Academics and standards: avoiding market failure

By Andrew McGettigan –

Can academic standards be ensured without a central role for academics? Not according to the current regulations governing Degree Awarding Powers.1 Proposals to amend these rules so as to allow for more diversity amongst providers put quality at risk.

The government’s reforms of the higher education (HE) sector in England, if allowed to proceed in their current ‘direction of travel’, will exacerbate the disparities already seen between institutions. Resources will increasingly gravitate towards the small group of universities clustered to the right hand side of the chart below.

Distribution of higher education institution (HEI) incomes in England, 2009–102











‘Excellence’ will be protected and lead to a greater monopoly by the Russell Group of elite research-intensive universities plus a handful of others. What we will see will resemble what happened to English football after the formation of the Premier League in 1992 – but without relegation or promotion.

For those institutions hovering around the mean annual income of £170million, which also lack any significant endowments or wealth, the new market conditions will have a more challenging impact, threatening course diversity, quality and even viability.

All along, following the recommendations of think tanks, such as Policy Exchange, and a range of private sector lobbyists, the government has been aiming to create a ‘level playing field’ for a range of alternative, commercial operations. So far this has been achieved in steps.

First, all of the ‘block teaching grant’ to established institutions in receipt of public funding was removed for subjects where ‘new providers’ can most easily compete. As David Willetts, UK Minister for Universities and Science, declared to assembled Vice-Chancellors in early 2011:

‘Currently, one of the main barriers to alternative providers is the teaching grant we pay to publicly-funded HEIs. This enables HEIs to charge fees at a level that private providers could not match, and so gives publicly-funded HEIs a significant advantage. Our funding reforms will remove this barrier, because all HEIs will – in future – receive most of theirincome from students via fees. This reform, of itself, opens up the system.3

Second, access to loans for fees and maintenance has been extended widely and rapidly, including to students at those same private providers. More than 150 institutions now have courses with ‘designated’ status, which will, from 2012/13, enable their students to borrow up to £6,000 per year towards fees from the public purse. Maintenance grants and loans are available to those students on the same terms as those at established institutions. I and others argue that companies that distribute profits should not have access to the publicly funded Student Loan Company (SLC) at all.

Third, the legally protected title of ‘university’ is now available to institutions with only 1,000 full-time equivalent HE students. This represents a significant reduction in the current criterion which specifies a minimum of 4,000 students.

Fourth, the 2012 Budget outlined plans to include commercial operations in the value-added tax (VAT) exemption on tuition fees enjoyed by charitable universities and colleges.

I contest that this is all consistent with the UK Coalition government’s overriding objective – using the resulting competition to reduce the cost of higher education to the public sector finances. As stated, a minority of elite institutions will be protected, while the ‘mass’ HE system will be disciplined by a new market.

Many of the ‘new providers’ benefiting from these changes are meant to be cheaper, undercutting the middle tier of institutions and forcing such institutions to reduce fees or to go out of business. Paragraph 6.9 of the 2011 White Paper states the UK government’s intention to no longer act as the backer of last resort for public universities.

The vision of those hundred or so ‘designated institutions’ joining the fight for market share, while overall student numbers are capped, is not a pleasant one. This is a zero sum game. A saturated market of providers where applicants are at risk of being swamped by the available information and thereby failing to become informed consumers.

Combined with increasing examples of ‘degree mills’, where the senior institution in a partnership is more concerned with the fees received than the quality of the award programme, and the advent of mass online HE provision (a coming ‘tech disruption’), we are faced with a looming issue of quality control. The higher cost of established courses may drive some students towards cheap provision rather than the education best suited to them. The matter is not helped by the government’s apparent desire to erode any distinction between commercial training and undergraduate degrees.

Given the kind of economic ‘good’ HE is, diversity and choice are not sufficient to avoid various inefficiencies and market failures. With no normal pricing signals, prestige and brand strength are proxies for teaching quality. Recruitment and marketing will inevitably absorb a greater percentage of resources.

With all market entry barriers removed, the government’s reckless policy-making would be inviting a sub-prime style degree scandal. Indicatively, over the 2011–12 holiday period, the government rushed out a belated tender to conduct a survey of the private providers offering HE in England. Were we dealing with a well-planned and thoughtful expansion, such due diligence would have surely been conducted in advance.

