Return to a ‘managed market’?

In the hierarchy of public services and expenditure in the UK, the National Health Service dominates more than any other area.

The idea of a health service that is free at the point of use is part of the fabric of the country, so the debate about its future gets understandably emotive as the fabric thins, frays and finally threatens to rip.

Even so, the language being used by the former health secretary Alan Milburn, who has been brought back by the current holder of the post, Wes Streeting, to help oversee reform of the NHS, is notable.

The health service, he said in a recent interview, is “drinking in the last-chance saloon”, needing “cultural change” and “big reforms to make it fit for the future”.

“The NHS has got to be weaned off the ‘more, more, more’ culture, and it’s got to recognise that if you’re going to do big dollops of resources, then that has got to be matched by a massive dose of reform,” he said.

Universities, self-evidently, are not the NHS. They do not absorb anything like the same level of public resource, nor do they have the same stranglehold on the public consciousness.

But they are, undoubtedly, seen as a sector in need of reform – and, by far too many people than is comfortable, a sector that appears always to be asking for more.

That will be seen as grossly unfair by many in higher education, particularly as the recent tuition fee hike follows the best part of a decade in which that crucial component of their revenue has been frozen.

But be that as it may, it is where the narrative currently stands. As one newspaper columnist recently put it: “Sometimes you just need to call something out for what it is: English undergraduate education is a hot mess that works in the institutional interests of universities, not young people.” That this was in The Observer, which is hardly on the front line of university bashing, speaks volumes.

Part of the problem for universities is that, as things stand, the financial underpinnings remain a long way from stable – as we report in our news pages, sector leaders expect as many as 100 UK institutions to be making redundancies at the start of 2025, with warnings that many are still in a “cataclysmic” situation, in which “everything is on the table”.

One vice-chancellor estimates that the total cuts across the sector could amount to 10,000 roles, in a context where “there is no flesh to remove, you’re back down to bone”.

That these are not idle warnings is reinforced by a report from the Office for Students, which warns that nearly three-quarters of English providers face being in deficit next year after student recruitment trends lagged well below expectations.

What, then, are universities to do, if all accept that asking for “more, more, more” is a road to ruin?

Whatever shape reforms may take, it is certain that the debate will incorporate discussions about the size of the sector, and the part that number controls could play in managing it.

In our cover story, we consider what this would mean for a sector that has grown significantly since caps were lifted, with the stated aim of “tackling the micromanagement imposed on the higher education sector…and which has held institutions back from responding to student demand”.

Over time, with shocks such as the tuition fee freeze, inflation and restrictions on international recruitment throwing curveballs into the mix, the market has inevitably delivered results that its architects would not have anticipated.

In recent years, for example, there has been a trend of higher-tariff institutions expanding at the expense of others, leaving lower-tariff institutions – which also tend to recruit fewer international students – with little scope to cross-subsidise, and therefore a lower unit of resource (often for a student body from less-advantaged backgrounds).

A key question, then, is whether number caps might be seen not as a block on aspiration, but as a way to stabilise and protect a broad-spectrum sector (we speak to leaders of several institutions at the squeezed end of the hierarchy who make the case if not for a return to hard caps, then for a more “managed market”).

It is a question that will make many uncomfortable, and others argue that the market genie is now out of the bottle and won’t be recorked. But it is also a framing that could, conceivably, make some return to number controls imaginable under a Labour government with a refreshed appetite for reform.

john.gill@timeshighereducation.com