Augar review of post-18 education – Proposals and politics

Major proposals of the Augar review had been heavily reported before it was even released on 30 May. Universities had been accused of ‘scaremongering’ after warning against funding loss.

Recommendations to cut tuition fees to £7,500 (US$9,470) and restore maintenance grants were supported by a prime minister who had resigned. Perhaps the full implications of the review will come to light once the dust has settled, though they could still be overlooked.

The proposal for a return of grants for disadvantaged students has been widely embraced, including by outgoing Prime Minister Theresa May, who reportedly said last Thursday in response to the review report: “Removing maintenance grants from the least well-off students has not worked and I believe it is time to bring them back.”

But some analysts have argued that fees are unlikely to reduce as government might not want to plug the funding gap between the current fee maximum of £9,250 and the proposed £7,500 – another recommendation is for government to top up the shortfall with £2 billion in direct teaching grants. There has been much criticism of a proposal to extend student loan repayments from 30 to 40 years.

The Review of Post-18 Education and Funding was announced by May in February 2018, headed by Philip Augar, a financial services expert and author with a PhD in history and a visiting fellowship at the Institute of Historical Research.

In October 2017, May had announced a freeze on tuition fees for 2018-19 and an increase to £25,000 in the amount graduates earn before they start repaying their fees.

The proposals

The panel report to the Review of Post-18 Education and Funding said there was “much to be celebrated in England’s post-compulsory education system”. Record numbers of young people – and young people from disadvantaged backgrounds in particular – were entering higher education and many universities were making a considerable civic contribution.

Its proposals aim to build on the system’s strengths by identifying areas where it can be improved. The review’s objectives were to provide a joined-up system that “is accessible to all, supported by a funding system that provides value for money and works for students and taxpayers, incentivises choice and competition across the sector and encourages the development of the skills that we need as a country”.

The review’s core message is the need to tackle the disparity between the 50% of young people attending higher education and the other 50% who do not. “Doing so is a matter of fairness and equity and is likely to bring considerable social and economic benefits to individuals and the country at large.”

The review’s recommendations across the post-18 education sector are:

• • Strengthening technical education.
  
• • Increasing opportunities for everyone.
  
• • Reforming and refunding the further education college network.
  
• • Bearing down on low value higher education.
  
• • Addressing higher education funding.
  
• • Increasing flexibility and lifetime learning.
  
• • Supporting disadvantaged students.
  
• • Ensuring those who benefit from higher education contribute fairly.
  
• • Improving the apprenticeship offer.

Higher education recommendations

In higher education, the review’s focus is on undergraduate education. There are 141 higher education institutions in England, of which 100 are full-scale publicly funded universities and the rest are specialist, postgraduate or privately funded institutions.

The proportion of young people entering higher education has risen from below 20% in 1990 to nearly 50%. Today there are 1.44 million undergraduates – including 210,000 European Union and international undergraduates – of which 1.24 million are full-time.

Nationally, the university sector contributed £21.5 billion to gross domestic product in 2014-15, representing 1.2% of GDP. In 2017-18, the academic workforce totalled nearly 212,000 and there were 218,000 non-academic staff. In 2016, revenue from a total of 460,000 international students was £11.9 billion.

Many universities also make a considerable civic contribution. Estimates put the value of pro-bono work by universities at over £3 billion in 2017.

Further, said the review, the sector has an outstanding reputation for research. In 2014, the UK represented less than 1% of the global population, less than 3% of R&D expenditure, and 4% of researchers, “yet accounted for 11% of downloads of research papers, 10% of citations and 15% of the world’s most highly-cited articles”.

The review concludes that higher education broadly fulfils its objectives regarding access, value for money, choice and skills provision. “However, as is true of any market, there are deficiencies both at system-wide and at institutional level.”

Even among the 50% of young people attending university, “the rising tide has not lifted all the boats. A minority – but a significant minority – of university students are left stranded with poor earnings and mounting ‘debt’.” This has personal and economic consequences.

The case for change

Replacement of most of the teaching grant by tuition fees in 2012 unintentionally led to the over-funding of some degree courses relative to their reasonable cost of provision, and to the under-funding of others, said the review.

One result was many under-funded high-cost subjects in areas central to the government’s Industrial Strategy – engineering, science, technology, medicine and health subjects.

“They produce some of the highest returns in earnings for graduates and therefore incur a low taxpayer subsidy on their student loans. We believe that providers should be encouraged to offer these subjects, not – as they are now – financially penalised for putting them on.”

