With students paying tuition fees of up to £9,000 a year, it’s more important than ever that they get a valuable and rewarding experience at university.
This is why the higher education market in England must work in their interests.
A good market is one where students are empowered to make the right choice of university and course (or whether to attend at all), and where universities respond to students’ needs.
We understand what makes markets work well – and when and how they can go wrong. We know that market structures, regulation, consumer behaviour, and the actions of suppliers all have an impact. This means we can help design regulation, which promotes competition on aspects that students care about in higher education, while also delivering on the government’s wider objectives.
Making the market work for students
We recognise that competition is a familiar concept in the higher education market. In fact, our work suggests that the sector is already pretty competitive. Universities fight hard to win over prospective students, teachers, researchers and funding.
However, some aspects of regulation stifle competition. Currently, different types of university face different regulations. For instance, newer universities can have their Degree Awarding Powers (DAPs) removed following a poor ‘quality review’, but longstanding universities can keep their DAPs forever! This makes fair competition between newer and more established universities difficult, and reduces the competitive pressure between universities. In turn this means that some universities may have to fight less hard to provide attractive offers for students. In response to our recommendations to deal with this issue, the government is now proposing to introduce a single framework of quality regulation that applies consistently to all higher education providers.
Protecting students’ interests
It’s also important that providers are under pressure to deliver what students want. If universities fail to meet students’ needs, they may see a drop in their student numbers and ultimately have to close courses or even whole institutions. This can be a healthy part of a competitive market as the threat of closure keeps universities focused on meeting students’ needs.
However, a university closing down is likely to have a much worse social impact than when, say, a small shop has to close. Students may be left stranded. Because of this, government may be tempted to keep struggling providers open. If providers believe this will happen, the pressure on them to deliver what students want is reduced. This means that the government faces the difficult choice of leaving students stranded or reducing the pressure on universities to deliver what students want.
To address this, we recommended introducing a student protection requirement. This means that all universities have to have a plan to make sure students can complete their courses elsewhere in the event of university or course closure. This will protect students. It will also remove the need for government to rescue failing providers which can reduce the pressure on them to deliver for students. The government has taken on this recommendation, which is great news for students! Students will be protected, but universities still face pressure to deliver attractive options that appeal to students.
Making courses fit students, not the other way round!
The government wants to make it easier for universities to provide ‘accelerated degrees’. This is where the same course is delivered over, say, 2 years rather than the traditional 3. For many students, other commitments, or simply a desire to get a graduate job more quickly, makes this an attractive option.
We have found that the main barrier to this is the way the fee cap works. At the moment, a university can only charge up to £18,000 for a course delivered over 2 years, whereas they can charge up to £27,000 for a course delivered over 3 years. This is the case even where the courses are identical! This means that universities have an incentive to make courses take as long as possible, even if students prefer faster courses. We have recommended that the fee cap is more flexible rather than being based on the duration of the course. We hope that government will take on this recommendation, so that students have more course options that are better suited to their needs.
Comment by G.R.Evans posted on
The terms ‘student wants’ and ‘student needs’ are used almost interchangeably in this Blog. It is not made clear why it is assumed that everything students ‘want’ constitute student ‘needs’. A toddler expresses many ‘wants’ whose fulfilment may not be in his interests. This confusion has resulted in reasoning which appears to lead to conclusions in conflict with published Government guidance on some fundamental principles, and also to some internal contradictions in the Blog itself.
An exclamation mark flags up an incorrect statement apparently intended to support the argument that it is competitively ‘unfair’ not to allow new higher education providers permanent degree-awarding powers from the beginning.
‘For instance, newer universities can have their Degree Awarding Powers (DAPs) removed following a poor "quality review", but longstanding universities can keep their DAPs forever!’
The most recent Government Guidance on the grant of degree-awarding powers, published in September 2015, makes it clear that this is incorrect:
‘Organisations in the publicly funded higher education will be granted taught and/or research degree awarding powers on an indefinite basis. All other organisations, including institutions in the publicly funded further education sector, will be granted taught and research degree awarding powers for a fixed term period of six years.’
The Privy Council may renew the DAP for a further 6 years subject to a satisfactory external review by the QAA. Not renewing a temporary grant of powers which have come to an end is quite different from ‘removing’ powers. It seems regrettable that a body advising Government to make significant policy changes apparently failed to check its facts. This should please be corrected in the Blog at once.
It is also hard to see why it should be celebrated (with that exclamation mark) as in the interests of students to allow a provider with ‘a poor quality review’ to go on granting sub-standard degrees, with it seems approval from the CMA. But there is a contradiction in what follows
The normal expectation has been that if (and it has been rare) a higher education provider found itself in difficulties ( academic or financial ) it would be supported to put right whatever was wrong. The QAA’s reports on providers regularly make recommendations or ask for Action Plans which are followed up. All these reports may be read via links in the existing HEFCE Register. Where the problem has been financial and concerned a publicly-funded provider, including loss of Tier 4 licence, HEFCE has worked with the provider to protect the long-term interests of students.
‘Government may be tempted to keep struggling providers open’, says the CMA Blog, condemning this approach, arguing that ‘if providers believe this will happen, the pressure on them to deliver what students want is reduced’. This seems inconsistent with the view that it would be anti-competitive not to renew the temporary degree-awarding powers of a provider struggling to satisfy a ‘quality review’.
