Lower Fees: a threat to teacher education?

Will the promise of a possible cut in tuition fees held out in the recent Augar Review harm applications to teacher preparation courses, especially those courses for postgraduates?

Due to an accident of history, postgraduate teacher preparation courses with a higher education component are still usually linked to the student fee regime, at least in England. This anomaly has worked well for course providers in recent years, as they have mostly been able to charge the full fee or something close to that amount.

Although not generous, in terms of the cost of running these courses, the fee has generated more income than was possible during the period when the fee income meant that it was almost impossible to cover the cost of running a course from the income received and university management would every year have to write off deficits, often amid suggestions that teacher education would not survive.  Apart from in one or two institutions, it did survive, as it has survived the Govian era of regarding higher education as part of ‘the blob’.

Still, Augar poses new threats. In the short-term, probably the 2019-2020 recruitment round, will would-be teachers postpone applying for courses until the issue of a fee cut and changes to the interest rate on student debt are decided.

Any such reduction in applications would be a worry since noises from Whitehall now suggest that the government’s planned spending review may be delayed because of the change of Prime Minister.

Hopefully, those concerned with policy on teacher education will have raised the issue of the effect on recruitment of a possible future cut intuition fees with DfE civil servants. However, until their political bosses (is that a non-sexist word?) take a decision, there may be little that can be done in the short-term, except monitor what happens to applications and even that may be easier said than done next year.

I also hope that those on the teacher education side are talking both to civil servants and to the teacher associations about what happens to funding if fees are reduced to say £7,500? Will the shortfall from current levels of funding be made up by the government, and will that mean closer monitoring of recruitment again?

Course providers will need reassurance that the cost of running their courses will be covered if fees are reduced for students. If not, will we see further changes in the landscape, with some schools unwilling to participate for anything less than the current level of funding, especially with the pressures on school budgets at present?

Of course, I favour a return to the situation where all fees for post-graduate courses are paid by the government, and training to be a teachers doesn’t require an increase in the level of debt to the individual, especially if the length of time repayments must be made is also increased by ten years as Augar suggested.

With probably another five years of increased secondary training targets to come before the bulge of pupils passing through secondary schools can be provided with sufficient teachers, even if not the right mix of subjects, anything that deters new entrants should be avoided. A delay by applicants awaiting a decision on lower fees might end up as a loss of a number of potential teachers to the system.

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Publishing Augar is only the first step

In more ‘normal’ times we might expect a report of the main features of the Augar Report into FE & HE to appear in the Sunday Times this weekend. However, these are anything but normal times in UK politics, so who knows.

Some of the possible suggestions as to what might be in the Report have been widely rehearsed already, including a possible cut to tuition fees; more cash for adult further education and a minimum point score for access to an honours degree course.

Whatever Augar suggests will have to be accepted by the then government, and then translated into action as part of the discussions on the next Spending Review. Of course, it could go the way of the famous Tomlinson Report and be rejected out of hand by the Prime Minister of the day, whosoever that is. More likely is a battle within the DfE.

Bringing back FE and HE into the DfE makes good education sense, but not good sense for either sector where they inevitably play second fiddle to the vastly larger schools’ sector within the Department.

Imagine the Permanent Secretary from the DfE at The Treasury during negotiations for the Spending Review either this autumn or in early 2020 that we know will be tough, as George Osborne always said it would be in the second half of this decade without tax increases.

So, the Permanent Secretary is asked, what are your funding needs: well we have lots more pupils in secondary schools over the next five years and we cannot recruit and retain enough teachers, so more cash for schools is the immediate reply; but FE funding has taken a hit, and we needs to reskill the labour force and, sadly, the Apprenticeship Levy has flopped, so more cash for FE and especially part-time study.

Is that all, queries the Treasury Mandarin? Of course not, replies the DfE official, there is also higher education, where we need to cut tuition fees and fund research while keeping the sector going through the dip in the number of eighteen year olds for the next few years.

The Treasury might then ask, if you cannot have everything what would be your priority order? Schools must come first, would undoubtedly be the reply. There are more votes in parents than students or employers, and the teacher associations have done a great job in convincing everyone that schools are both underfunded and a special case alongside the NHS. FE might come next, as some of the pain felt by schools could be alleviated by upping the unit of resource for 16-18 year olds across both schools and FE. That leave the university sector in third place.

