Why Labour should prioritise tertiary reform over tuition fees

Keir Starmer set hares running at his big New Year speech at UCL in East London, when he was asked whether his decision not to get the big government chequebook out would mean abandoning Labour’s commitment to abolishing tuition fees.

He hinted that it might but also that Labour had been looking at several possible reforms.

University tuition fees are not working well, they burden young people going forward. Obviously we have got a number of propositions in relation to those fees that we will put forward as we go into the election.

Repeated to Laura Kuenssberg on Sunday morning, Starmer added, “we haven’t got a settled view”, and “Rachel Reeves and I have had to be very clear that we will only make commitments that we can afford at the General Election”.

But if the state of the public finances prevents any promise to redesign HE funding, then it’s possible that this is both a political and a policy blessing. Starmer and others almost certainly understand the first part – that economic circumstances mean it’s even harder to find the upfront resources to shift to something like a graduate tax or a lower fee system. It gives him a get out (of Corbyn’s 2017 and 2019 manifestos as well as his own promise to abolish fees when running for the leadership).

But there may – and perhaps should – be more to it than that.

Labour pains

Policy watchers will also have noted the publication of two hefty reports from Labour grandees in recent months – the first from David Blunkett on skills and the second from Gordon Brown on constitutional reform. Both have an impact on how Labour might now think about higher education reform in the next 18 months.

Blunkett described “an artificial divide between academic HE and practical FE” which is often the mantra of present government spokespeople and that “the two sectors should be working together much more.” Many have – rightly – disputed the first part of that assessment, but few would disagree with the second. The bigger problem lies in the ways policy, funding and governance, keep the sectors apart rather than in the differences between academic and practical routes, which are firmly embedded in both sectors. The report went on to state the importance of lifelong learning – noting its long-term decline – and the need for a funding system that rebuilds provision and pathways for adults.

Gordon Brown, like Blunkett, also places great store on devolution and the granting of more powers, particularly to mayors and city regions, not just for adult learning but also for “freeing further education colleges from central control” as well as a “a radically reformed suite of place-based, innovation-led R&D programmes, with Mayors and local leaders in all parts of the UK playing a key role in design and delivery.” This includes increases in regional R&D spending through a scaled up Strength in Places Fund and more local control of the coming Shared Prosperity Fund. Tackling regional inequality and poor productivity and economic growth outside London and the South East are major themes of both reports.

In other words, there is likely to be a series of policy priorities that will affect both colleges and universities as Labour draw up its manifesto, alongside any potential plan to reform tuition fees and higher education funding. But designing centralised policy solutions separately – eg by focusing solely on full-time university tuition fees but not on lifelong learning, apprenticeships or day-to-day funding for FE will only bake in the silos and systemic incoherence that cause so many problems for people, places and businesses.

Broke and broken

There is little doubt that the FE and HE funding systems are broken – albeit in different ways. Taken together it’s a hotch-potch of different loans, entitlements and levies that is complex, incoherent and unfair, so it’s almost certainly a bad idea to try and solve one part without thinking first about how funding and finance work across the whole system.

While the higher education funding system looks unsustainable in its current form and surely can’t survive the next Parliament without reform, it does not follow that it is sensible to try and fix it in isolation from other parts. This could create further inconsistencies and unintended consequences as well as reinforcing the fragmentation that currently blights the wider tertiary system.

Furthermore, there is also a possibility that a satisfactory settlement – however practically difficult that would be to achieve – might also serve to reduce incentives for universities to actively support other Labour priorities such as its new industrial strategy, investment in green technologies and its own plans for tackling regional inequalities. Gordon Brown, when Chancellor of the Exchequer, was always keen to offer “something for something” deals and I’d expect Rachel Reeves and Keir Starmer to take a similar approach if and when they bring out their big government chequebook.

