Letter (or more of a note, really) from Vienna

While I always emphasise that academics do not, overwhelmingly, take anything more than very short summer holidays, it is still a good idea to get some rest, refreshment and perhaps a change of scene. In my own case, I am spending a week just outside Vienna (with regular day trips into the city). I have been here before, and once again I am struck by the almost overwhelming grandeur of this old city of the Habsburgs; I may follow this up with some photographs in due course.

But as you might imagine, I have taken just a little time to look at what is happening in Austria’s university system, and was struck by one development in particular. Since 1999, under an Act entitled Universitäts-Akkreditierungsgesetz (University Accreditation Act), a government-appointed Akkreditierungsrat (Accreditation Council) can receive and consider applications from proposed private universities and can recommend to the government that they be established (or not). As a result of this process a total of 12 private universities are currently in business in Austria, including a private medical school. These operate alongside 23 public universities.

Typically these universities – like the Anton Bruckner Privatuniversität – offer a very specialised portfolio of programmes, and little (or perhaps no) research. Austria is of course not alone in pursuing this particular model, and I have not had the time to look, for example, at the legal and operational model for each of these institutions (including the question whether they operate for profit). The growth of private universities, and their role within the overall system, is a topic that will need to be explored.

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Private universities, ‘super leagues’, and such stuff

A few years ago the then Irish Minister for Education mused aloud in the course of a conversation with me about higher education funding. He wondered whether the answer to the resourcing problems of universities (which were then much less serious than they are now) could be resolved by letting them all ‘go private’. This would involve the state discontinuing the payment of annual recurrent grants or capital investments to the institutions, and directing the money instead to students who had gained a minimum number of points in their Leaving Certificate (final school examination), and letting them decide where to spend it. So the universities would still receive public money, but indirectly, and they could supplement this by setting fees that were higher than the state’s award to the students. This is of course what is known as the ‘voucher‘ system (more commonly discussed in relation to secondary education). It never went beyond the informal conversation.

But can this idea still take off? The place where it might just do so, depending on how public policy develops, is England. The latest report from there suggests that two universities may be toying with the idea of going private; though we are also told that these two are ‘specialist’ institutions and not members of the Russell Group. Speaking of the latter, there is also a prediction that a new ‘super league of strong institutions’ may be emerging in England. These will not necessarily be private, but references to the US Ivy League suggests that there may be some moves in that direction.

To be clear, I have no particular problem with private universities. Some of the American private not-for-profit institutions are the very best in the world, and apart from their undoubted educational and scholarly excellence they also have active social inclusion programmes that would put some of our universities on this side of the Atlantic to shame. But the kind of privatisation that is emerging in England, including that which is mentioned in the recent UK government White Paper, is different, not least because it is based on financial modelling rather than educational excellence.

In all of this, there is a growing debate about the ‘public good’ element of higher education, including a conference that took place yesterday organised by the Quality Assurance Agency (QAA). It seems to me that sometimes the debate seems to revolve around structures, whereas in reality it should be about values and strategic purpose. Without a clear sense of these, the higher education scene will look chaotic and vaguely threatening. Values  and purpose built around pedagogy and scholarship are what policy papers on reform and renewal need to project. And all too often, they don’t.

The rise of for profit higher education?

As we have noted here recently, the British Minister of State for Universities and Science, David Willetts, appears to feel that more private for-profit institutions should be encouraged to play a role in English higher education. For those who may feel, like the Minister, that for-profit colleges will apply a market discipline and bring greater efficiency and choice, it is worth noting recent information coming from America that only 22 per cent of new entrants to such colleges actually graduate within six years. While some of the reasons for this may be related to the backgrounds of the students taken in, it is still an unacceptable performance and should give some considerable cause for concern.

Of course there are some high quality private institutions of this kind, including one or two in Ireland, but across the board there must always be questions about the idea of a ‘university’ that has to organise itself in a way that will secure significant profits and thus dividends for shareholders. I am not against participation in higher education by for-profits, but I would strongly suggest that this is not the answer to almost any issue that is currently of concern to the sector; and furthermore if new private institutions are pushed into the market too aggressively there could be serious problems in the medium term if some of them run into quality issues.

A better model might be for universities to enter into partnerships with some for-profit institutions that can provide services in an appropriately monitored environment.

Interesting times for English universities

Over the past few days, the British Minister of State for Universities and Science has been making various statements designed to map out the future direction of English higher education. On November 3 he made a statement to the House of Commons in which he explained the government’s decision to allow an increase in tuition fees, without lifting the cap completely. The standard ceiling will now be £6,000, with fees ‘n ‘exceptional cases’ permitted up to £9,000. This will not take the form of a payment on entry, but rather a repayment on graduation after pay exceeds a threshold of £21,000. He explained the payment system as follows:

‘We are also proposing a more progressive repayment structure. At present graduates start repaying when their income reaches £15,000. We will increase the repayment threshold to £21,000, and will thereafter increase it periodically to reflect earnings. The repayment will be 9% of income above £21,000, and all outstanding repayments will be written off after 30 years. Raising the threshold reduces the monthly repayments for every single graduate.’

Then the minister also addressed a meeting of Universities UK in which he explained that the upper cap of £9,000 would only apply where universities made special access arrangements for disadvantaged students. Interestingly, the minister also laid emphasis on his desire to have private higher education providers enter the market, and for growth in higher education provision by further education colleges. He described the new world of higher education as follows:

‘First of all there is a serious requirement of widening access. Secondly, universities shouldn’t underestimate the competitive challenge they will face. I have a stream of new providers who believe that there is potential to offer an alternative. I believe that the challenge for universities is to look very carefully at their costs, not simply assume [they can] take today’s costs and put them into the new world.’

