The Marketisation of English Higher Education

A Policy Analysis of a Risk-Based System

Colin McCaig

• Publisher: Emerald Publishing Limited
• Year: 2018
• Print ISBN: 9781787438576
• eBook ISBN: 9781787439948
• Topic: Didattica
• Subtopic: Politiche educative

This book traces the development of a fully marketised higher education system in England over a 30-year period, and identifies five distinct stages of market reforms culminating in the Higher Education and Research Act (HMSO, 2017). The Act shifted the risks of institutional failure (and the prospect of market exit) onto applicants, presenting them with ever more applicant choice information and encouraging them to use their consumer behaviour to oblige weaker providers' lower tuition fees or lose market share to new competitors. The new regulatory regime represents a marked departure from previous attempts to introduce market dynamism into the sector and places the English HE system at the forefront of a global trend of system marketisation. 

The book employs a critical policy discourse analysis and addresses several key aspects of the current higher education policy landscape. It considers the extent to which there been a continuity of policy from the encouragement of efficiencies and accountability in the 1980s to the emphasis on competition and risk in 2017; whether the marketisation process is designedly cumulative or has developed in response to factors beyond the control of policymakers; and what the English case can tell us about the nature of neoliberalism and the future trajectories of other national systems in the process of marketising and differentiating their institutions.

CHAPTER 1

THE GENESIS OF MARKET REFORMS: EFFICIENCY, ACCOUNTABILITY AND THE CELEBRATION OF DIVERSITY

1.1. INTRODUCTION

While the main focus of this book is the three major White Papers and two Acts of Parliament of the early twenty-first century, the intellectual roots of marketisation can be traced back to the Conservative governments of the 1980s and 1990s. This chapter covers the first two stages of marketisation – the ‘accountability and efficiency stage’ which emerged in the late 1980s, and the ‘diversity as good’ stage, covering the period 1992 to 2000.

During the 1980s, the HE system was expected to begin expanding again after a period of retrenchment and stagnation after the inflationary crises of the 1970s. The OPEC crisis had led to the quadrupling of oil prices and subsequent public spending cuts, leading to a fall in the numbers of people attending HE for the first time since the Second World War (DES, 1978; Kogan & Kogan, 1983, p. 25). Overall, university funding had failed to keep pace with inflation during the 1974–1981 period, with a cut-off of 10% in per-student funding (Walford, 1988, p. 48). Growth was reignited during the mid-1980s, partly stimulated by even more radical cuts (17% across the sector announced in the 1981 Budget) with the University Governing Council steering the process, favouring institutions that would expand the numbers studying subjects of importance to the economy – science, technology and engineering – while cutting places for social sciences and the humanities. In order to survive this level of funding cuts, Polytechnics and colleges took the opportunity to absorb unmet demand by accepting larger numbers of students at a lower ‘unit-of-resource’ per student, thus rapidly becoming the locus of most of the late-1980s expansion. By 1985, Polytechnics were for the first time teaching more than half of all full-time UK students (Robertson, 1995; Walford, 1988).

The government were also reacting to international competition and a demographic shortfall (expected to last until 1995) in the number of young applicants (18-year-olds for standard entry) by expanding places for mature students (DES, 1986). Most of the ensuing growth in student numbers occurred in the Polytechnics and larger Colleges of HE – the public sector of HE – rather than the universities. This inevitably implied a widening of participation to social groups that had little previous experience of accessing HE. Following a period of rapid growth from the late 1980s (young people’s participation more than doubled under Kenneth Baker 1988–1992), the 1992 Further and Higher Education Act abolished the binary divide between universities and Polytechnics, creating a unified and diverse sector of around 130 institutions that remains largely unchanged today, albeit added to by new ‘challenger providers’ (DBIS, 2016a, 2016b). This chapter explores both these developments as aspects of the development of marketisation.