Fees might be cut, because of misguided belief that it would protect the student vote for the government, especially if Labour campaigned on an end to fees completely. The risk to universities would be that The Treasury would not make up the loss in fee income, except in a few STEM subjects.

Could one of the unintended consequences of such an outcome be universities opting for lower cost, mostly classroom-based courses, while spending more on marketing to attract students? An astute government might suggest the price of lower fees would be fewer separate institutions with campuses linked to a central site with a single set of support services and associated cost savings.

Now we know the departure date for Mrs May, will Augar be published before she goes or not? Either way, the funding issues won’t go away

 

Money for education

The DfE has published its annual retrospective look at the amount of money generated by education as an export industry. This implies either goods or services sold overseas or alternatively consumed and paid for here by non-residents. Now that the DfE includes both further and higher education the data can no doubt be more easily collated by one government department, although with the help of others along the way.

The latest set of data refers to 2016, although the technical note doesn’t seem to define what is covered. For fees, I assume it is the academic year 2016/17, but possibly for some other products and services, the calendar year 2016? The technical document can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/773029/Education_Exports_2016_-_Technical_Document.pdf

This blog has commented upon the figures released for previous years and the trends seem largely the same; decline in language training income and from the further education sector, balanced by higher income form higher education fees still being reported and increases in equipment, publishing and awarding body sales.

Overall, HE accounts for two thirds of the income stream, so any slowdown in the world economy and post-Brexit departure or non-arrival of EU students will impact on the figures and hurt some universities in cash terms. There is also a sizeable research income attracted from overseas that may be impacted by Brexit, especially if some research teams move elsewhere.

Further education accounted for 6% of revenues in 2010, but by 2016 this was down to just two per cent. During the same period, English Language Training share of revenue fell from 14% to just eight per cent. High education increased its share during this period from 60% to 67%.

The total income from education exports increased between 2010 and 2016 from £15.88bn to £19.93bn.

With more UK schools opening campuses across the world, a proportion of their income will no doubt continue to find its way into future year’s figures once local spending has been accounted for. How far such growth can be set off against the loss of teachers from the labour market in England to help staff this export drive is an interesting debate that no doubt someone within government has had at some point. However, this transnational education activity has shown significant growth, especially in the schools sector, albeit from a relatively low base in 2010.

Some teachers returning from overseas may well bring back more cash than they had when they left to teach overseas, but such additional wealth for the country wouldn’t be captured in this data.

There is no doubt that education is a potential export growth area for the United Kingdom as a whole. New markets will be needed, especially post Brexit it there is a significant slowdown in revenues generated by higher education.

 

Cut tuition fees?

Should University Tuition Fees either be reduced to £6,500 as some think a Tory working group might suggest or even abolished at Jeremy Corbyn hinted at during the last election campaign? Whatever happen, it is true that ever since Labour introduced fees in 1997 they have been a source of debate and controversy.

The hike to £9,000 by the Coalition didn’t stop the number of eighteen year olds flocking to higher education and the removal of maintenance grants also didn’t seem to make much of a different in numbers applying.  Even punitive interest rates of more than six per cent haven’t proved a deterrent to would-be graduates.

Now it appears the government might be re-thinking their policy on fees and recognising the fact that arts and humanities students are paying more for their degree courses than universities are spending on their education.

When the hike in fees to £9,000 was proposed, I suggested a fee of around £6,500 might be more appropriate, with the government topping up the cost of STEM courses to encourage students to study those subjects, if there were going to be fees at all. I am less certain that is the direction to go now. Reintroducing a cap on numbers that would inevitably follow government intervention in the fee market would risk disadvantaging those with the least social capital to game the system. When the number of university places were limited, fewer teenagers for disadvantaged backgrounds went to university than at present.

I recall the late Prof. Halsey once saying that the gap in higher education entry rates between different groups would only be reduced once all middle class children that wanted to go to university were able to do so and there were still places available. Reintroducing a cap on places might seriously affect the opportunities for higher education in some communities.

