To the university sector, with love. Please wake up.

A cri de coeur

This week’s 102 page Policy Exchange report from Iain Mansfield has generated both a Mail splash and a huge noise within higher education - much of it screamingly oppositional. But what worries me is not what it argues. There are elements of it I disagree with, in particular around the future vision for the size and shape of the sector. What worries me most is the consensus on the problem diagnosis, and how few people are able to see what this means.

Because turn to the other recent doorstopper report from John Blake of the Post-18 Project and you can see a huge amount of commonality. Both reports say the fees and loan system has run out of road. Student choice doesn’t work. The sector is both too heavily and too lightly regulated. Bad actors can flourish. The question of international students needs to be taken seriously.

Iain’s report comes very explicitly from the Right. It carries the rare distinction of two endorsements from two different education spokespeople - Laura Trott for the Tories and Suella Braverman for Reform (as well as Neil O’Brien, covering policy overall for the Tories). I’d go further: it is the template for the future of the Right’s thinking on higher education, and I wouldn’t be surprised to see it lifted, almost word for word, into the agenda of the next Right government, whoever heads that¹.

John’s, by contrast, comes from a think tank (where, for transparency, I am one of several Fellows) explicitly badged as “offer[ing] a Labour government in Westminster policy and ideas and solutions, and develop[ing] the most exciting original thinking around the sector”

Different starting philosophies. Some difference in policy solutions (though not always). Almost identical problem diagnoses.

When this happens in public policy, it means something. And it rarely bodes well for the sector that is in the crosshairs.

When consensus kills

There are two things that worry me about this convergence.

The first is that the sector has no real champions in Westminster or Whitehall. Gone are the days of senior figures in either the Tories or Labour who regularly publicly advocate for HE. Neither the Prime Minister, nor the likely next occupant, especially have a good word about universities (though Burnham has worked with them closely in Manchester, his national rhetoric leans more towards the familiar hymn to technical education). The idea that universities would be protected from a Spending Review and austerity, as they were in 2010, seems fantastical. The sector is forced to reach back to the figures of Willetts, (Jo) Johnson, and Blunkett to make their case: high profile and heavyweight characters, but in many ways from another era.

This is not just frustrating on its own terms, but even more so when one considers the way in which the HE sector is critical to the UK’s domestic and international agenda. Buried in the Industrial Strategy and its jobs plans are various (correct) analyses of the contribution universities make to growth and research. Hidden in Skills England’s annual report is the assessment that large parts of the forecast occupational growth in industrial-strategy priority sectors requires qualifications at Level 4 and above. Eyeballing the list of the 875,000 jobs projected to grow in the fastest three job segments of each of the IS-8, I estimate more than 75% will require L4+ skills, and many need Level 6+. Other estimates - including one by QS, the University of York and ourselves - put the number higher still.

But these are not the reports that make the front pages. Ministers are not briefed for the Sunday shows with these. Instead, we have a Milburn review where one of the toplines is the (misleading) conclusion that graduate unemployment is a significant and structural problem. We have an Education Secretary and Higher Education Minister who cannot speak about HE without almost spluttering in the speed of their subsequent downplaying of the sector in comparison to other routes. And atop it all, we have a Prime Minister who last year made the centrepiece of his conference speech a paean to talent, proposed an uptick in those gaining higher skills, promptly briefed it as an attack on the mythical Blair 50% target, and never mentioned the commitment again.

Where are the pro growth, pro market, pro openness voices which call for the future of the UK to be highly skilled, highly innovative and highly entrepreneurial? They are rarely found among the elites – at least vocally. Some politicians may well believe it, but when push comes to shove, other issues are prioritised. There is public support still for HE in the abstract, but as Diana Beech articulates and our own work also shows, the public is also “increasingly sceptical about the system as it currently operates”.

Not all of this is the sector’s fault. Much of the public scepticism of it comes downstream of wider challenges. The graduate wage premium has declined, though this speaks more to the weakness of the UK labour market, and a rapidly increasing minimum wage. Graduate jobs are now less common than they were previously. Graduates do find it harder to get on the housing ladder, are getting married later (if at all) and having children later (if at all). But some of it represents a fundamental break between the highly graduate political class, and the institutions which create graduates.

