Is HE policy doomed by design to fail?

Central to the Government’s reform of higher education has been its belief that the creation of a competitive market is the best way to deliver value for money to both taxpayer and student, and to improve student experience and outcomes. This has resulted in much impassioned debate about what value for money looks like in HE and what outcomes we should be measuring, a debate that it's probably fair to say has created more heat than light. But what if the reason for this lack of agreed definitions is because the belief itself is fatally flawed, and a competitive market is not in fact the way to deliver the Government’s desired goals.

I attended a conference on the regulation of higher education last week at which there was a fascinating presentation about the work of the National Audit Office’s public service market team. The team works to assess the effectiveness of public service markets and has recently developed a Market Analytic Toolkit which makes interesting reading in the light of recent HE reforms. A link to the Toolkit can be found here:

https://www.nao.org.uk/wp-content/uploads/2016/11/Market-analytic-toolkit.pdf

The Toolkit enables an assessment of the “market”, demand and supply side factors, and outcomes. The underlying premise, as I understood it, is that the more complicated the assessment, the more difficult it is to develop market-based interventions that have a good chance of delivering the desired outcomes.

Let’s take just one aspect of the Toolkit, “defining the service”, and apply it to HE. Defining the service is of course key to defining the “market”, the effectiveness of which is being judged, and the more difficult it is to define the service, the more the risk of an ineffective market increases.

I have listed below the characteristics the NAO has identified as being key to defining the service, together with some thoughts on how they might apply to HE.

Service differentiation: the more differentiation there is in the way the service is provided, the harder it is for “users” to compare it. In the UK, HE is delivered through academically autonomous providers and is thus already highly differentiated. Further, the Government wants to see it even more differentiated, hence its desire to see more innovation and new entrants. When you move outside the academic “service” being provided there is even more variation in facilities, resources, and experiences on offer.

Emotional attachment: this refers to the non-service related, “emotional” preferences users might have to choose a particular service. Students choose their higher education provider for a whole host of reasons beyond the course on offer. They might like the city or town, the provider’s sports teams or the campus culture. They might choose based on prestige or recommendations from others who have been there. Again, this renders a market based approach problematic.

Irreversibility of purchase: this refers to the ease with which users can walk away from the service once purchased. In HE, one of the main barriers is the difficulties around credit transfer, and this would need to be resolved effectively if the market approach is to stand any real chance of working. It may therefore need to be one of the OfS’s earliest priorities but is by no means an easy one to resolve, given the academically autonomous providers & highly differentiated services referred to above, and that's before we even get to the problems of linking this up with policy in the devolved nations. But even if credit transfer were easier, it would not necessarily make actual transfer easy. Geography and emotional connections to or dependencies on friends/family are two other factors, for example, that might make walking away from the service to another provider hard for many.

Complexity of choice: prospective students are faced with a wide array of choices and a bewildering amount of information about those choices.

Non-repeat or infrequent purchasing: Certainly at undergraduate level, which has been the focus of much of the Government’s reforms, HE is usually both a one time and a highly significant purchase, making comparability at the point of “purchase” difficult.

Experience service: HE is par excellence a service which users can only really know and understand once they have experienced it. For example, it's arguable that much of the current, and in my view misplaced, focus on contact hours as a measure of the quality of the service stems from prospective users defining the service they have yet to experience (a degree programme) with one that they have experienced (compulsory schooling).

Credence service: This is defined by the NAO as a service where the “quality” is observable only after some considerable time. Clearly the impact of a degree in improving the quality of someone's life will only become apparent over a protracted period of time, whether measured in terms of earnings potential, health outcomes, capacity for civic engagement or anything else. Meaningfully comparing it with what would happen with a different degree or a different university is, for the reasons given above, nigh on impossible.

Coproduction: the last characteristic is the one that is most significant in the context of HE and that is the service user plays an important (some would say decisive) role in the value they derive from the service.

So, in relation to the question of the “service” being offered by the HE public service market, there is no doubt that immense complexities abound. And these are replicated across many of the areas covered by the Toolkit. Defining the market, for example: are we talking geographic, subject based, mode of study based, provider-type based?

Why does any of this matter? Pursuing a market-based system of reform has had a huge effect on a system of higher education that has historically been one of the UK’s true success stories. These reforms have resulted in unintended consequences (VCs’ pay being the latest example), which in turn have resulted in further often knee jerk interventions. Cumulatively these risk real damage to what made UK HE so great in the first place. We need therefore to be sure that the reforms are effective.

So firstly, perhaps the difficulties identified by utilising the NAO Toolkit should give the Government pause when developing policy: are crude, market-based interventions really likely to be effective in delivering its desired outcomes? Secondly, the OfS needs to reflect on what this means for its appointed role as a market regulator. Thirdly, it serves as a reminder that the market is not the only or indeed the best way to deliver value in higher education. Counterintuitive as it may seem, perhaps co-ordination, collaboration and planning, rather than competition and “Compare the Market”, may be a better way to deliver what Government thinks it wants and students need.

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