control, or just an end to moving the numbers about? From an institutional perspective, the numbers cap issue is really the more important one.

Since Ed Miliband has already indicated that this policy will be changed before the next election, it isn't likely to have much direct impact on anything. In one sense, as a concrete step bringing Labour policy closer to current Government policy, it should reduce uncertainty for institutions. I'm not sure that's how it will feel for us on the ground.

Comparing English and American HE

I’ve posted before about the Education Trust’s survey of US Universities that found only a tiny number of institutions with low fees, decent graduation rates, and above-average proportions of poor students. In this post I’ve excerpted a key graph from that report, and produced a companion graph of English universities by cost, graduation rate and proportion of students from lower socio-economic groups. The data definitions don’t tally up precisely (for which see below), but this provides, I think, three really powerful and interesting messages.

Venture Capital

In comments on this post, Andrew McGettigan points me to an Education Investor story about venture capital.

Speaking to EducationInvestor, Glynne Stanfield, partner at law firm Eversheds, said he was aware of five instances where “big private equity firms” are looking at buying part or even all of a UK university.

 

I have to confess this makes no sense whatsoever to me. Best as I understand venture capitalists, they seek to buy or invest in businesses which can be aggressively grown in value and then sold on. Quietly taking a steady profit on a steady business is not really the VC line (or so I thought), so buying a university in heavily-regulated England makes no sense to me.

I suspect some overselling by EI. The currently-ubiquitous Matt Robb makes more sense when he says:

there are “legally acceptable routes by which universities and investors can enter into partnerships that retain the best of both worlds”

Partnership around research commercialisation - where there is high risk and a potential IPO or sale to allow the VC to cash out in the medium term makes sense and if we see anything emerge I suspect it will be this.

Condé Nast

Via Registrarism, I discover that Condé Nast is launching a fashion college in London. This isn't exactly unprecedented. Sotheby's for instance have an education arm which leverages the exclusivity and access offered by the Sotheby's brand. To quote the Sotheby's site:

Sotheby's auction house provides students with privileged access to pre-sale viewings, talks by experts, and handling sessions. In addition, students visit the many commercial galleries, artists' studios and museums available in London. Such knowledge prepares students for a variety of careers in the art world.

 As you may have garnered from this post, I don't consider myself much of a looker and don't have much interest in fashion. I am interested to see from the BBC site, which makes this clearest, that there are no plans to offer undergraduate degrees.

I've been watching for any new private providers to announce an intention to open in the UK undergraduate market since the White Paper. So far I've seen none. Only those providers - Kaplan and BPP primarily - already committed before the White Paper seem to be coming forward. I strongly suspect that the student number cap is the  biggest single issue here.

When does absence of evidence become evidence of absence?

Continuing a conversation with Andrew McGettigan

When people come to my blog, it’s generally to do one of two things. Either they are searching on Google for something to do with core/margin, or they have come to read this post, which I published in response to an earlier piece of Andrew McGettigan’s about the White Paper. Andrew has now published a further article looking in detail at the case of Middlesex University, and as that piece is now on the public web, I’m going to post a response to it in the hope that it will also be useful.

I am taking the same approach as I did before, not wishing to comment on Andrew’s political commitments or values, which are in any case less prominent in the Middlesex piece. I want to offer data and a pragmatic, practitioner perspective on the issues that Andrew raises. I think in a few cases Andrew’s rhetoric in this piece is slightly overblown, but I understand that he is writing in a particular genre for a particular effect so hopefully when I comment on those examples I will manage to avoid any tone of condescension or superiority. If I fail to achieve that, I should honestly acknowledge that it is probably because the photo of Andrew that I ripped off his academic.edu profile (with that prominent nose and full head of hair) [Update: Photo removed at Andrew's request] reminds me of myself when I was younger. I do still have the nose, but as I am now just a few weeks shy of forty the hair is an increasingly painful thing to be reminded of. 

Defence and Higher Education

Judging by the response to Tuesday's post, pictures of battleships are the way forward for this blog so here is HMS Warspite, the hardest-fighting battleship in two world wars, pictured on shore-bombardment duty off Normandy in 1944.

To make some tentative connection to the original subject of this blog, I'm accompanying her with a post comparing the UK Defence and Higher Education industries from an exports and jobs perspective.

Government accounting

HMS Dauntless is currently parked in the dock at the foot of the University of East London's Docklands campus. She's been there since Friday, either protecting London from inappropriate celebrations of 9/11, or perhaps protecting UEL's First Week celebrations from anyone throwing cricket balls at Mach 3.

By my calculations, UEL gets about £55 million a year of UK Government funding (overwhelmingly HEFCE grant), whilst Dauntless cost a little over £1 billion (including her share of class development costs). In other words just building the ship, before any running costs, has set the British taxpayer back about 19.5 UEL-years.

