Augar response makes balanced tweaks to England’s funding system

It was Theresa May who commissioned Philip Augar in 2018 to reshape England’s higher education landscape. So it is ironic that his main achievement has been to reverse her own worst mistake in higher education policy.

The May government’s big increase to the repayment threshold, announced the previous year, means that currently more than half of the cost of student loans is being written off. This is too heavy a burden for taxpayers, many of whom earn less than graduates.

Bringing down the repayment threshold from £27,295 to £25,000 and extending the repayment period from 30 to 40 years reduces the proportion of loans written off to about 30 per cent, which is a much better balance. That £25,000 figure is approximately what the original £21,000 repayment threshold would have been if it had been uprated over the past decade.

In its long-awaited response to Augar’s review, which reported in 2019, the government has also tackled the biggest political grievance over the loan system, the interest rate. This became much more salient when the repayment threshold was high because there were too many graduates who were not repaying and just seeing their debt rise.

The new flexibility on loans for courses at levels 4 and 5 is also welcome – though students going for a full honours degree will rarely trade down; it is more likely that those currently missing out on higher education will trade up. And that is no bad thing.

But the government’s proposals leave unfinished business. One is tuition fee levels. These have been frozen at £9,250 for a further two years. But we cannot indefinitely have a crucial stage of education facing declining resource per student. Fees need to increase again at some point. However, this depends on universities delivering substantial and sustained efficiency gains. Despite all the miseries of the pandemic, it has opened up some opportunities for innovation in pedagogy, with better use of online learning.

There are other big issues that require more consideration. For example, what makes a subject a strategic priority? Whitehall always assumes that the term equates to STEM subjects. But if, for example, the last department where Ukrainian language and culture could be studied was about to close down, wouldn’t it be strategically important to fund it?

There are two other major issues out to consultation. First is number controls. There are some courses with poor performance, and the critics are itching to end their funding. But these courses are not as easy to spot as might be thought because there can be real education gain but from a low base. And despite all the recent pressures, English universities still enjoy considerable freedom to decide who to admit and what to teach. Trying to micromanage their admissions subject by subject would be a massive change, and the solution might be worse than the problem. Whenever such measures are looked at, they prove very intrusive and hard to implement. Last week, ministers buried the idea of moving to post-qualification admissions. It is possible that number controls will go the same way. I hope so.

The lifelong loan entitlement (LLE) remains an enigma, although a potentially important and exciting one. At least it is now clear it is going to be an extension of the student loans regime to cover four years of education. Ministers had to tackle the expense of the existing loan write-offs as a precondition for the Treasury agreeing this extension.

I suspect that the main effect of the LLE will be the rapid growth of the four-year course. As absurdly early specialisation means England has some of the Western world’s youngest graduates, that would be very welcome. It is hard to see many adult learners going for full three- or four-year loans – they have family obligations and less confidence that taking a course over several years will transform their careers. However, universities minister Michelle Donelan has set out a different and much more plausible scenario, where mature learners take on relatively modest amounts of debt to do one or two specific career-boosting modules. Such an excellent new flexibility in the system requires modular courses to be made available, but it might not require an entirely and exclusively modular structure, with full interchangeability between institutions and courses.

There has been a welcome change in tone from Gavin Williamson’s time as education secretary. Ministers are once again speaking of higher education with pride. They welcomed the 80 per cent increase in participation by students from disadvantaged backgrounds over the past decade. The Department for Education is again clearly stating that graduates earn more than non-graduates and that there should be no overall targets for graduate numbers. This has actually been the position ever since we abolished number controls in 2013.

There is no point in picking fights with universities. It is better to work with them to achieve the sensible reforms needed. I believe that is now the track we are on.

David Willetts is a visiting professor at King’s College London and chancellor of the University of Leicester. His book A University Education is published by Oxford University Press.