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The open market in highereducation: The universitiesand the futureJohn Turner aa Professor of Education, School of Education ,The University ManchesterPublished online: 21 Jun 2010.

To cite this article: John Turner (1989) The open market in higher education: Theuniversities and the future , British Journal of Educational Studies, 37:2, 99-110,DOI: 10.1080/00071005.1989.9973803

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BRITISH JOURNAL OF EDUCATIONAL STUDIESVOL. XXXVII, No. 2 MAY 19890007-1005 $2.00

THE OPEN MARKET IN HIGHEREDUCATION: THE UNIVERSITIES AND THEFUTURE1

by J O H N TURNER Professor of Education University of Manchester

During the last ten years there has been a transformation in therelationship of the universities to the government and in their internaldealings for planning, management and resource allocation. Thesechanges have also had a great effect on academic issues in a waywhich has not always been clearly recognised, and there is no doubtthat the impact of government policy and financial stringency onacademic affairs in higher eduction will greatly increase during thenext ten years.

In this paper I will be discussing mainly the university sector ofhigher education, since that is the sector best known to me. I believe,however, that virtually everything which I say about universities willapply to public sector institutions also.

Speaking of the Education Act, Stuart Madure2 says:

It is difficult to exaggerate the magnitude of the change in themanagement of British Higher Education implicit in . . . the Act.One set of long-standing conventions has been swept away, thefoundations have shifted. The idea of universities as independentcentres of learning and research capable of standing out againstgovernment and society, and offering critical judgement of varyingobjectivity informed by learning and protected by the autonomy ofhistoric institutions is discarded. Instead universities are made theservants of the state and its priorities. In the context of the latetwentieth century they, like the rest of the education system, are tobe used in the attempt to create a nation of enterprise and todiscredit the 'dependency culture' associated with the forty yearsafter World War Two.

This change has been fermenting for many years. Indeed therelationship of universities to the government which finances themhas been the central theme of all serious discussion about the nature ofthe British higher education system for many years. The typicalBritish compromise of a Universities Grants Committee whichreceives advice and funds from government and which then distributes

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those funds on the basis of its own internal assessment of universityquality has been regarded by universities themselves as guaranteeingtheir own autonomy in academic as well in financial matters. Indeedthe UGC machinery has been exported to many other countries underBritish influence as a solution to the perennial problem of university/government relationships.

Nevertheless this mechanism has always been esteemed morehighly by higher education than by the government. The first seriousattempt to question it was in 1969 when Shirley Williams, as LabourSecretary of State for Education and Science; asked every university torespond to thirteen points about the central theme of finance andacademic autonomy in relation to government interests. The docu-ment was greeted with incredulity by universities; the questionsseemed, to the interested parties that were obliged to answer them, todisplay an ignorance of the essence of a university, which bordered onthe naive. It is hardly an exaggeration to say that most Senatestreated them with contempt and thus disqualified themselves in theeyes of government from playing any constructive role in the reform ofthe university planning mechanism. Nine years later Gordon Oakes in1978 asked the Universities to answer fourteen questions coveringsimilar ground to those of Shirley Williams' points, and fared littlebetter. The Conservatives noted the Universities' high-handedresponse to these socialist attempts to engage in genuine discussionand when they had an opportunity to deal with the universitiesdecided to act with firmness and with the minimum of consultation.The fact, however, that a Labour government was as concerned as theConservatives to question the independence of the universities andthat they were the first to raise the issues seriously indicates that anyparty political controversy on this issue relates to means, rather thanends.

Both universities and government seem equally uncertain as to howthe market economy can be made to operate in the field of highereducation. On the government side there has been much talk ofcontracts, as if this were an entirely new departure, yet for many yearsuniversities have operated under a contract system. Government hascontracted with the UGC for a certain number of students and hasallocated these students broadly to arts and science and quitespecifically to certain particular subjects. The UGC in turn hasallocated funds to universities to produce the numbers prescribed bygovernment. It is true that universities had an often quoted freedomnot to spend the money on the purposes for which it was given. Thiswas a privilege rarely used since it was well known that any abuse ofthe system would be likely to reduce grants in following years.

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For example, if government decided that it was necessary toincrease the number of speakers of Arabic they would inform theUniversities Grants Committee that they required an additional fiftystudents with degrees in Arabic and would give the UGC the requisiteamount of money for this purpose. The UGC after consultinguniversities would make an academic judgement as to which oneswould be most likely to produce the necessary additional students andwould allocate the money to them for that purpose. Other subjectshave been more closely planned. In education, for example, depart-ments have been told precisely how many PGCE students they shouldtake as their target, further subdivided by level and subject, and havebeen cautioned equally for exceeding or underachieving their targets.We are all currently waiting anxiously to see what targets will beannounced for us for the 1990-91 academic year and beyond. If this isnot contracting it is difficult to see what is.

Universities have not fully understood what difference governmentenvisages when it talks about a different type of contracting in futureand the signs are that the government does not know either. Perhapsthis is why the voucher system has recently been revived, and whythere has been so much discussion about it, both in the DES and inthe treasury.

In one sense one could say that the 'Robbins' Principle' is oneexample of the market system since it argued that all students whowere able to benefit from a university course, and who wanted to doso, should be able to take a university course. Using that principle thesize of the system was determined by the number of those who wantedto attend, and were qualified to do so.

The main disadvantage of this type of student-led open market asfar as the Government is concerned is that the cost does not fall uponthe consumer of the product, but upon the Government. YetGovernment cannot afford to honour an open cheque every year;control of Government expenditure has been one of the maininstruments of economic planning. It therefore becomes necessary toshift as much as possible of the cost of higher education from the stateto the consumer.

