Last November I gave a brief overview to Australian observers of current developments in UK higher education to the AFR Higher Education Summit in Melbourne, which I joined electronically from a basement in London in the middle of the night. I made the following points to them. The Higher Education and Research Bill (HERB) currently making its way through Parliament and the development of the Teaching Excellence Framework (TEF) are the next in a long line of policy initiatives intending to create further competition between UK institutions, especially focussing on England, as well as creating a ‘regulator’ of the education of the sector through the Office for Students.
Successive UK governments have harboured a niggling perception of a homogenous and uncompetitive higher education sector, providing inaccessible information to the public on a set of relatively indistinguishable products, as well as having a view of students as fee paying ‘customers’. The argument advanced within the 2016 White Paper was that the current range of HE offerings within the UK was a form of market failure which required government intervention to correct. At some level one can see this point of view whilst not really accepting it. The existing fee and regulatory regime, along with the influence of league tables has led to ‘homogeneity’ of model, especially on the price for undergraduate education with universities working to sector-agreed concepts of academic standards and quality. However, marketing teams would be able to point to many examples of competition at the micro-level with approaches to student recruitment becoming ever more sophisticated. An institution seeking to grow or enhance its standing in national league tables is subject to significant competitive pressures and there has been work on the sector by the Competitions and Marketing Authority. Differentiation may not be on the basis of price, but is in terms of student attractiveness, where there are clear opportunities to create a market niche around internationalisation, facilities, innovative teaching or the role of research integrated into the student experience.
Price competition was an aim of previous reforms to UK higher education, starting with the Higher Education Act 2004 allowing institutions to charge variable fees up to a cap of £3,000. The Conservative-led coalition increased that cap to £9,000 in 2012 with a reduction in central government grant funding. This change revealed the stubbornly price inelastic nature of demand for undergraduate education, which remained buoyant at the national level. That fact, combined with inflationary increases to the institutional cost base has led most conventional institutions to pin their standard undergraduate fees at the maximum permissible level, undermining a key intention of the policy.
Market entry and TEF
The HERB aims to facilitate market entry for new providers and mandates a new ‘regulator’ to play an active role in ensuring teaching institutions maintain academic standards. The TEF will be a key mechanism for differentiating between institutions above this threshold standard. The Government is exploring how a ‘Gold, Silver, Bronze’ rating system can be used to create visible differences between institutions and has floated the ideas of using these ratings to determine the institutional visa status, and has already agreed to the TEF rating being linked to the maximum fee level an institution can charge domestic students. The current specification for the TEF uses six core metrics from existing sources covering teaching quality, learning environment and student outcomes. Initial ratings are determined on the basis of institutional performance in these metrics, which is then confirmed or amended following peer review of a short 15 page narrative document. Many commentators have criticised the choice and range of metrics, noting the difficulty of rating a complex interaction between student and teacher in such a simple way. In response, expectations are that new measures will be added to the TEF over time, with projects underway to explore how to measure important concepts such as ‘learning gain’.
A benefit of the TEF is the renewed attention it gives to the teaching mission of universities. This provides parity with research, which has had an equivalent exercise since 1986 used to allocate block grant research funding, currently known as the Research Excellence Framework (REF). REF and TEF use fundamentally different methodologies. Peer review is at the core of REF. Individual outputs are rated on a four point scale and aggregated to build a picture of subject and institutional performance, which is then used as part of the basis for funding calculations. Lord Stern’s review of REF largely rejected the use of research metrics for determining the quality of research outputs. The TEF approach in some ways is the complete opposite, starting with institutional level metrics, which are consolidated with peer review to determine a final qualitative rating. No direct funding will be allocated on the basis of the TEF result, but there are likely financial (directly via the fee) and reputational implications depending on where an institution is standing on the TEF ‘podium’.
The UK sector is working with policymakers to shape the HERB. We are mindful of the potential impacts of the reformed system. The stability of the UK higher education sector has been one of the reasons for its international success. The benefit of creating a stable system as a platform for innovation and growth has been demonstrated through our experience of the REF and the predictable long-term funding this facilitates. The current reform agenda disrupts stability, but also risks elements on which the reputation of UK higher education was built, such as institutional autonomy. Universities will employ a variety of strategic responses to navigate their way through this churn. There are opportunities for the UK to learn from colleagues in the Australian sector from their experience of living with TEQSA as a regulator.