New proposals won't create a genuine market in higher education, says SMF

Responding to today's publication of the White Paper on Higher Education, SMF Director Ian Mulheirn said:

"Despite the rhetoric that these measures will fully liberalise Higher Education, in reality they will not. More's the pity. Having freed universities to charge what they like, the Government should now free students to go where they like, and that will mean ending the quota system.

"While a cap on student numbers still exists, there can be no real expansion of good universities, and shrinking of bad ones, which is badly needed to improve the competitiveness of the UK workforce and maintain the pre-eminence of UK universities. Attempting to crowbar in market mechanisms within the current quota system - through competition for AAB places and increased places at lower fee-paying universities, for example - will do little to make that happen.

"Worse than that, they may result in universities recruiting students based on only their grades rather than on their potential, which would disadvantage students from poorer backgrounds and damage social mobility.

"The Government has made great strides towards introducing a fair market in Higher Education. But trying to have a market with a quota is like trying to eat rice with one chopstick. If it wants a genuine market, the Government needs to remove the cap that stops long-suffering students from having a fairchoice."

Notes to Editors:

The SMF's model for funding undergraduates would allow for students to pay fair prices without a cap on places. Under this model, universities would borrow money for tuition from the Government and would repay them through the earnings of their graduates above a certain threshold.

Examples of the distortionary effect of the HE white paper proposals include:

• Entrenching social privilege. The Government has suggested that universities should look at contextual data when admitting students, to recognise that state-school students from poorer backgrounds have a bigger battle to get the top grades. But giving elite universities an incentive to recruit people on the basis of grades only restricts lower income students' access to those universities, as students from wealthier backgrounds are much more likely to get these grades.
• Potentially misleading information. While more information on subsequent employment outcomes will allow students to see if their investment represents value for money, crude information could be misleading. Good salaries for graduates of some universities may reflect the existing capabilities of people who went there, rather than any added value on the part of the institution. Alternatively they might reflect the fact that employers are basing assumptions about graduates' quality on dated or incorrect university reputations, rather than the skills or knowledge that the institution actually imparts.

The Social Market Foundation (SMF) is a leading UK think tank, developing innovative ideas across a broad range of economic and social policy. It champions policy ideas which marry markets with social justice and takes a pro-market rather than free-market approach. www.smf.co.uk

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