1.2. ACCOUNTABILITY AND EFFICIENCY

During the early and mid-1980s, secure Conservative governments – influenced by new right ideological thought – were encouraging the use of market principles for the allocation of public resources in the name of greater accountability and efficiency in state-funded services. This was an example of New Public Management Theory in practice (the use of private sector practices in the public sector of the economy, Hood, 1995) and national economic competitiveness, employing ‘human capital’ economic theories to counter emerging globalisation. Human capital conceptually describes the econometric link between education and employment; in the UK context, its usage is rooted in the changing basis of industrial demand for labour, the comparative decline of the UK economy and the growing inequality of income since the late 1960s (Barnett, 1986; Evans, 1992; Glennerster & Hills, 1998; Wiener, 1981). It should be reiterated, of course, that the state’s interest in making the HE system more accountable and efficient, not least in providing for an improvement in the maximisation of the nation’s human capital, was reflected in the Robbins Report, and indeed would become ever more important in the context of the systemic growth he recommended (Robbins, 1963). These manifestations implied a need for governments to centralise powers over the education system, firstly in order to reduce the amount of inter-party political dispute about the means and ends of the system, given that the public sector of HE (the Polytechnics and Colleges of HE) was controlled by local authorities, often Labour-led, and secondly to maximise economic outcomes in the face of international competition.

The starting point for analysis of the Conservative reforms of the 1980s, therefore, is a recognition of greater state involvement in the HE system throughout the post-WWII era. While during the pre-war period the proportion of income universities received from the state via the University Grants Committee (UGC) never exceeded 30% of their overall income, this situation changed rapidly after 1945:

After the war, the need for a rapid expansion caused this to rise to about 50% in 1946, to over 70% from 1953, and to about 90% for most of the universities in 1980. Such major changes in the degree to which universities were dependent on government funding meant that there were inevitably corresponding changes in the UGC’s role (Walford, 1988, 48).

These changes at ideological level were to be manifested in two key reports that in turn impacted on the development of legislation leading to the ending of the binary divide in 1992.

1.3. JARRATT AND CROHAM: THE BUSINESS CASE FOR ACCOUNTABILITY AND EFFICIENCY

In April 1984, the Committee of Vice-Chancellors and Principals (CVCP) appointed the Jarratt Committee to investigate university efficiency. This was designed as an attempt to convince the UGC and the government that the universities were taking the demands for greater efficiency seriously, given the context that the UGC had signalled less funding for universities after 1984. The 12 members of the Jarratt Committee included four industrialists and the Prime Minister’s efficiency adviser, alongside six representatives of the universities (Walford, 1988, p. 55). Among the key findings of the final report (Jarratt, 1985) were that universities were to be run by Chief Executive Officers (or Vice-Chancellors acting in that manner) and that performance indicators were to be introduced alongside staff development, appraisal and accountability.

Further, Jarratt recommended that the Department for Education and Skills conduct a review of the UGC’s role, staffing and structure. This reported as the Croham Report (1987), recommending that the UGC ‘construct a national strategy for the investment of public funds’ in universities, and to exercise close and effective oversight over the ‘financial competence’ of individual universities (Croham, 1987). It was led by ‘an eminent figure with substantial experience outside the academic world combined with a strong personal interest in higher education’, and a full-time executive director general, who ‘should have had substantial experience of high office in a university’ (Walford, 1988, p. 56). This helped preserve the notion that the reformed UGC would be seen as both independent and effective:

It was to be more active and managerial, but the grants, once given, were still to be block grants to individual universities. Croham supported the need for flexibility at the local level, and wished to avoid ‘excessive concentration of decision-making with the UGC’. Block grants, rather than a series of item-specific grants, were seen as important to retain academic freedom, to avoid too much government influence on the detailed workings of the universities, and as being the most likely way of obtaining the greatest internal efficiency (Walford, 1988, p. 57).

The revised UGC should have overall control of conditions of grants to universities and require greater accountability from the latter as to the disposal of their fiscal allocations. Croham also recommended the introduction of a triennial funding system, ensuring adequate time for institutions to plan necessary changes in the event of fiscal reduction (Walford, 1988, p. 91).