Policy to live by

The second thing that worries me is that both reports contain specific proposals I believe would harm the sector. Chief among those are a call for a new graduate tax style funding model (from John), and a 30% shrinking of the sector over 5 years (from Iain).

I debated the former at length with John on Tom Richmond’s podcast. My case is that the tuition fee and loan system, while not without flaws (including real terms interest), is one of the two strongest assets of the English HE sector (along with institutional autonomy from government). A graduate tax is deeply flawed in execution; there is a reason every English politician who has ever seriously considered it has backed away. But it is also wrong in principle. It would surrender, simultaneously, a dedicated ring-fenced funding stream and the autonomy from the state. It should be the last thing to be offered up and the first thing to be defended.

Iain’s proposal that worries me the most is this one:

Reduce student numbers by 6% year-on-year for five years, for a 30% total reduction in places. Reductions should be targeted at institutions with the highest drop-out rates, lowest progression to highly-skilled employment or further study and lowest earnings, as well as at providers that have grown rapidly at the expense of their staff-student ratio, local accommodation availability or entry standards. The resulting savings should be used in part to fund an increase in apprenticeships, additional places in further education colleges and the uplift to the higher education teaching grant set out below.

This would see a ~180,000 reduction in the number of home undergraduate students each year by the end of five years (assuming a static cohort size, and counting all entrant undergraduates resident in England for simplicity of calculations).

My opposition isn’t because I think the number of students currently in HE is somehow, miraculously, the correct number (and indeed, demographics means the sector needs to shrink in future years anyway). But the knock on consequences are bigger than the authors accept, especially at the speed they advocate, and the proposal underplays both the future labour market need for tertiary skills and our ability to meet it.

Ostensibly, targeting any reduction on the lowest-quality places - defined here by high drop-out rates and low progression - makes sense. But assume the cut falls on, say, 10 to 20 of the worst-performing institutions. A 6% sector-wide cut doesn’t mean 6% for them. It means perhaps 10 to 20%, year on year. At that point, very conceivably, those institutions cease to be going concerns.

So be it, say the Right. We need fewer institutions, and the managed failure of poor ones is a good place to start. But here is where I part company. Consider the University of East Rutland. Its (mythical) HESA data shows low days of liquidity, a high debt ratio, and a structural deficit. The numbers cut is applied; it goes under. Assume OfS and DfE manage a smooth-ish exit, with teach-out. My question is this: what happens to every other institution with similar profile when they next sit down with their lenders?

We looked at this issue back in 2024 in our report on university failure. Those lenders think: hang on. I am watching, in real time, an exit from the market - and an exit, moreover, of an institution that looks an awful lot like this other one that owes me a great deal of money. I’m going to reduce my exposure, raise my interest rates, and apply more commercial discipline. And that conversation happens not just at the 10-20 institutions but across a larger slice of the sector. A cut of this speed and magnitude ripples through the financing of many more institutions than are directly affected - which in turn shifts student behaviour at home and abroad, weakens commercial partnerships and research investment, and undermines the confidence of local communities. This risk of financial contagion (even if mediated by a failure regime as the report also suggests) is underplayed by Iain’s report, and it would do real damage.

Now the second reason. Both Iain and the Conservatives want to move these ~180,000 non-HE students into apprenticeships, other high-level tertiary training, or straight into the labour market. The Conservatives have pledged 100,000 new apprentices a year, predominantly, I assume, at tertiary level (4+). Iain likewise focusses on 4+. (Reform go further, wanting 50% of young people in trades; Maurice Glasman, endorsing the Policy Exchange report, wants half of universities changed to technical colleges. Let’s stick with 30% to be cautious.)

Just how deliverable would such a large scale switch - let’s say 100,000 a year at scale - be? Not very.