Thankfully, the government’s formal response to the consultations run on the back of the 2011 Higher Education White Paper has refrained from removing the main defence of standards. David Willetts had previously advocated extending degree awarding powers to bodies that do no teaching; specifically he had referenced ‘BTEC degrees’ thereby nominating Pearson as the initial beneficiary of this change. Writing in the 2011 Blue Skies, he pledged to end the ‘fixed, yet illogical, link between degreeawarding powers and teaching’.

There is nothing ‘illogical’ in the current criteria since full ‘public confidence’ in degree quality depends on a central role for academics. Any institution with powers to award degrees must be able to demonstrate: ‘a well found[ed], cohesive and self-critical academic community that demonstrates firm guardianship of its standards’. This is the sine qua non of quality assurance.

Although the ‘Technical Consultation’ on the proposed regulatory framework promised to remove all ‘barriers to non-teaching bodies’, the weight of feedback on those proposals has caused the government to pause.

The Quality Assurance Agency (QAA), which has responsibility for degree standards, told the government that their plans would require a change in legislation, while two thirds of respondents overall indicated that there were serious obstacles. Notably the current requirement that: ‘It is particularly important that teaching is carried out by staff who are active and recognised participants in research and/or advanced scholarship.’ [my italics] This is the standard expected of all, including those on ‘teaching only’ contracts.

Non-teaching bodies would have no academics and therefore no staff reaching this standard which is determined by the community.4 With no active relation to research or scholarship (that is, producing none of their own), non-teaching bodies would be freeloading off the research produced by other institutions: plagiarising course content to commercial ends and effectively breaking the collegial pact on which the reproduction of academic and intellectual life depends. The relation would be one of parasite to host, not symbiotic.

Burdened by an unviable funding regime, the government was keen to see a low-cost product that could be rolled out in cheap mass provision to go beyond the current ‘partnership’ arrangements, which are riven by conflicts of interest in the new terrain. Now that it has admitted that it does not know what its market reforms will do, the UK government should use the pause to reconsider any pursuit legislative change.5 Its rushed and botched agenda threatens degree quality. When combined with the potential proprietary architecture (textbook publishing, learning management systems, media content packages, etc.) and deep pockets of a few new providers, there is potential for serious damage to the sector.

The University of Cambridge’s official response to the White Paper concluded:

‘There is a serious long-term risk that new providers will be prepared to operate initially at a loss to take market share from some universities that will then become unviable. In many cases, this would be to the detriment of local and regional communities who would then lose the wider benefits that a local university with its diverse range of activities can provide (and which new operators without the same roots in local communities are unlikely or unwilling to provide). … We could then be left with a depleted university sector and damaged communities.’

Pearson has a market capitalisation somewhere in the region of $10billion and to some it represents precisely the risks described by Cambridge. Even if such undercutting is not its short-term intention, without a central role for academics, quality is jeopardised.

The government cannot solve the problem of its unviable funding regime through this manner of competition. Such creative destruction will only spill over into more profound problems: the loss of infrastructure and long-term damage to the sector’s international reputation. Whatever the merits of the market reforms, the best defence of quality in provision is an enhanced regulatory structure that enables academics to perform their core function of protecting standards.

Andrew McGettigan is a freelance researcher. He writes on philosophy, the arts and education. His book for Pluto, ‘The Great University Gamble’, will appear in Spring 2013. He is the author of the Intergenerational Foundation report, ‘False Accounting? Why the government’s higher education reforms don’t add up’. He is a member of the Campaign for the Public University.


  1. BIS, Applications for the Grant of Taught Degree Awarding Powers, Research Degree Awarding Powers and University Title: Guidance for applicant organisations in England and Wales. Department for Business innovation and Skills, August 2004 Available at:
  2. David Willetts, Speech to the Universities UK Spring Conference, 25 February 2011, Woburn House, London. Available at:
  3. Standards for external degree programmes are supported by the academics employed within the university concerned. For example, the University of London International Programme depends on the academics at its constituent colleges.
  4. Government response to the consultations ‘Students at the Heart of the System’ and ‘A new fit for purpose regulatory framework for the higher education sector’, June 2012, p.4, ‘The White Paper set out proposals for primary legislation to create a new regulatory framework. Many responses to the White Paper stressed that we do not yet know the full effect of the new funding arrangements. Hence, it cannot be clear what form of regulatory framework will be appropriate. We will therefore not at this stage be seeking to introduce changes to primary legislation, but will move our reform agenda forward primarily through non-legislative means. We will keep this situation under review.’ Available at:
  5. Council of the University of Cambridge ‘Response to the Consultation’, 26 September 2011. Available at:



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