Much of the Croham Report was reflected in the White Paper Higher Education: Meeting the Challenge (DES, 1987), published prior to the 1987 General Election (when the Conservative government was returned for a third term). However, as Walford points out, there were some significant changes that went beyond Croham, showing that the government wished to replace the UGC with a University Funding Council (UFC) whose ‘essential responsibilities should relate to the allocation of funding between universities rather than to its overall amount, which is a matter for Government to decide after considering all the evidence’ (Walford, 1988, p. 56). In future, the payment of UFC grants to institutions would take the form of a contractual relationship between institutions (as service providers) and the UFC as the consumer. Instead of a UGC with advisory powers, the UFC was to be purely a funding allocator acting on behalf of (but at arms’ length from) government. Instead of being suppliers of HE funded by block grants, universities would become competing suppliers of those services demanded by the consumer.

According to drafts of the 1987 Bill (Walford, 1988), contracts would be introduced which would enhance both accountability (to the public purse) and entrepreneurial dimensions designed to:

(a) encourage institutions to be enterprising in attracting contracts from other sources, particularly the private sector, and thereby to lessen their existing degree of dependence on public funding;

(b) sharpen accountability for the use of the public funds which would continue to be required;

(c) strengthen the commitment of institutions to the delivery of the educational services which they agree with the new planning and funding bodies to provide.

Sir Peter Swinnerton-Dyer, Chairman of the UGC, made the extent of the change clear:

Ministers are no longer thinking in terms of grants, however calculated, but in terms of buying certain services from universities. The bulk of those services are research and teaching. The Government is here a single purchaser, faced with an array of competing suppliers. It will use the power which that situation gives to press for greater efficiency, just as Marks and Spencer, for example, does in similar circumstances, indeed, it is already starting to do so. (Reported in The Times Educational Supplement, 2 October 1987, p. 17., in Walford, 1988, p. 59.)

Henceforth, HE’s links with the corporate world would be strengthened, and its contribution to economic growth more fully asserted. Human capital thinking clearly played a dominant role as the White Paper linked growth (and by necessity wider access to HE) to the need for highly qualified manpower. In the service of a better balance between the needs of the economy and the needs of individuals, improvements in the management, performance and accountability of the individual institutions would drive quality and efficiency (DES, 1987). The White Paper also suggested the removal of the ‘public sector’ of HE from local authority control. Such large institutions of HE were to be placed under a Polytechnic and Colleges Funding Council (PCFC) as an equivalent body to the UFC.

The extended role of the state also affected the universities. Academic tenure was formally abolished to ensure that institutions would have the power to terminate the appointment of academic staff for reasons of redundancy or financial exigency (both terms for the first time defined in legislation). Critically, reference was made to dismissal for ‘good cause’, which refers to unsatisfactory performance of duties (Dennison, 1989, p. 93). This would open the way for newly empowered university managers to change the nature of their provision against the wishes of academics. While opposition to the Bill in the House of Lords (led by the CVCP) ensured that ‘academic freedom’ was enshrined in legislation, as Dennison noted: ‘the government’s action is consistent with its vision of universities as institutions able to respond to economic needs and to changes in the corporate marketplace’ (Dennison, 1989, p. 93). In a prescient conclusion, Dennison foresaw the link between market forces and state-mandated neoliberalism:

While there is more direct government influence over the operations of the college sectors, universities are by no means immune. Contemporary political jurisdictions have a tendency to intrude into the operation of any or all social institutions under the rhetoric of economic reform and the pursuit of market-driven priorities (Dennison, 1989, p. 96).

The subsequent 1988 Education Reform Act legislated for the 29 Polytechnics and with them all colleges with 350 or more full-time equivalent HE students and more than 55% of full-time equivalent students in HE courses (around 30 colleges) to be incorporated as PCFC institutions. Dennison (1989) summarised the new regime:

The individual polytechnics and colleges, under their new corporate status, will operate with both a governing and an academic board. A high degree of accountability will be expected from the governing boards, which will be broadly representative of both internal and external groups. The Secretary of State will retain certain powers regarding the initial selection of outside representatives. The role and responsibility of community groups in influencing postsecondary educational policy has clearly been reduced. It might be argued that good educational management is the ultimate objective but few deny that one overt political motive is the government’s wish to undermine the power of unsympathetic local politicians (Dennison, 1989, p. 95).