Over-funding for other courses “incentivises institutions to prioritise them because they provide higher margins”. Some lower cost courses have seen major growth: for instance, in the four years to 2017-18 there was a 20% increase in social sciences students and 17% rise in business and administration – compared with 10% average student number growth.

Calculating cost to government per student per subject of direct teaching grants and loan write-offs for tuition fees and maintenance, the review reports that the public subsidy amounted to about £30,000 per person studying arts and humanities and as much as £37,000 for students in creative arts. This compares to a public subsidy of £28,000 for engineering students and £24,000 for maths and computer science.

“We make no judgements about the merits or demerits of these disciplines, but question whether this changing pattern of public subsidy is strategically desirable.”

The review also found a “persisting gap” between advantaged and disadvantaged students, and argued that supporting economically disadvantaged students is “central to achieving a post-18 system that fully plays its part in improving social mobility and is core to the panel’s principle that ‘everyone should have the opportunity to be educated after the age of 18’”.

Advantaged 18-year-olds were more than twice as likely to enter full-time higher education in 2018 as their disadvantaged peers. Disadvantaged entrants have higher dropout rates: 9.7% of disadvantaged full-time first-degree UK entrants in 2016-17 dropped out by the following year, compared with 5.3% of advantaged entrants.

Research has found that “lower-class students are still far more likely to be deterred from planning to enter higher education because of fear of debt”. Graduates from the top socio-economic status quintile earn 8% to 9% more than those from the lowest quintile. Further, disadvantaged students are likely to graduate with a larger debt – as much as £15,000 more.

Funding for disadvantaged students through Access and Participation Plans do not reflect the additional costs of teaching large numbers of disadvantaged students. “In effect, the current funding system penalises those institutions which do the most to support social mobility.”

An analysis of graduate earnings at age 29 showed that “a significant minority of graduates, concentrated in some institutions and some subjects, as well as among those with low educational attainment on embarking on degree study, are likely to earn too little to repay any or more than a small part of their loan; they would have been better off financially if they had not embarked on a university course in the first place, or had chosen a different course.”

The Augar review makes the following recommendations regarding higher education:

1. The average per-student unit of resource should be frozen for three years from 2020-21 to 2022-23. Inflation based increases should resume in 2023-24.

2. The cap on the tuition fee chargeable should be reduced to £7,500 per year. This could be introduced by 2021-22.

3. Government should replace in full the lost fee income by increasing the teaching grant, leaving the average unit of funding unchanged at sector level in cash terms.

4. The fee cap should be frozen until 2022-23, then increased in line with inflation.

5. Adjust the teaching grant attached to each subject to reflect more accurately the subject’s reasonable costs and its social and economic value. Support for high quality specialist institutions that could be adversely affected should be reviewed and if necessary increased.

6. Take further steps to ensure disadvantaged students have sufficient support to access, participate and succeed in higher education. Government should do this by: increasing the amount of teaching grant funding that follows disadvantaged students; changing the measure of disadvantage used to capture individual-level socio-economic disadvantage; and requiring providers to be accountable for their use of Student Premium grants, alongside Access and Participation Plans for the spend of tuition fee income.

7. Government should intervene to address recruitment to courses with poor retention, poor graduate employability and poor long-term earnings benefits by 2022-23. Intervention should take the form of a contextualised minimum entry threshold, a selective numbers cap or both.

8. Withdraw financial support for foundation years attached to degree courses after notice. Exemptions for specific courses may be granted by the Office for Students.

Responses

The Russell Group of 24 UK public research universities issued a terse response saying it was “imperative the next prime minister provides students, businesses and universities with a cast-iron guarantee that, in the event of a fee cut, teaching grants will fully cover the funding shortfall and meet future demand for higher education places”.

Dr Greg Walker, chief executive of the MillionPlus association for modern universities, warned that reduced investment would undermine universities and “would be a major own goal for England in meeting the needs of industry and employers”.

Government should not implement the review proposal against ‘foundation’ courses. “This pathway has helped thousands of people progress to higher education and study for a degree who might not otherwise have moved up and on.”

Josh Hardie, deputy director-general of the Confederation of British Industry, described the Augar review as honest and thoughtful. “Universities are a jewel in the crown of the UK’s education system,” he said. The review should not lead to their funding being cut.

Ending the financial and political neglect of further education was long overdue and the review “rightly reflects the call from business to bring back maintenance grants to cover living costs while studying”.

Hardie said any change to fees and funding must not lead to a cut in higher education funding. “Undermining the financial sustainability of universities would be a national tragedy given the crucial contribution they make to skills and innovation. They are vital to meeting the government’s target of spending 2.4% of GDP on research and development.”