A critical path: Securing the future of higher education in England

Over the past 50 years higher education has been transformed from an elite system to one in which nearly half of all young people and more than a million mature students participate. Our universities provide us with a significant national economic advantage as well as a vital public good. But the system faces growing future challenges, including increased international competition for students, the rise of new modes of learning and unprecedented cuts to public spending.

The report ranges across the full spectrum of issues affecting higher education, while focusing its key recommendations on how to promote a rebalanced, productive and resilient economy, how to expand access to opportunity and advance social justice, and how to respond to the new demands of students, employers and the wider community.

Summary of recommendations

1. Higher education opportunities should continue to expand. While resources are constrained in the next parliament, we should sustain the current proportion of 18-21--year--olds entering higher education until 2020, while focusing additional places on locally available, flexible and low--cost courses, aimed in particular at those who seek vocational--oriented learning.
2. Universities and further education colleges should be able to bid to provide new £5,000 'fee only' degrees, focused on vocational learning and offered to local students who would be eligible for fee loans but not maintenance support.
3. The government should consider reforms to the approximately £5 billion that companies receive in training tax relief, with a view to better incentivising employers to invest in courses leading to accredited qualifications and continuing professional development, whether in further or higher education.
4. We must strengthen our systems of vocational provision and in particular our provision of advanced vocational learning through further education colleges. More of these institutions should be given the ability to award degrees and granted the renewed use of the title 'polytechnic'.
5. We should continue to ring--fence and sustain in cash terms the science and research budget through the next spending review period until 2017/18. Because this implies a continued real--terms decline in funding, we argue that once the structural deficit in the public finances has been eradicated we should commit to a 10--year strategy of raising public investment in research each year above inflation.
6. We should reallocate approximately £1 billion a year that is mainly spent inefficiently on R&D tax incentives to instead set up a national network of Applied Research and Innovation Centres focused on boosting applied research in the strategic industries of the future and on revitalising regions with below--average growth.
7. Universities in Britain should follow the best practice of the US Ivy League in recruiting and 'crafting' diverse and representative student intakes. This is to ensure that students are educated not merely for individual advancement but also to be effective and responsible leaders with an understanding of an increasingly diverse society and interconnected world.
8. Funding should be shifted out of fee waivers and bursaries and into outreach programmes, which have a stronger track--record of recruiting applicants from disadvantaged backgrounds. Where possible, these should be delivered collaboratively by higher education institutions in the same city--region.
9. A student premium should be introduced of £1,000 extra per student from a low--participation area or who has received free school meals, in order to recognise the additional cost of their learning and recruitment. This would be funded by reallocating existing widening participation resources and the abolition of the national scholarship programme.
10. Institutions that currently have a small core allocation of places should be able to recruit unlimited numbers of students who are eligible for the student premium, in the same way as they are currently free to recruit students with grades ABB+. This will enable them to make contextual offers to this group.
11. More widespread use of contextual admissions data should be promoted so that lower offers can be made to students from disadvantaged backgrounds. This will be enabled by exempting 10 per cent of the lowest grades from entry tariff calculations in university league tables, provided universities commit to using them for contextual offers.
12. Eligibility for part--time loans should be extended to tackle the crisis in part--time learning.
13. International students should to be removed from the net migration target and the rules governing post--study work should be revised, to ensure that the UK's HE sector can compete on a global stage.
14. A new postgraduate loans system should be introduced to enable fair and wider access to postgraduate courses.
15. Higher education institutions should strengthen the active participation of students in improving teaching and learning.
16. English higher education institutions should embrace the potential of new technologies by recognising credit from low--cost online courses so that these may count, in part, towards degree programmes. To make a start down this road we recommend that the Open University should accredit MOOCs provided via the FutureLearn platform so that they can count towards degree programmes offered by the OU itself and its partner institutions.
17. All universities should follow the example of those that have created an established career path for academics who want to focus on teaching.
18. To enable greater transferability throughout the system HEFCE should exempt those students that transfer directly from one institution to another from student number controls; higher education institutions should be encouraged to establish transfer arrangements with other institutions, both regionally and nationally; HESA should collect data on the extent to which institutions engage in transfers and accredit previous qualifications of students.
19. We recommend that HEFCE, QAA and OFFA should be merged into a single higher education regulator. This will reduce bureaucracy by simplifying the relationship between universities and government.
20. The regulator should act to ensure the international competitiveness of higher education institutions across England. Where necessary it should encourage institutions to collaborate in regional or other federations to secure research funding, as many are now doing. The regulator should also monitor the financial health of higher education institutions and where necessary facilitate federations or mergers between universities.
21. Degree--awarding powers should only be given to those institutions that exceed demanding quality thresholds, such powers should never be bought or sold, and the title of 'university' should be reserved for institutions oriented towards the public good.
22. In order that universities contribute efficiency gains of their own to the task of fiscal consolidation, the £9,000 tuition fee and teaching grants should be held constant in cash terms until the end of the next spending review period in 2017/18.
23. The current student funding system is unsustainable and should be reformed. Any system must protect university autonomy, be fair to students across all social backgrounds and modes of study, not place all of the burden on the generation currently going through university, and be sustainable for the public purse. We have modelled a range of alternatives to the current system, examining their cost to the government and their fairness to graduates, universities and the taxpayer. We hope this menu of options will help to inform the debate on higher education funding between now and the general election.

Technical annex: Methodology for modelling of funding scenarios

Download the technical annex to this report.