Colleges are currently funded and regulated in much the same way as schools – sharing a funding agency and an inspection regime. The Office for National Statistics (ONS) reclassifying them as part of the public sector accelerates this. But they have much more in common with universities in terms of their importance to “place”, to local economies and to research and innovation ecosystems, where the availability and utilisation of skills is an important but typically underperforming part. They could benefit by being treated, managed (and funded) in similar ways to universities. With greater institutional autonomy including over mission, resources and qualifications (some colleges already have degree awarding powers) – flexibilities with which they could play a greater part in meeting local employer and economic needs as well as key civic institutions in towns, cities and rural areas.

This could be transformative, although not by merging them into an existing higher education market overseen by a regulatory and funding model that does not see or incentivise these activities. Better then in a single tertiary system with a mission to address and respond to these and other issues.

If this sounds familiar – it is – it’s very much like that currently being developed by the Welsh Labour Government. In Wales, the establishment of the Commission for Tertiary Education and Research (CTER) is a model now worth considering for England. It covers FE, HE, adult learning and apprenticeships. In addition, it allocates research funding devolved to Wales (principally the equivalent of QR funding in England).

The Welsh model, if not perfect, is certainly better than that currently in England. Instead, we have three competing and very different systems – a centralised funding and management body (ESFA) running (and underfunding) FE, as well as schools, a market regulator (OFS) and an entirely separate and different system for apprenticeships (IFATE). Adult learning remains a poor relation and a low priority for each. The three funding systems are also different – direct funding and loans but managed places, uncapped markets with tuition fee loans, employer levies and grants (and limited access across routes to means-tested maintenance). I could – and often do, go on.

But it is complex and counterproductive. And both in part and overall, it is failing.

The tertiary future

Labour should therefore commit to creating a single, integrated tertiary system treating colleges, universities – and their learners – uniformly, including through access to finance, living support, and with strong, autonomous institutions at its heart. And they should do so before they commit to finding solutions or making policy promises about funding tuition fees.

Of course, there are other reasons to think more holistically. The last few years have not been great for public service or utility markets or for any of the regulators designed to oversee them. Whether in energy, water or transport, the public is yet to be convinced that any are working in their best interests. The Office for Students suffers from some of the same challenges, offering a regulated market model that is simply too narrow for all the activities and wider purposes of higher education. We need more than a regulator because higher education isn’t and has never been just a market – universities are part of the social and economic fabric of towns and cities in England, of our local and national economies and at the heart of good public services. We need a system that understands and values these things much more than is currently the case.

Devolution also requires careful consideration – and there must be sufficient incentives for both colleges and universities to think and act in concert with local leaders and authorities. Here they are vital local institutions, not just supplying human capital or R&D in an area, but working with new institutions, building capacity and playing a full part in developing local economic and industrial strategies. In Greater Manchester and the West Midlands, both Andy Burnham and Andy Street are currently bidding for more powers and resources over skills and innovation. As part of new pilots announced in the levelling up white paper, both city regions are developing proposals for joint commissioning of the 16-19 as well as adult skills and better-integrated provision. They are also developing new approaches to incentivise and build innovation ecosystems across their regions including both colleges and universities.

These joint commissioning boards with actors from public and private institutions brought together with local mayors and leaders can be a good start. From increased R&D public funding and SPF and SIPs they could be given single pot’funding to spend on innovation, skills and local industrial strategies. This is particularly important for the parts of England that currently lose out in R&D funding and that underperform in economic and productivity performance (see Jones and Forth). Alongside there should be a duty (as well as incentives from new funding) for universities to take part in both planning and delivery and to work with 16-19 and 19+ providers to support and develop pathways into key sectors that includes the application of R&D and innovation.

Many of these issues and arguments were raised in the Augar Review commissioned by Theresa May in 2018, although succeeding governments (and prime ministers) seemed to forget or ignore much of its insight and recommendations. As with the levelling up and “take back control” agendas,

Starmer and Labour might now choose to adapt them to their own agendas. And if they are going to radically reform the way the state works, then they should prioritise long term tertiary reform over sticking plaster solutions to tuition fees.