However, there is evidence that attending a university and studying some subjects in the arts and humanities categories doesn’t bring significant financial benefits and many graduates don’t work in occupations that either pay well or use their graduate skills. Nevertheless, the alternative for the government might be having to pay out similar levels of cash, if youth unemployment rates increased and present undergraduate frozen out of higher education swelled the ranks of the unemployed. That would have a direct effect on government expenditure, unlike tuition fees that both have the possibility of clawing some of the expenditure back and also having a less direct effect upon government accounts.

Now that might be a risk worth taking in a tight labour market, and where some would-be undergraduates could be channeled into apprenticeships at a lower cost to the government. But, it would undoubtedly come at a price with regard to social mobility. Such a price might not be worth paying, especially if there is a downturn in the economy.

Better, to try to make degrees more beneficial for society while recognising that some courses may be high quality, but will lack high earning capacity. Such is the nature of higher education.

Participation in higher education

The DfE recently reported on the time series regarding entry into higher education. The data was updated for 2016/17 starts and can be found at https://www.gov.uk/government/statistics/participation-rates-in-higher-education-2006-to-2017 There are a number of useful tables that show the continued growth in participation by eighteen to twenty one year old either directly from another education establishment or after a gap. In the latest year that data are available for, 28% of the 652,000 eighteen year olds went straight into higher education. They were joined by 11.9% of nineteen year olds and 3.2% of those aged 20.

All the percentages up for all age groups and the percentage comes to 49.8% that is described as the initial participation rate (IPR). As might be expected, a greater percentage of eighteen year old women than men go directly into higher education; some 32.1% of women compared with 24.1% of men. As might be expected, the IPR for women is much higher overall at 56.1% compared with 43.1% for men. However, the gap tails off with age as numbers form the year group starting in 2016/17 tailed away. The IPR is still below that of many other G7 countries.

Sadly, the IPR for part-time students has yet to regain the percentages seen before the fee increase to more than £9,000. Some of this potential group of students may have transferred to degree level apprenticeships, but it is to be feared that part-time higher education at least at the undergraduate level, remains out of favour and is not being marketed by the higher education sector.

A small percentage of those entering higher education do so through the further education sector rather than at a university. The further Education sector accounts for just less than four percent of IPR for higher education and seems to be growing slowly. There is also no gender gap amongst those taking the FE route into higher education.

I couldn’t find a comment yet from HEPI, The Higher Education Policy Institute, about these data from the DfE. However, the concern for the higher education sector must be that they are facing a few years when the number of eighteen year olds in the cohort will be falling. If the IPR of the age group remains flat, then that actually means fewer students looking to enrol. This might partly account for the rash of unconditional offers as institutions seeks to plan their numbers, and hence their income, as far ahead as possible. The 17-19 age group in 2106/17 was around 20,000 smaller as a cohort than the previous year.

No doubt, if there is also a loss of interest from EU or other overseas students, then some courses and indeed faculties might find their cash position under pressure during the next few years. How legitimate is it to use tuition fee cash from popular subjects to support less financially viable departments? This is an interesting question that students as consumers might well ask. If you put a philosophy and ethics of business course in the business studies degree it may well be necessary to support the continuation of the philosophy department. If you don’t why should a future business mogul pay to support the department if it has no impact on his course?

One answer is, you are buying a university experience and not that of your course alone.

Are Education exports slowing?

Last August I wrote a piece on this blog about UK Education’s contribution to the export drive under the title ‘Buy British Education’. This followed a research report from the DfE. https://johnohowson.wordpress.com/2017/08/04/buy-british-education/

Recently, the DfE has updated the figures to include those for 2015. https://www.gov.uk/government/statistics/uk-revenue-from-education-related-exports-and-tne-activity-2015 This remains a good news story for UKplc. Our higher education sector accounts for two thirds of the revenue stream in 2015, up from 60% in 2010. Further Education, presumably following the crackdown on colleges and visa infringements, has seen a two thirds drop in income to around £320 million. It had been looking in 2010 as if the FE sector would break the Billion pound barrier.

Happily, the independent school sector has increased income by 44% between 2010 and 2015, and brought in some £900 million in 2015.How they might be affected if further sanctions on are imposed on Russia is an interesting question. Despite a fall in income generated between 2010 and 2015, Language schools still brought in nearly £700 million more than independent schools.