Clearly the British government intends to change English higher education quite fundamentally. It is still too early to see for sure how the changes will look, but clearly there will be a major emphasis on competition, both between institutions and between types of institutions. Whether the system can flourish on that basis rather remains to be seen.

A public or private academy?

The Adam Smith Institute is an influential think tank, which approaches the issues on which it comments from a ‘free market’ perspective. That puts it on what most would regard as the more right wing end of the political spectrum, though the Institute itself stresses that it is non-party and maintains good relations across the whole political field in the UK and elsewhere.

One of its most recent reports, The Broken University, has addressed the issue of higher education. The author of the report, James Stanfield of the University of Newcastle, draws some fairly startling conclusions. His key point is that ‘there is no evidence that there is any economic benefit whatsoever from transferring over £14.3 billion a year from the taxpayer (including those on low incomes) to students and universities’. However, he is not suggesting that universities are not a worthwhile investment, but rather than funding them through public money is wrong. To back up this assertion he gives a number of reasons, saying that government funding (and therefore control) has a number of consequences:

• Undermining the autonomy and independence of private institutions
• Crowding out philanthropic donations
• The complete disruption and distortion of the pricing system
• Combining and confusing academic, professional and vocational education
• The widespread rationing of university places
• Restricting private investment from home and abroad
• Crowding out for-profit institutions and entrepreneurial talent
• Restricting competition and innovation throughout the sector
• Qualification inflation

The net effect, he suggests, is that public funding is an unmitigated disaster, because not only does it redistribute funding from the poor to the rich (who disproportionately benefit from higher education), it also disrupts and undermines the success and vitality of higher education. He then makes a number of recommendations, which in essence envisage the removal of public subsidies from universities (while transferring some of these resources to students instead to spend as they may decide), and the opening up of a deregulated system of higher education to private and for-profit participants.

Speaking for myself, I find his analysis interesting, but would find it hard to go with his conclusions. I would agree that public funding and control has, particularly over recent times but in fact to some extent for along time, sometimes damaged rather than supported higher education. I agree that the at first creeping and now galloping bureaucratisation has been damaging. I agree that politicians all too often meddle with higher education without really understanding it. I agree that the narrow political vision of university resourcing and funding has crippled their strategic development.

However, higher education is a public good and should not be outside the realm of public accountability and transparency. And while I do not object in principle to some for-profit higher education, I would suggest that the major world class institutions will always be public or not-for-profit entities.

But this report does raise some very important issues, and its suggestion that organising and funding universities as public sector bureaucratic agencies is not necessarily a recipe for success. There are issues here that merit debate at least, not least because we appear to have entered an era in which the traditional model of higher education has been made non-viable.

Public and private universities

If you were to take a look at a list of private universities and colleges in the United States – for example, here – you would immediately see many of the best and most prominent universities in the world. On the other hand in these islands there are almost no private universities, the only notable exception being the University of Buckingham in England. But if you were to look for Buckingham in the very latest British university league table, you would not find it; it is too small (it has only around 800 students), and its ranking could not therefore easily be calculated. While it has some admirers, on the whole it is seen as being a peripheral institution in British higher education. In Ireland on the other hand there is a hugely successful private university-level institution, the Royal College of Surgeons in Ireland (RCSI), though this is a specialist private medical school with a small science Faculty, and therefore strictly speaking not a university; it is however a recognised college of the National University of Ireland and is recognised for the quality of both its teaching and its research.

The principal characteristic of a private university is that it is not publicly funded. In other words, students must pay the full economic cost of their programmes of study. A strict interpretation of the ‘private’ label could also suggest that the institution must not take public funding for research purposes; but any institution that adopts that policy will not be a major research player. RCSI in Ireland does compete for public research funding, and has tended to be very successful in doing so.

It has occasionally been asked whether a private university model could succeed in these islands, as it clearly has in the United States. There are a number of considerations that influence the answer. First, the public/private distinction is not as easy to maintain here as it has been in America. Irish universities are all in receipt of public funding, but on the other hand all of them also have at least some fairly significant income from non-State sources; my own university, DCU, has the highest income in percentage terms from non-State sources. Furthermore, all universities under statute are autonomous, and are free to devise their own strategic direction, design their own curriculum, decide on their own research policy, maintain an autonomous financial strategy, and so forth. In other words, despite public funding they operate in accordance with many of the principles that would, elsewhere, be seen as characteristic of private universities.

On the other hand, a key factor that has determined the success of the American private university – the accumulation of very substantial endowments through philanthropy and the support of alumni – has not appeared to be available, or at least is available only in a very modest form, in Ireland. And finally, the idea of private higher education being actually of higher quality and also driven by considerations of excellence rather than profit is not yet common here. The top private US universities are in fact not-for-profit organisations.

Then again, the example of the Royal College of Surgeons in Ireland is one that may merit closer investigation. While not a general university, it has managed to develop a profile within its specialism that does in many ways closely match the private US model, including a very healthy financial framework.

Clearly the type of institution that has been typical in the Irish university sector is one that derives the greater part of its income from the taxpayer and is in certain key contexts regulated by the state. It is likely that this model will continue to define Irish higher education for the foreseeable future. However, the gradual erosion of public funding may eventually persuade some institutions to take on some other characteristics of private universities, and a mixed model may yet become more typical. If properly managed, it could make a contribution to the sector.