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Browne report

17 October 2010
The fundamental problem is too many students, as a result of government policy on attendance not being backed with required funds. Between 1989 and 1997 per-student funding fell 36% and fees merely bought it back to 1992 levels. Any scheme that includes increasing attendance further (a bad idea in itself) is going to need students to pay for themselves. The report is also coloured by cuts sanctioned by the previous government, which clearly do not list universities as a funding priority. On the plus side, the proposal does have some surprises in terms of benefits.

Favourable changes

Increased payment threshold

Considering that 9% repayment is quite a high marginal rate, £15,000/pa is a very low threshold, and it had not been increased in line with inflation. If you assume (and this is a big assumption) that the true average graduate salary is actually £22-25k as reported, then the new £21,000/pa threshold translates into an extra £540 for most graduates. All things considered this is a significant uplift. Loans are written off after 30 years rather than the previous 25 years to offset changes in repayment thresholds.

Maintainence grants & loans

Above £27,000 there is an oddity where the scaling back of the maintenance grant is partly offset by an increased maintenance loan up until circa £50,000, and then the 'extra' loan itself is then scaled back. This is scrapped in favour of a flat loan, and a grant that also tapers off at a much lower rate. For families in the £27,000-£50,000 region this results in quite a sizable increase in the grant, on top of the overall £1,000 increase. £3,500 still seems somewhat low considering the living cost of somewhere like Bristol or London, but such a sizable scaling up of grants is a major surprise given the overall tone of the report.

Increased costs

Scrapping of the cap

Increasing of the current inflation-linked £3,500 cap to circa £6000-£7000 was pretty much the expectation of anyone who isn't a communist. There is recognition that a universal hard cap will simply become the standard fee level, but for political reasons a tax-tapered soft cap is proposed that is intended to act as a break against universities charging the highest brand-name premium they can get away with. Reading between the lines there is recognition that £6,000 is merely a common break-even point after expected cuts, and this does not fully account for differing course costs. Resilience against further cuts to levels of direct-to-institution grants is also telling.

The widening participation scrutiny clause related to fees over £7,000 is mostly PR as a low proportion of poorer students is frequently due to factors beyond the control of the institutions. In Bristol's case it is living costs that rival London, but without any of the London income bonuses.

Loan interest rate

The proposal ensures the loan amount is always in decline, with special attention to those just above the repayment threshold. Ever-increasing numbers of students mean that the current effective-subsidy of "zero" interest is unsustainable, and it removes perverse incentives of even the well-off deferring repayment as much as possible. Taking out maximum loans and stuffing them into long-term bonds was very common until a few years ago.

Some analysis of the report has concluded that the system is effectively a graduate tax, as a majority of students are expected to have at least some of their debt written off. Having to pay real interest also means the system is partly regressive, with those on £27,000/pa ending up paying the most.

Funding allocation & targeting

Funding follows students

A lot of students have a pathological fear of anything remotely near market forces, which is not entirely undue as such a proposal partly recognises that fees will form a large part of funding. In the past there have been a lot of political issues in how institution-level block grants are allocated, and more attention has to be paid to student experience as disgruntled students voting with their feet becomes a much more significant incentive.

Student choice

This feels like wishful thinking, but it does highlight how awful some school careers advice is. Data on employment is already a major selling point, and leaving aside massaging of the figures, it is notoriously transcient. It does imply increased importance of feedback and student life as quality metrics, and these are things a lot of universities have got themselves stung over in some of the more recent league tables.

Prioritisation of block grants

It is proposed direct-to-institution funding should be for 'priority' subjects, which in practice is basically means STEM subjects. One problem is that some subjects (notably Computer Science) tend to swing between the extremes of huge shortage and huge surplus on time-scales comparable to course lengths. Lot of analysis expects this to lead to large cut-backs for Arts subjects.

Course efficiency

Bad idea. Trying to trim course unit-costs is something universities have had to do for years anyway, and the result is conveyor-belt teaching where the student experience suffers.

Philanthropic donations

Provision for tax relief on donations is included through the PAYE system, but motivation for doing so is still not addressed. I would rather tax breaks on scholarship donations, as I am too disillusioned over university financial planning to want to simply pay into the big "pot".

Other points

Opposition to Graduate Tax

The Graduate Tax was prominently slated for two main reasons: The time for funds to fully come on-stream, and the philosophy that what student pay should be linked to actual cost of teaching them. The other points against are basically detail that could be alleviated. A clear point is that companies are only willing to support students with skills relevant to the company, and the way to do this is via students by providing the salaries that pay off the student loans. Nevertheless some analysis considers effective repayment scheduling to closely approximate a graduate tax (see above).

Part-time students

Part-time students have long been mistreated, and ending up-front payment of fees for them is long overdue. To me it seems the real reason for the recommendation that part-time students can study third-of-time is because a lot of part-time students also having full-time jobs, and third-time approximates 1 day a 7-day week. It also alleviates the problem of timetable commitments frequently not being concentrated on same days.

Postgrad funding

Taught postgraduate degrees were mentioned in the report, but there is the assumption that postgraduate study is more a market-orientated decision by those who already have jobs and hence access to revenue. I suspect they were mindful of the increasing numbers of people doing taught masters straight after their undergraduate degree, and the report authors do not want the idea of university education as a (subsidised) right extended to second degrees.

Super-QUANGO

Beyond monitoring the effect of competition, merging of HFECE, QAA, OFFA, and QIA into a single Quango does not seem to entail any new duties.

What will happen next?

I suspect the Browne Report will not have any substantial changes before it is put to parliament. Although I expect the LibDems will invoke the abstention clause of the coalition agreement, I would be very surprised if there isn't a massive LibDem rebellion. Certainly at least half their MPs, and quite likely at least two thirds, but assuming all Conservative MPs vote in favour, actually stopping fees would require every non-ministerial LibDem MP to rebel. Consider the assumptions: A combined Conservative-DUP aye-vote would be 5 short of a majority, which translates into 8 non-cabinet LibDems abstaining. 45 out of 52 of these voting against would be a major revolt, as that total would have to include 3 of the 10 junior LibDem ministers. Its gonna be acrimonious.