Out-Law News 3 min. read

UK begins universities value for money review

A new review has been opened into 'post 18 education' in the UK and will look, in part, at the funding arrangements in this sector and in particular whether students obtain value for money from universities, as well as whether there are barriers which prevent people from accessing higher education and training.

The review, which has been commissioned by the UK government, will also look at whether the post 18 education system is best set up to deliver the skills businesses need.

The "wide-ranging" review will focus on facilitating "more effective choices" about which training, education or career paths people should pursue at the age of 18, as well as how to ensure everyone, regardless of their background, can "progress and succeed in post-18 education", the government said.

An independent panel, which will be led by author Philp Augar and includes representatives from the world of business and academia, will undertake the review in accordance with the terms of reference published by the Department for Education on Monday. The panel will publish their recommendations "at an interim stage" before the government completes the review with its report in early 2019.

In her speech announcing the review, UK prime minister Theresa May said that the cost of university must be shared "between taxpayers as a whole and the graduates who directly benefit from university study". However, she said the she shares concerns about the current way in which tuition fees in England are applied.

Currently in England, universities can charge students on their courses up to £9,250 per year in tuition fees. Graduates do not have to start repaying their fees until they are earning at least £25,000 a year.

May said: "The competitive market between universities which the system of variable tuition fees envisaged has simply not emerged. All but a handful of universities charge the maximum possible fees for undergraduate courses. Three-year courses remain the norm. And the level of fees charged do not relate to the cost or quality of the course. We now have one of the most expensive systems of university tuition in the world."

"The review will now look at the whole question of how students and graduates contribute to the cost of their studies including the level, terms and duration of their contribution. Our goal is a funding system which provides value for money for graduates and taxpayers, so the principle that students as well as taxpayers should contribute to the cost of their studies is an important one. I believe – as do most people, including students – that those who benefit directly from higher education should contribute directly towards the cost of it. That is only fair," she said.

Gayle Ditchburn, who specialises in universities law at Pinsent Masons, the law firm behind Out-Law.com, said that any changes to the current tuition fees model would require careful thought.

"Whilst this is just the initiation of the review and the government has not yet set out potential outcomes, there has been some suggestion that it could move to reduce the maximum rate at which tuition fees can be set," Ditchburn said. "Universities would need to be assured that any shortfall in their income from tuition fees is fully met by alternative funding from the government."

At the moment, the cost to universities of running some courses can exceed £9,250 a year per student, but come to less than that amount for other courses. Ditchburn said, though, that there are sound reasons why universities tend to apply a blanket £9,250 tuition fees annual charge on all their courses.

"Moving to a new charging model where the cost of particular university courses is determined by the earning potential of graduates from those courses might appear on the face of it to be a more attractive option, but it would raise a number of other issues which would need to be addressed," Ditchburn said.

"In particular, there would be a question of how to ensure people from disadvantaged backgrounds have an equal chance to pursue a career in higher-paid jobs where the cost of gaining qualifications to enable them to do so is raised. There is also the further issue of ensuring that society, and businesses, have access to all the skills needed – any new charging model must not serve to dissuade people from pursuing important jobs in teaching or social care, for example, because of the promise of a greater salary in other areas which are less in demand," she said.

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