This contemporary summary encapsulates both the ideological and political motivations in play. Increased accountability and links to the national economic imperative (the enhanced role for employers on boards) is evidence of human capital economic theory in application and more widely of what we came to think of as neoliberalism. However, the needs of the Conservative central state to override local and community resistance to its marketisation rhetoric implied an overtly political agenda to assert market hegemony by the removal of alternative voices and power bases. Walford’s equally prescient conclusion noted the incoherence of policy; the state had mandated ‘a thrust towards privatisation’, reflecting that:

[T]he ideology of privatisation has been a decisive influence in the way government policy on higher education has evolved in the last eight or nine years, and it may also be argued that the process of privatisation demands increased government control in the short term to establish the new system (Walford, 1988, p. 60).

Hence these earlier moves towards the marketisation of the system can be seen as neoliberal, a strong state regulatory system operating market levers to steer the behaviour of participating actors within that system.

1.4. THE SECOND STAGE OF MARKETISATION: THE COMING AND CELEBRATION OF SYSTEM DIVERSITY

The establishment and subsequent abolition of a binary divide between institutions offering HE are key markers in the development of the English variant of marketisation. The binary divide, confirmed by Labour Secretary of State Anthony Crosland in a speech at Woolwich Polytechnic on the 27 April 1965, was specifically intended to control that part of HE output which government thought necessary to meet its economic and industrial needs, and was introduced against the express wishes of the Robbins Report (Robbins, 1963). Because it was also intended to maintain the autonomy of the traditional university sector, the binary divide was welcomed by many in the universities as a signal that they could continue ‘unreformed’. Whereas Robbins’ recommendation of an expanding unitary system could have provided the basis for a broad democratic advance, the establishment of the Polytechnics as a distinct sector would forever consign them to a ‘second division’ (Simon, 1991, p. 249).

Crosland made a spirited case for a dual system of HE, largely on the basis that the Polytechnics would inevitably feel inferior to the universities even if they were within the same structure, ‘becoming a permanent poor relation’. He also made the social democratic case that a substantial part of HE ‘should be under social control, and directly responsive to social needs’ (Simon, 1991, p. 248). International competitiveness was a further motor of policy. In this sense, the Polytechnics were to have a regional role linked to industry’s needs and the employment needs of the local population. Prefiguring future battles over system differentiation, Crosland concluded his Woolwich speech with a rhetorical flourish: ‘Let us now move away from our snobbish, caste-ridden hierarchical obsession with university status’ (Simon, 1991, p. 249).

Two decades later, the need for democratic control over key aspects of the HE system was becoming highly politicised. A public sector reflecting regional employment needs implied a role for the Local Education Authorities, anathema to Conservative thinking in the 1980s which wanted not only to reduce the powers of the Labour opposition but also to enable – hence incorporation – Polytechnics and Colleges of HE to offer provision that satisfied latent demand in the system. So, while Crosland had believed that the Polytechnics had by 1972 established themselves and were not ‘trying to beat them [the universities] at their own game. Rather they are playing a different game with a different set of rules’ (Reisman, 1997, p. 86), the pro-market policy environment of the late 1980s specifically invited them to...

Table of contents

• Cover
• Title Page
• Introduction: The Marketisation of English Higher Education
• 1. The Genesis of Market Reforms: Efficiency, Accountability and the Celebration of Diversity
• 2. From Diversity to Differentiation: The Coming of the Market
• 3. The Higher Education and Research Act 2017: The Road to Risk and Exit
• 4. Continuity and Discontinuity on the Road to Risk and Exit: Stages of Marketisation in Comparative Policy Analysis
• Bibliography
• Index