Over those 19.5 years, UEL can be expected to graduate 63,653 FT students from first degree programmes (using the data in HESA Table T5 as a guide), in addition to PT and postgraduate students. There may even be some useful research into health, or maybe the Olympics if that's more to your taste. By contrast, the Type 42 destroyers that Dauntless is replacing shot down 7 Argentine aircraft and 1 Iraqi missile in total across a class of 14 over a period of 36 years. This gives us a rough statement 1 enemy aircraft=127,306 friendly graduates, although if we factor in 19.5 years of Dauntless' running costs, its more like 1 aircraft=150,000 graduates.

Heartwarming, eh?

Photo courtesy of Wikipedia, entirely without permission...

The College of Law

The College of Law is a 'private provider' because it is not HEFCE-funded. However it not only has Degree Awarding Powers and charitable status, but is also incorporated by Royal Charter like the old universities. With a turnover of £73 million and 7,131 students, it is rather smaller than most HEIs, but not small by most other standards. Delivery is from 8 sites across England and Wales.

The College decided to enter the undergraduate LLB market in January 2011 with a two-year accelerated programme. This turned out, of course, to be a bit of a miscalculation as the fees regime announced in the White Paper is not very supportive of this kind of arrangement, and the core/margin criteria even less so. The College's chief executive is accordingly complaining about the White Paper in the press.

Twelve Universities Look to Cut Their Tuition Fees (allegedly)

As I read my morning paper on the train, this wasn't exactly a choke-on-the-cornflakes moment, but pretty close. Without any clear source, it was difficult to make sense of Metro's story.

Fortunately I had my iPad to hand to check the Times Higher site, and they carry a more informative version (dated yesterday, but I didn't see it in the magazine). Twelve is the number of universities which have asked OFFA what the process for changing fees is. This is a pretty low bar for 'considering', so it is likely that most of these universities will do nothing.

Of course nothing prevents a university from offering more fee waivers than it promised to OFFA, so certain universities could come down below the £7,500 level without changing their Access Agreements. Others may have been too slow off the mark to ask OFFA what the process before OFFA published guidance. However for the most part the sums simply won't add up, as the chance of a few additional numbers won't be worth the reduced price on all core and margin numbers.

So one reassuring conclusion - there's no evidence here that many universities will actually change their fees, still less anyone come down from £9k to £7.5k - and one surprising conclusion - the HE coverage in the Higher is sometimes better than Metro.

Bloat and the profit motive

Here is a link to the US, where things are a bit different, but this illustrates another example of a perennial issue at the root of bloated costs: the lack of a profit motive. If units (in this case a law School) are not held to account for their profits, then the institutional pressure to maximise the resources they control is unconstrained. It is sheer benefit to the Law School to have another tenured post and nonsensical to turn a post down when it is available. In the UK it is a little different, but not very: posts are not tenured as such but they tend to be permanent all the same. Other resources, such as space, IT equipment or library holdings may not even be carried on the budget of the unit that uses them.

In the UK context, most academic units will at least be under pressure to break even, although it is rare to set more demanding targets than that. Non-academic units simply have to operate within agreed budgets, so if you can get agreement to increase your budget, why wouldn't you?

Now, of course, giving profit targets (and incentives to exceed them) to middle managers in universities would clearly create some risks and issues itself, so this post isn't a call for action so much as a comment that preserving certain cultures and practices has consequences.

Blackboard

An interesting article about Blackboard, the major provider of learning management systems. As a previous WebCT user, my own institution has become a Blackboard customer by default, and subsequently become involved with Moodle, so we fit well into the general picture drawn. I have little direct knowledge of learning management systems, but I do know something about student data systems, and there you see some of the same issues with a lack of innovation in products, but seemingly insufficient profit available (and/or insufficient risk tolerance amongst institutions) to tempt in new providers and disrupt the position of the incumbents.  

Procurement people have a saying that you get the suppliers you deserve, and I think one of the important contributors to bloat is precisely our inability to procure and then benefit from really good IT. This has something to do with universities being professional bureaucracies, so it is likely to be difficult to change.

In praise of HESA

When I read stories like this one about dubious practices in published destinations data, I am reminded just how valuable the Higher Education Statistics Agency is in ensuring that we have consistently collected, reliable and auditable data collected and permanently held about all HE institutions in the UK. Not only held, but made available to all.

From the perspective of the individual on the ground, struggling to resolve data quality issues in the time and resource budget allowed, it is easy to focus on the negative. I'm very conscious of the weaknesses in my own institution's data, and I have seen plenty of examples of still greater weakness in others'.

But still, HESA ensure that no institution can redefine 'unemployment' for private advantage, or withhold the breakdown of graduate and non-graduate jobs from publication. If you wanted to test some aspect of the published data, there'd be no question of looking at your own institution's handful of forms, as Paul Campos seems to have done, you could get as much data from HESA as you needed to draw statistically valid conclusions (or, indeed, much more than that if you wanted to).

So for all its flaws, the regulatory system in the UK does deliver this one very significant achievement.

The newspapers of the future

Matt Yglesias bravely predicts that universities are the new newspapers - by which he means that their business model is about to be undermined by technological change which is making it cheaper and cheaper for people to find information on line. My first reaction was 'how absurd'. Its pretty clear that the specific curriculum learned at university is one of the least valuable parts of the process - even in highly specific vocational fields like medicine most of that curriculum gets forgotten once you are in the job.

