Fee market selection: find a niche or go extinct

Too many universities lack a distinctive mission and risk being eaten up in the "bloody" competition that may follow Lord Browne of Madingley's review of the sector.

The warning comes from Julian Beer, pro vice-chancellor for regional research and enterprise at the University of Plymouth, who is leading a sector-wide project on university strategy.

Speaking to Times Higher Eduction just days before Lord Browne was due to report his findings to the government, Professor Beer said that an analysis of every institution's mission statement shows that about 70 are trying to cover too many bases and are spreading themselves too thinly.

Too many universities simply state a desire to "achieve excellence in teaching and research" and appear unable to carve out a market niche, Professor Beer said.

Although elite institutions would flourish if an unregulated tuition-fee market was unleashed, thanks in part to their history and reputation, 30 to 40 institutions - about a quarter of the sector - could struggle.

It would be "inevitable" that some would disappear, he added.

It is expected that Lord Browne's review panel will suggest a hike in fees among a raft of proposals for the academy. Universities will then turn their attention to how much income they will lose in the Comprehensive Spending Review on 20 October.

Some reports have suggested that the review has looked at raising the fee cap - currently fixed at £3,290 a year - to £10,000 so that a market can flourish, with institutions allowed to charge even more if cash is set aside for student support.

Professor Beer said that the existing funding model for higher education had encouraged homogeneity in the sector, and a market would drive more institutions to specialise.

He said that although some universities had developed distinctive approaches - by focusing on postgraduates, internationalisation or vocational training, for example - he was surprised that so many others were attempting to achieve excellence in all areas across both teaching and research.

"It is harder in that grouping in the middle to distinguish between provision," he said.

"Some of them will win. Obviously there are institutions that - if you had a fee to pay - you would choose over others because of history, heritage and everything else, but that is where it gets very bloody in terms of competition."

The problem could be exacerbated for institutions that rely more heavily on public teaching funds because they are likely to be hit much harder than research by the CSR.

Some figures quoted in recent weeks suggest that up to 75 per cent - or £3.5 billion - could be wiped off the annual teaching grant, with the expectation that higher fees would help to plug the funding gap.

This figure is partly based on speculation that the Treasury may entirely remove public support for the teaching of lower-cost subjects such as the arts and humanities.

Political hurdles

At the Conservative Party conference in Birmingham this week, there was growing concern that the fee level necessary to meet the loss of government funds would be impossible for the coalition to force through Parliament.

Most Liberal Democrat MPs signed a pledge before the general election not to support a rise in fees and can abstain from voting on the issue. Meanwhile, Labour is set to vote against a massive hike, citing the damage it would cause to widening participation. A crucial Commons vote could come as early as next month if the government decides to put up fees as an interim measure while also promising to reform student finance in the longer term.

It has been suggested that Lord Browne's review is being linked with fee levels as high as £10,000 a year so that a cap of £7,000 would appear moderate if put forward by the government.

However, vice-chancellors say that even at this level, fee income would struggle to meet the predicted shortfall in funding.

Speaking last week, Geoffrey Crossick, vice-chancellor of the University of London, said: "We will have to have a charge of £6,000 to £7,000 just to stand still - and not everyone is in a position to pay that."

Keith Burnett, the University of Sheffield's vice-chancellor, said that any proposal to cut teaching funding from entire subject groups would be a major surprise.

"It is such a huge withdrawal of public funding from higher education, and I don't think we've actually had a moral debate about that yet," he said.

Speaking at a fringe meeting during the Tory conference, David Willetts indicated that the government was still examining how to change the system to make higher contributions acceptable.

The universities and science minister said that the "challenge" facing Lib Dem MPs was not only a matter of parliamentary arithmetic, but "also a real-world issue (that) tells us that there are people who are very anxious about the idea, in the old model, of fees going up".

Nicky Morgan, the Conservative MP for Loughborough who was recently appointed as Mr Willetts' parliamentary private secretary, said during the same event that cultural change was necessary.

"People need to think about investing in a higher education college fund from a very early age," she said.

Ms Morgan also appeared to dismiss talk of a 75 per cent cut to teaching funding, saying: "I haven't heard that one before but that seems on the high side to me."

Unpleasant surprises ahead

Others at the Tory party conference echoed Professor Beer's argument that the sector was about to be thrown into turmoil by the likely change in funding arrangements.

Malcolm McVicar, vice-chancellor of the University of Central Lancashire, said: "There are a number of universities that think they are sitting pretty, but in a market they won't be and there will be some surprises."

On 7 October, Universities UK published its submission to the Treasury on the CSR. It again warns that the UK risks destroying its growth strategy by slashing university funding.

The submission calls for any necessary cuts to be "back-loaded" towards the end of the CSR period (2014-15) to make it easier for higher graduate payments to replace lost teaching funds.

Meanwhile, the Sutton Trust warns in a report published this week that unregulated tuition fees could lead to English students paying up to five times more than they do today.

A separate report from the University and College Union, published last week, warns that increasing the fee cap to just £5,000 a year would make England the most expensive place in the world to study at a public university.

simon.baker@tsleducation.com.