Funding has already shifted hard towards higher-level apprenticeships, paid for by Level 2 starts falling off a cliff. Level 6+7 apprenticeships are now 17% of the whole budget; Level 7 spending has doubled and Level 6 trebled. And yet the absolute numbers remain tiny in comparison to HE: around 60,000 starts a year at Levels 6 and 7 combined, across all ages - and only 3,000 of them 18-year-olds. So run the scenarios:

1. If - implausibly - all 100,000 no-longer-students were 18 and a government wanted them all on degree-level apprenticeships, that means roughly 30x-ing current 18-year-old numbers in five years.

2. Spread them across the 18-25 age range, where there are about 20,000 L6+7 starts, and you still need to 6x the cohort.

3. Send a chunk straight to work instead - say the 80,000 we’ve already lost track of, plus another 30,000 - and the state is still committing to double current L6+7 numbers in five years.

4. Push some down to Levels 4 and 5 apprenticeships (where there are about 40,000 places for 18–25s, and which polling shows this cohort finds far less attractive as a qualification) and reaching 80,000 there still means trebling all tertiary training for young people.

In other words: the Right may not like what a lot of these 18-year-olds are studying or where, but I see little evidence that - even with budget available - the economy and employers have the absorptive capacity to grow high quality and sustainable replacement apprenticeships and high level technical training this fast. In practice, the result would be tens of thousands of young people going into the labour market at 18-25 with only Level 3 qualifications. Given almost every projection of the UK’s future skills needs, and the UKs track record on mid-career retraining especially for lower skilled adults, that would be problematic - even if a future government curbed migration at the same time to increase demand for Level 2 and 3 jobs.

A rude awakening

These two ideas - a graduate tax, and a significant reduction in student numbers - are being discussed right now. And their strength comes from the backing of a shared elite consensus of the problem diagnosis.

And the response of the sector has been in large part (though not entirely) to ignore this diagnosis, to dismiss it, or to quibble over the facts and figures of it. As indeed, I have done above! And there’s some rationale to that. When you’re under attack, it’s natural to go backs to the wall. But it didn’t save Arsenal in the Champions League final, and it won’t save the sector now.

So it is here I say - with love - wake up.

The sector shouldn’t catastrophise. But neither should it think that simply talking louder about how great it is will solve the issue.

These ideas may not be implemented in full, although I wouldn’t bet against a top down significant reduction in student numbers. The point here is the convergence of the left and right. Even if these ideas don’t make it over the line, others will.

Defence on its own can – at best – sand the rough edges off proposals. And it works best when the perception is that the sector isn’t just reflexively defensive, or dismissive, of everything critical.

The sector – led by UUK, or groups of institutions - needs to take this diagnosis and come up with its own solutions, for today’s environment. I proudly show my life membership to the club of “wasn’t the late 1990s through to 2016 pretty peachy for the HE sector, the UK, and indeed the global economy”. But it’s not where we now are, and the debate needs to be engaged where it is.

Too much of the response to Iain’s piece, in my view, comes from an inbuilt scepticism of the Right and its public sector reform principles. It also ignores that John’s critique from the Left drinks from the same well.

Some facts the sector should consider include:

• 27% of the UK voting population would currently vote Reform; 45% would vote for the same “right bloc” of Reform + Conservative who endorsed the Policy Exchange report.

• Immigration is consistently in the top three of every issue tracker run by major pollsters (including us) and will be a defining line in any future election campaign.

• International students are not coming back, ever, to their previous volumes - a combination of worldwide scepticism on migration, and the rise of Chinese and Asian universities has seen to that.

• The era of consensus on science policy is also over (and will become increasingly politicised, as well as being seen as poorer value for money generally). Too much research isn’t focussed on solving the big issues of the day, which means even if universities are able to secure the same levels of research funding, it will be increasingly directed to the economic and security challenges the UK faces, rather than as an unrestricted funding pot or on pure Haldane principles.

• Too much of the sector is too low quality, or takes students with minimal or no prior qualifications that aren’t always ready for tertiary study, and technical arguments over LEO and the Graduate Outcomes survey miss the point.

