Straws in the Wind: Markets in Higher Education

The government's recently published White Paper on higher education reforms in England, bringing in higher fees from AY 2012-13, relaxing some of the formerly very tight recruitment constraints, and lots of other lesser changes, is starting to make some institutions think more competitively, as if they see themselves as inhabiting a market-type economy - as indeed they do!

This change in attitude has to be welcomed, in my view, because it might encourage HE institutions to deliver better services to their students - increasingly seen as their 'customers', whether one likes that or nor - and perhaps even to their staff, who need proper incentives in order to deliver what institutions want.

High-flying students with AAB or better at A-level (or equivalent other qualifications) will no longer be subject to number controls, so universities will be able to take as many of these students as they can attract. Lots of people tried to get into universities for AY 2011-12, to win places before the new fee regime comes into operation; and demographic changes mean that the age group eligible to enter university will anyway be down by about 10% for 2012. Hence the competition between universities to attract the best students will be pretty tough in a year's time, and a few institutions have already announced scholarship schemes offering discounted fees - not means-tested - to entrants with top grades.

This is not unusual in the US, since institutional reputations are often linked to the quality of student they can attract. But it is new for the UK. As one might have guessed, no special deals have yet been offered by the top ranking institutions, since they already attract plenty of high quality students, though they might be thinking about it. Rather, plans have been announced by middle-ranking institutions seeking both to protect their student numbers and to rise up the rankings. It will be most interesting to see how this competition plays out, once we have seen it operating for two-three years.

And for university staff there are increasing rumblings from various institutions thinking about leaving the national pay arrangements and setting pay locally. Imperial College London has already left the national system, and Exeter and Durham are apparently among those currently considering following suit. This could have several effects.

First, local pay levels could come to reflect the local or regional living costs better than they currently do.

Second, institutions will be able to do more, pay-wise, to attract and retain the very best staff than the current national pay-spine allows. However, one should not overdo this point, as senior administrative staff and professors have had more flexible pay for years, often based on measures of their performance. So leaving the national scale only affects less senior staff, and even there there was always scope for institutions to offer a few more points on the scale to secure a particular person. Hence this may be less of a change than it appears.

Third, institutions charging high fees and succeeding in attracting plenty of good students will be able to afford to pay more to all their staff, and some will probably choose to do so - something that staff would welcome after three years of severe pay restraint. However, the campus unions worry that local deals will put management in a stronger relative position, and that universities might demand measurably higher productivity as a quid pro quo for higher wages. This is possibly true, but at the end of the day good staff can vote with their feet and move elsewhere if they don't like their working conditions. This will surely place some constraint on institutions' ability to over-exploit their staff, one hopes.

At the moment, these points are just 'straws in the wind', but they could herald the start of some major changes in English higher education. Some of what is happening will also pose difficult challenges for those of us based in Scottish universities, and for now we have no clear way forward. We're still waiting for funding decisions from the Scottish Government for 2012-13.