The CMA’s proposed remedy (with another exclamation in the Blog) is to require providers:
to have a plan to make sure students can complete their courses elsewhere in the event of university or course closure. This will protect students. It will also remove the need for government to rescue failing providers which can reduce the pressure on them to deliver for students. The government has taken on this recommendation, which is great news for students!
It is hard to see why it should be ‘great news for students’ since no detail is available as to how this is to be managed, or what long-term protection they can expect of the value of their degree when it is associated with a failed provider whose name even if remembered by employers may be no asset to the graduate in future years.
The current Government guidance on the renewal of temporary degree-awarding powers says that:
‘Students transferred in this way will, if successful in their assessments, be awarded the qualifications of the receiving organisation’.
It is not made clear how the ‘receiving organisation’ will be required to accept both the students and this requirement. Higher education course changes and closures: statement of good practice (November 2015), barely touches on this problem.
The same guidance explores the situation already arising in the case of buy-outs of the alternative providers of BPP University and the University of Law:
The Department needs to be assured that the original ‘institution’ awarded DAPs is the same institution post the change. For this purpose the ‘institution’ is the cohesive and self- critical academic community that was assessed by the QAA for DAPs and, in so doing, demonstrated firm guardianship of its standards.
Once awarded, DAPs cannot be ‘transferred’ from one institution to another. After they have been awarded to a specific institution, they are ring-fenced within that institution.
This growing area of concern is not touched on in the Blog. The Office of Fair Trading ( the CMA’s predecessor ) gave Phase 1 clearance to the proposed merger in the case of the then anticiapted acquisition by Apollo Global In of BPP Holdings in 2009. This may now be read on the CMA website. The merger was no referred to the Competition Commission because it was not ‘expected to result in a substantial lessening of competition within a market or markets in the United Kingdom. However, it was suggested that ‘as a result of this transaction Apollo and BPP will cease to be distinct’, so that the arrangement would fall foul of the Government guidance just quoted.
Comment by Paul Wakeling posted on
This blog claims that CMA knows what makes markets work well, before showing clearly that it does not when it comes to higher education. Putting to one side the highly questionable assumption that education should (or even can) operate successfully like any other service as a marketable good, even on its own terms the CMA's position is wholly at odds with the evidence.
The large majority of students are happy with their university experience and the choices they have made according to a variety of different surveys. In particular, the suggestion that two year degrees have somehow been blocked by a kind of cartel of universities is simply untrue. Governments have been backing two year degrees since the establishment of the University of Buckingham in the 1980s. The 'market' - revealed through student choice - has comprehensively and repeatedly rejected two year degrees, yet this failed idea keeps being resurrected. So the market is the solution, except where the market doesn't behave in the way the government wants it to, when the solution is somehow supposed to be marketisation.
I wonder how long the CMA sould survive if it had some competition...
Comment by Dr Sean McMahon posted on
Students, essentially by definition, do not have the information they need to evaluate whether an academic course will meet, or has met, the necessary academic standards. That is why they are students. They do not know their own interests until *after* they have been educated. What appears satisfactory to an undergraduate may be transparently unsatisfactory to an expert with years of experience. When I was an undergraduate, I would have liked a smaller workload, less rigorous examinations, and a guaranteed 2.i. But I didn't get what I wanted. Instead, I got what I needed, and now I thank God for it (or, more accurately, Oxford). Heaven forfend that Oxford should ever "make courses fit the students".
Does the government really not understand this simple logic? Or is all this facile rubbish about student choice just a cynical smokescreen for the government's ideological drive to privatise everything?
Comment by Nick Seaford posted on
Thanks to those of you who have commented on this blog. I thought I should respond to a few of the points.
Professor Evans and Dr McMahon make similar points about the fact that what students want and what students need may be different. This is something that we explicitly recognise in our policy paper on HE regulation and has informed our recommendations. However, this does not conflict with the fact that information can and should be provided to students to help them make better decisions, or that competition for students between a diverse range of providers can (and does) play an important role in maintaining and driving up standards in the sector.
Professor Evans also questions the way the blog presents the difference between the duration of degree awarding powers between the publicly funded HE sector and other organisations that provide HE. The key point that we are making here is that there is a significant difference between the two and that the difference is undesirable. Professor Evans also doubts the desirability of substandard providers continuing to offer substandard degrees. This may be reasonable, but doesn’t justify treating different providers differently on the basis of their legal status rather than the actual risk posed to students’ interests.
Professor Evans highlights the current policy of supporting providers, who are struggling, to turn things around. There is a trade-off here and a judgment to be made on a case by case basis; it is surely not desirable to rescue providers with continually falling demand and no prospect of reversing that situation, even if it is desirable to support universities in temporary difficulty. Here also there is a spectrum with support in the form of advice and action plans for improvement at one end and large rescue packages at the other.
Paul Wakeling argues that there is no evidence of a “cartel” of universities blocking two year courses. Our argument is not that two year courses are being restricted by “cartel-like” behaviour of universities, but by the nature of fee regulation which incentivises universities to make courses last over as many years as possible. Indeed, in parts of the sector that are not subject to fee regulation, there is a more diverse range of course structures with courses lasting different lengths or starting at different points in the academic year.