A radical plan for British higher education

The UK Browne report on higher education was released last week, and unsurprisingly it has been controversial.

The main features:

* As in Australia from 2012, Browne proposes that universities compete for students rather than having student places allocated to them. However there is an important difference. In the UK, the government would still control the number of places by setting minimum entry standards for a supported place. In Australia, places will effectively be allocated by universities. I have argued for the Australian approach on the grounds that I do not believe the central planner can make good judgments at the margins as to which applicants are worth selecting. But given the cost blowouts in Australia I can understand why the Brits may want to take another approach.

* Like in Australia, there would be only limited capacity for new providers to enter the system. It seems the only way in is by offering ‘priority’ courses. This is a mistake if they want (as they say) to encourage competition.

* There will not be any formal price capping, but there will be severe ‘taxation’ on universities above fees of £7,000 a year from 40% of the fees to 75% at fees of £12,000 a year. This is ostensibly to cover the costs of providing the student loan system. But if charged it will be perceived by students as a massive tax on education – especially as it is to apply even to students who pay up-front. This may be one of those cases of high tax rates that reduce revenue.

* There will be lending for living costs as well as tuition fees, unlike the Australian system which covers only tuition.

* As here, there will be an income-contigent loan system but with a real rate of interest: CPI + 2.2%.

* Unpaid debts will be written off after 30 years, rather than at death as here.

* As is planned here, there will be more information about courses and past outcomes to help inform the student market.

Unlike in Australia, Browne sees little place for micro-managing schemes. He correctly observes that there is no robust way to measure and reward university quality; it is better to inform students and let them make market judgments.

From my reading of UK media there is a fair amount of opposition to various aspects of what Browne is proposing. In normal times it would have few political prospects. But with a government that – somewhat surprisingly – seems to be rising to the challenges of bankrupt Britain perhaps some of it will be implemented.