But on reflection I see that there is more to it than that. After all, information about what happened yesterday is only a part of the value proposition in a newspaper too. Specifically for students on professional programmes with professional accreditation requirements to meet, curriculum content is important - at least until the accreditation is achieved. New institutions like Western Governors can offer a route to that accreditation more cheaply than the traditional ones. So maybe there is a future where new entrants can undercut (some of) the functions of the traditional university sufficiently to undermine the viability of traditional business models for some or many established universities.

But I don't want to push that too far. I've had some experience of distance and online learning, and it seems to me that the model can easily be one of a few delighted students, but many more drop-outs. This is pretty much the picture at the Open University, where those students who survive to the end of the programme are amongst the most satisfied in the country, but also a minority of those who start. This makes me suspicious of the kind of journalism I linked to in the paragraph above. The positive stories of successful students are only part of the overall picture.

So maybe universities will be the next newspapers, but I think probably not. At any rate, I'm not revising my career plan yet.

The University of Stirling is losing the fight against scientific openness

I read this story with disbelief. How can we have gotten into the situation where an established British University is fighting against a tobacco multinational on issues of scientific openness and freedom of information and Philip Morris is in the right? If you review the Information Commissioner's decision notice you will see that the facts are:

• The university undertook public health research at its Centre for Tobacco Control Research
• Philip Morris used Freedom of Information legislation to seek underlying data about the sampling and data collection (in other words, the data needed to conduct a scientific assessment of the research in question), but did so through its solicitors
• The university refused to provide all the data requested
• Philip Morris complained to the Commissioner that it had not received the data requested, but the Commissioner refused to act on the basis of a technicality (because the original request was made anonymously via a solicitor)
• So Philip Morris asked again, in their own name
• The university wilfully misinterpreted Philip Morris' second request, and responded with a spurious request for additional clarification (which was, itself, out of time). When the requested clarification was received, they declared Philip Morris' request to be vexatious (i.e. manifestly unreasonable or disproportionate) and refused to provide data. International tobacco companies are not, I would think, being manifestly unreasonable in showing an interest in research about tobacco.
• So Philip Morris has complained to the Commissioner again, and this time the Commissioner has found in their favour.

In submissions to the Commissioner about the case, the university claimed that it would cost them £2,908.75 to collate the data requested. The Commissioner is careful not to comment on this directly, but simply quotes Philip Morris:

if a disproportionate amount of time were required in order to produce the response to their request, this would suggest that the survey had not been carried out in an orderly manner, or that the material used to prepare the Report had not been methodically collected and analysed.

 And as I am not a Scottish government official, I can say openly that I heartily agree. How can any scientific institution seek to prevent access to taxpayer-funded data on technicalities, and then again on entirely spurious legal grounds, and then finally with a straight face claim that they cannot provide their data at a reasonable cost? This amounts to excusing your mendacity on the grounds of your incompetence.

The University of Stirling, and the Centre for Tobacco Control Research in particular, should be ashamed of themselves.

Leeds College of Music

Research Fortnight published yesterday a story about the merger between Leeds College of Music and Leeds City College. I haven't seen this reported elsewhere so I guess it counts as a scoop, although LCM published a press release a month ago and the matter was also included in the published papers of the HEFCE Board meeting in July (I linked to this very paper myself here without commenting on the LCM issue so I certainly can't claim it...).

Unusually, the assets and liabilities of the dissolved college are not simply being handed to LCC, but are placed in a wholly-owned subsidiary company. Accordingly, LCM is still a separate going concern with managers and staff still in place as they were before the dissolution. This strikes me as a far better outcome for them than the pure merger which so often leads to asset stripping (see, e.g. Bretton Hall). Research Fortnight says that the company will also control LCM's degree awarding powers, so at first I thought that perhaps it is these powers that explain LCM's unusually effective bargaining, but it seems that LCM doesn't have degree awarding powers and awards Bradford degrees. So perhaps it was just the £6.6 million of SDF funding that LCM brought into the merger that did the trick. Or maybe LCC's senior managers are just very nice people.

Andrew McGettigan comments further on this story here, placing it very firmly in the context of privatisation. I've commented on his blog post and hope he'll explain his view more because on the face of it this seems implausible. As a charitable private company limited by guarantee, the new Leeds College of Music Ltd cannot have share capital or distribute profits which, to quote Wikipedia, 'makes this type of company unsuitable for commercial enterprises'.

Wrong but Romantic

I was looking for wrong but romantic, and the Free University of Liverpool seems to fit the bill.

Who couldn't love a project that sets out to fight back against the privatisation and deregulation of Higher Education by setting up a private HE provider outside the apparatus of state regulation? (or indeed, that uses higher education as a means to fight back against the instrumentalisation of higher education?)

I confess some of the other jokes go over my head slightly (or perhaps more than slightly). I'm not sure why the 'Foundation Degree' is six months, when the 'BA' is the standard three years. But then I'm hardly the target market either for the programme or the protest. And people as square as me don't get coverage in the Guardian on the basis of no more than a couple of blog posts.