LGS Thoughtpiece

Academocalypse Now: time to wake up and smell the napalm

Posted: Friday 21 Sep 2012
by LGS 0 comments

It’s been a busy time for the gathering forces of the dies irae of English Higher Education.  The four horsemen of the academocalypse (Fees, Margin Core, Deregulation, Incompetence) have all been on the move as students returned to universities for the start of the new academic year.  Last things first: Incompetence.  To coincide with the opening of his party’s annual conference, Liberal Democrat leader Nick Clegg offered a heartfelt YouTube apology: not for £9,000 tuition fees themselves but for having made a solemn pledge (not to raise tuition fees) that he was not ‘absolutely certain’ he would be able to keep.  This is a bit like a man apologising to his wife after an affair for having made wedding vows he did not know he was completely certain he could uphold.  In his masterly non-apology Clegg notes that he should not have made such an expensive commitment ‘when there wasn’t any money around’ and he fought for ‘the best policy we could in those circumstances’.  This is why I would classify this particular nag as ‘Incompetence’.  Clegg clearly does not understand what he has got himself into by hanging around with those bad boys from the Conservative Party.  Firstly, as has been well established, the new fees regime is considerably more expensive than the one it replaced.  While borrowing money from the markets, handing it to the Student Loans Company in the form of vouchers, and charging it back to students will cut the deficit, it adds considerably to the national debt.   However, the point of fees was never just to cut public spending.

Alongside the deregulation of the Higher Education market (new entrants, access to private finance, degree awarding powers on offer, elastic use of the title university) the new fees regime was the first step in a consciously engineered paradigm shift from education as a publicly funded right of citizens to a privately acquired, for profit, traded service.  Private funding for UK higher education now exceeds public funding (0.7 per cent and 0.5 per cent of GDP, respectively).  It threatens to be a tragic social experiment and has been the biggest public policy disaster for a generation: the Coalition’s Poll Tax.  The result has been the loss of 17% of all new three-year undergraduates (54,000) from English universities this summer.  Figures released by UCAS last Friday, after both Vince Cable and David Willetts had addressed the Universities UK gathering of Vice Chancellors, show this massive drop off in students taking up degree places in England.  The danger now is that because of the high fiscal cost of loans, the Treasury will permanently remove these numbers from the system to bring spending commitments back into line.  The loss of students is not just down to fears about debt; it is also the result of the misguided attempt to control technocratically the cost of the Loan Book through the Margin Core policy of removing AAB applicants from the student number control.  HEFCE over estimated the number of AABs in the system by about 8,000 while a Michael Gove inspired culture of rebasing exam classification resulted in less students than predicted achieving their expected grades.  Add to this the low numbers of deferred students coming through from last year, before full fees were introduced, and the result is a £1.3bn loss in teaching income over the next three years across the sector from Southampton to Northumbria.  That is plain incompetence and something worth apologising for.

However, things are about to get even worse.  If anyone still labours under the illusion that raising tuition fees had anything to do with the deficit, they should ask as Richard Murphy does, why was the cost of the Student Loans Company not included in the several rounds of Quantitative Easing? [http://ht.ly/dQTZi]  The effect of QE (the government borrowing money from the Bank of England, which it owns) is to write off government debt because if you borrow from yourself you can repay at your leisure, or not at all, since no real money has changed hands.  For a few billion more on a £650bn QE plan there would have been no need for £9,000 tuition fees and everything that has fallen out from them.  This is once again an example of how rushed and botched the fees strategy was rather than ‘the best policy in the circumstances’.

The third horseman, deregulation, also made an appearance with David Willett’s commitment at the UUK conference to exempt private providers from VAT on fees, like traditional not-for-profit universities, in order to create ‘a level playing field’.  In fact this queers the pitch even more by reducing further the difference between for-profits and not-for-profits while simultaneously leaving those traditional universities without the access to private resources that the for-profits enjoy.  Any competent private company that backs one of the new entrants will have many ways in which to take profits out of institutions (consultancy, service charges etc.) and so the VAT exemption will merely increase private profits at the tax payers’ expense.  The abandoned HE bill was supposed to introduce a regulatory framework that would sort this out, for good or ill.  Instead we have a situation that is neither fish nor foul but will clearly give the profit makers an advantage.  It should also be said that contrary to popular opinion the private equity that backs these new entrants is not interested in owning bricks and mortar on the Holloway Road.  Rather, it wants the brand equity that comes from the traditions of British publicly funded universities to sell through high-volume, low cost degrees in the Asian and American markets.  It’s not so much selling the family silver as selling the family name and coat of arms to the highest bidder.  They are also attracted by the cash flow of universities, whereby private equity can lend money to a university (say through a bond sale such as the one now under way at De Montfort University) underwritten by the guaranteed income from student fees over the lifetime of the mortgage.  In this way, student fees income (borrowed by the government, repaid by graduates) will flow out of universities to private lenders to allow for universities to borrow money up front in order to compete for more fee-paying students and AABs etc etc etc.

And it could get worse.  At the moment the number of students in England is capped by the cost of borrowing.  The AAB fiasco has convinced Universities UK that it should push not just for a further opening of the student number control to ABB or BBB but for a complete deregulation of the student market, allowing universities to compete for as many numbers as they want.  This cannot be done without a rethink of the whole student finance package, for all the reasons given above.  Before becoming the President of UUK the Vice Chancellor of University of Bristol, Eric Thomas, wrote to David Willetts in March 2011 about the possibility of private finance funding the future borrowing of an uncapped loans system.  Rather than the government borrowing the money up front for fees, the SLC could fund uncapped student numbers through private investors in return for a proportion of graduates’ salaries.  In such a scenario: how would loan rates be guaranteed (they are not at the moment)? How would risk and credit-worthiness be assessed? What would happen to the repayment threshold? How might student debt be sold on through Credit Default Swaps?  Who would own universities at that point?  If this were all to come to pass it would be nothing short of the privatisation of English higher education.  We are sliding towards it because there is no HE bill forthcoming that can be subject to parliamentary scrutiny and another rushed set of proposals may be taking shape between BIS and UUK to fix a problem of their own making.  The stakes are very high and I am not convinced that, like Nick Clegg, most of the audience of Vice Chancellors at UUK understand why.

As Paul de Man reminds us every apology or confession of guilt is also a self-justification.  The offering of excuses, as Clegg did, is only self-excuse; s’excuser as the French has it (to apologise, to excuse one’s self).  For this reason Derrida notes that asking for forgiveness and perjury are closely related, the former being ruined by the self-excusing pledge of the latter.  Nick Clegg pledging that he will never make another pledge that he cannot keep takes us quite far down this dizzying logic, in which an avowed liar promises never to lie again.  Derrida also goes on to say that if most forgiveness is not really forgiveness but just the acceptance of self-justification then the only thing truly worthy of forgiveness is the unforgivable, the absolutely inexcusable.  The passing of English universities into private hands (by design or by ignorance) will, for many, fall into that category.  However, unlike Uncle Monty, I am not sure if I could say of Nick Clegg, ‘I am preparing myself to forgive you’.

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