• There are bad actors, in terms of domestic student recruitment, English language testing, and international recruitment disguised as economic migration. These bad actors are not limited to for profit providers.

• A decent chunk of the expansion of places in recent years has been more about a balancing item on budgets than because of widening access or student demand.

• Universities do give junior academics a bad deal because they pay too much to senior staff in pay and pensions.

• The sector doesn’t always respond positively enough to local demands and circumstances and when it does, it does it on their terms, rather than the community.

• Not enough students come out job ready or with sufficient work experience.

The sector, and its advocates, cannot sit in conferences in air-conditioned rooms in Senate House in which 70% of the room declare that they would vote Lib Dem or Green and name inequality as the single biggest issue facing the country (which happened in a conference I was at this week), and then wonder why we are not taken seriously.

(Not) burning down the house

I hosted a dinner with a senior US higher education administrator and former university President the other week. In their remarks, they spoke powerfully about distinguishing between “the pendulum, and the long march”. Trump undoubtedly brings aspects of a pendulum. But if the HE sector in the US just focuses on the horrors of the present, they argued, then the long march is missed. Democrats and Republicans are united in saying that over the last 30 or 40 years college has become too expensive, quality is now too low, the workforce and economy is not being well served, and things must change.

The same is true in the UK. Ultimately, if the sector doesn’t get its house in order, and systematically address the shared diagnosis of thinkers from left and right, then reform (and maybe Reform) will be done to it. The agenda is there, in plain sight. I know some in the sector know this, and are trying to move. But more is needed.

To put another way, the sector needs to ‘confidently own its own problems’ – to steal a phrase a forward looking Vice Chancellor said to me just recently.

What might getting the house in order, or confidently owning its own problems, mean?

As a starter for 10, I would argue that every Vice Chancellor needs to be able to say, truthfully, the following five things – and if they can’t, then taking action this day so that they can be said in short order:

1. Every one of our international students comes first and foremost for education and our student recruitment is not economic migration in disguise. It’s fine, and indeed desirable, that the wider UK attracts them, and we want them to stay afterwards if they can. But they come for education.

2. We are delivering quality education across our courses and faculties in both teaching and research (what that looks like will depend on the institution). Where quality is not where it needs to be - in content, or assessment, or research, or resources, or staffing - we have a plan to fix it. And all the students we recruit have the ability to thrive on the courses we offer.

3. Our physical space, and wider infrastructure, meets our student and wider community needs. We are not expanding faster than we, or our local area, has the capacity to absorb. But equally, where we have empty estate, we must be able to use it better, for our students and community.

4. We know where our graduates go to work, we understand the demands of those organisations and those parts of the labour market, and we continually adapt as those demands adapt. We prepare our graduates as much as we can for a life of work once they leave us and, when they graduate, we are confident they are likely to go on to successful careers of their choosing, where employers can have confidence in what a degree from our institution brings with it.

5. We make a positive difference to our local community, and we can demonstrate that in a real life way, not just with a big GVA number.

The sector has, for too long, assumed that there is widespread consensus on the outcomes from a higher education system and the way in which higher education is delivered, and all that matters is the question of how it is funded. That it not what the public and politicians have been telling us in our work on sector reputation. It has also gained universities a reputation for being more focussed on money than mission, to their detriment.

The sector needs to be mature enough to own its Ls. It needs to stop purely going on the defensive or adopting an arms crossed posture. It needs to accept that its political instincts are too often wholly out of line with the rest of the country and increasingly with the Government. It needs to embrace change where it is needed, and listen to senior voices within the sector setting out what needs to happen. It needs to rebuild its coalition of advocates and allies, rather than relying on those of the past. And most importantly, it needs to not just wait for the government, but work out how it can itself proactively act - to confidently own its problems - against the critiques that are a central part of politicians’ long march away from the sector.

It is time to wake up.

1. There ought not to have been much of a surprise in here, for people who have been keeping up with Iain’s own Substack in which he has rehearsed these arguments for some time - most comprehsnsively here

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