As I predicted last summer, publishing is now being affected as the marketplace adaptation to new technologies gathers pace. Although income has increased by six per cent between 20-10 and 2015, that figure looks derisory compared with achievements elsewhere.  Qualification Awarding Bodies did exceptionally well, increasing revenue by 73% over the period between 2010 and 2015, and brought in £250 million that year.

Taken overall, total education exports and transnational educational activity that earned revenue for the UK saw a 22% growth in revenue between 2010 and 2015 to reach £19,330,000,000.

Of course, all the income flows aren’t in one direction and it would be interesting to assess how much net contribution education makes to UKplc after cash flows in the other direction are taken into account. During the period 2010-2015 that great British institution, the TES, was bought by an American Group and if were it making profits they would presumably be flowing overseas along with some of the company’s contribution to its debt pile.

TeachVac, the company where I am chairman, hope to start making a modest contribution to these export figures through www.teachvacglobal.com our recruitment site for international schools. As it is based in England, our income can be regarded as part of the export drive.

However, there are some worrying signs behinds the headline numbers. The DfE point out in the latest Bulletin that between 2014 and 2015 total education exports and TNE activity grew by 3.0%, 1.7 percentage points lower than the rate of growth seen between 2013 and 2014. This reflects the slightly lower growth rate in total education related exports which grew at 2.4% between 2014 and 2015, compared to 4.4% in the previous year.

We must now await the outcome of the UK’s departure from the EU to see whether or not it affects income, especially fee and research income received from overseas by our universities. Perhaps, if overseas students had been excluded from the immigration figures, some who voted leave might have felt differently about the referendum: or perhaps not.

Top salaries in higher education

In 1995 the National Audit Office prepared a report for the Public Accounts Committee on severance payments in the publicly funded education sector after a furlough about the size of such payments. The current debate about the salaries paid to vice chancellors has an echo of the earlier concern with the methods used at the time to fund severance payments to top staff in our universities. Of course, as with most companies, there are now better governance arrangements and independent remuneration committees, designed to prevent the very political row that is currently underway about how much vice chancellors should be paid?

The business case is probably along the lines of that in order to attract top quality leaders you need to pay top salaries competitive with other parts of the world. This argument has been used by UK plc companies for many years, so the business people on remuneration committees can hardly object if university leaders advance the same argument in an increasingly global marketplace for higher education. There is also another argument that by becoming a vice chancellor you may forgo the success in your academic field, whether a possible Nobel or similar prize; a top selling text book or even just the satisfaction of teaching and research in your chosen field.

The alternative view that nobody in public service should be paid more than the Prime Minister usually ignores the non-salary benefits of a house in London and in the country and a non-contributable final salary pension that make up the total remuneration package of the leader of the government and just concentrate on the basic salary.

Where vice chancellors have probably made a mistake over the past few years of pay restraint is not to adhere to the same level of salary growth as the rest of their staff. If you are going to widen the differentials you need a cast iron public relations exercise in advance; to do so after the event always looks defensive and self-serving. Any head of human relations that doesn’t make that point clear probably isn’t reading the runes correctly.  Just saying the job is harder or more demanding isn’t enough?

The same is true for Multi-Academy Trusts where salaries of chief officers have risen over recent years, as I pointed out in a previous post ‘What is a CEO worth’ some time ago. The contrast between the pay of the chief executives of two of the larger MATs is around a couple of hundred thousand pounds. Is one underpaid?

The really interesting point with the university vice chancellors’ pay story is, however, that this time around, unlike in the 1990s, Ministers haven’t sought to pass the issue to the NAO and then the PAC, but have waded in directly. I assume that they see this as a way of diverting attention from other more concerning issues and putting the government on the side of the lecturers. Realistically, they are trying to close a stable door sometime after the horse has bolted and are only likely to catch universities that hadn’t adjusted their VCs pay to market conditions. Perhaps there should be performance related pay for senior university staff, but as large institutions they probably have to pay the heads of their professional service department competitive salaries and would you want the chief finance officer paid more than the vice chancellor? An interesting question.