Core/Margin: Implementation

Many things have happened during my intermission from blogging. This post is about the developments specifically in core/margin. Twenty seven institutions re-negotiated their Access Agreements with OFFA, and 201 universities and colleges (mostly FECs of course) have now bid for 35,811 margin places. There are 20,000 places available and HEFCE have announced that they will allocate places to eligible bidders pro-rata to their bid numbers.

Compared to my expectations, this must constitute a considerable success for the Government's agenda. Few or none of the twenty seven will see advantage to themselves or their students from their lower fees.

For the institution, 4,000 entrants at £8,500 are worth a much revenue as  4,500 at £7,500 but cost more to teach, so to wind up ahead financially the thirty-odd HEIs bidding for places would have to win almost all the 20,000 places available (unless they are very small HEIs on average). If bids are pared down pro-rata, that is unlikely to happen. Even if it does happen this year, it is going to have to keep happening year after year as further core/margin adjustments are made. Most institutions would do better financially to tough it out at a higher fee level.

Some of the institutions may have brought their numbers down primarily by switching student bursary support into fee waivers, which gives the student lower debt repayments in the distant future (or perhaps a smaller sum written off at the end of the loan) but takes actual cash out of their pockets now.That isn't a good deal for students.

It therefore seems likely that most of the twenty seven are looking ahead to a possible future in which continued cuts from the core would put them out of business. There is an element of the prisoners' dilemma here because if the Government's policies drive a few universities into bankruptcy that is a problem for those universities; if almost all the existing universities are bankrupted, that is a problem for the Government. Because a significant group of universities have moved, and the margin numbers have been substantially overbid, Government will be emboldened to keep pushing, and institutions above £7,500 (and below AAB) will begin to feel more threatened. We can expect to see a further wave of fee reductions next year.

The upshot of this seems to me to be that the chances that the current fee regime will form a sustainable, long-term regulatory and funding basis for English HE is significantly higher than it seemed when I was last blogging about a month ago. Whether you view that as good news or bad depends largely, I imagine, on your political stance.