But who is the consumer? It is clearly the student and her or hisparents (and their views do not necessarily coincide); but it is also theemployer. Both in state enterprises and in the public sector there havebeen many occasions on which disaster threatened, or actuallyhappened, because of a shortfall of the right type of manpower. In ourown education sector we are all too well aware of the dangers to theimplementation of the national curriculum posed by shortages ofteachers of certain subjects in the mid 1990s.

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And here we come face to face with the problem of dual demand inthe higher education industry. On the one hand Government has toengage in some sort of manpower planning to ensure that the maindemands of society for people with different levels and specialisationsof education can be met. Since it has the overall duty of ensuring theconditions in which industry can flourish, it has to provide appropriateeducation for other sectors than those for which it is immediatelyresponsible. It must therefore do its best to ensure a ready supply ofappropriately qualified individuals for the labour market. One has toenter the reservation, however, that manpower planning is still a veryinexact art. The fact that education and medicine have been amongthe most thoroughly planned professions as far as student numbersare concerned cannot inspire confidence as one observes the wildswings between under and over supply of doctors and teachers.

On the other hand, the students and their parents may have noinclination to favour those subjects which Government recognises areessential for national development policy. They are likely to wish tofollow either their own inclinations or their estimate of what are likelyto be the best rewarded professions by the time they have graduated.Reconciling national needs and individual freedom of choice, while atthe same time controlling the overall cost of higher education, is aproblem of which the solution has so far evaded us.

In an interesting discussion in Education3 Robert Jackson seems tofavour what he describes as the 'bottom up' method of highereducation finance rather than the 'top down' one. By 'top down' he isreferring to a constant pressure from above on the unit of resource; hesees this as being difficult because of the resistance it would arouseand because it would raise problems about erosion of quality andpressure on research. Under the bottom up method, however, studentswould compete for a fixed number of vouchers. He envisages thatthese would be in several price bands, those in the higher bands beingcashed either for higher cost courses or in higher cost institutions.

Two different scenarios seem to be envisaged. In one of themUniversities could continue with something like their present basefunding to produce a certain number of graduates in appropriateareas, while at the same time having the power to take as many abovetarget private students as they wished, in this way generatingadditional money. Alternatively the base funding could be dispensedwith entirely, leaving the institutions entirely dependent on thevouchers they could attract, augmented by additional privatestudents paying their own fees. If the vouchers proved insufficient invalue for the courses or institutions desired, the students could topthem up at their own cost by a loan, or by using family resources. If

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students did not show an inclination to direct their studies in thedirections wanted by Government, it would be possible to tie certainvouchers to particular subjects of study, or to give generousscholarships to those taking the desired courses.

What would happen to Higher Education under this form offinance it is difficult to envisage. The traditional view of Universitiesis that they are engaged in both teaching and research, and that theyalso have a thesaurus, or treasure-house, function. That is to say thatthey safeguard certain forms of learning, even if they are not in greatdemand at any particular time. Universities are repositaries ofknowledge, stored and kept in good repair from age to age for thebenefit of the community. It is hard to see how this function could bemaintained under a voucher system. If the costs of this function wereadded into the cost of student places, it would seem likely thatstudents would go to those institutions which did not serve thisfunction, and where the buildings, being newer, were less costly tomaintain. There has been little discussion as yet about how theseproblems could be addressed.

Some guidance as to how the contract and voucher systems mightaffect Higher Education institutions can be gained by examining theexperience of Education Departments during the last few years. It isnot necessary to say much about their experience of funded research,since all University Departments have had similar experiences. Wehave all, for example, found it necessary to take some of our bestteachers temporarily away from their teaching, so that they canconcentrate on drafting research projects to beat the deadlines, andhave fought the temptation to regard our teaching as a second levelactivity because we already have the students' fees and fte's safely inthe bank. And we have all had our arguments with our Bursars'offices to try to have our university overheads reduced so that we canbe more competitive with other institutions. Yet we recognise uneasilythat if all our income were derived from competitive contracts itwould be impossible for us to cut overheads, because these wouldprovide the only source of funds to maintain our libraries and keepour buildings in good repair, as well as paying for our administrativesupport and our energy costs. Would the Universities with the biggestlibraries, museums and public art galleries be the first to go to the wallin the new competitive era, because their facilities could simply not beincluded in competitive tendering? Or would these public facilitieshave to be sold off to commercial interests who might be able tomaintain them as profitable commercial ventures?

Education Departments have much more experience than otherDepartments in contract teaching and voucher systems. For example

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our PGGE courses can be regarded as government contracts handledby the UGC. Indeed, it is a very favourable kind of contract. On ourpart we contract to provide a number of student places in closelyspecified levels and subject areas, in exchange for a certain sum ofmoney for our University. The contract is fulfilled by the UGG even ifwe fail to implement our part of the contract. In fact the small print ofthe contract leaves it unclear whether we are even expected to adhereto the definitions of level and subject, or even to the contractednumbers. This could be regarded as the most favourable form ofcontract — too favourable to survive, perhaps, in our new marketplace.

The only room for negotiation in this type of contract would be thestudent unit of resource, and here we hit a major obstacle. It is quiteclear that there are two features of institutional running costs overwhich little control can be exercised. One of these relates to thelocation of the institution, and the other to the age and nature of thephysical plant. An old University College in London would get theworst of both these factors. Their costs for teaching a student wouldbe bound to be very substantially higher than those of a recently builtgreen fields University. Every Higher Education institute would besomewhere on this cost continuum. Choices relating entirely, or evenlargely to the value for money criterion would spell disaster to theseinstitutions.

The other item missing from the equation is, of course, the qualitycriterion. How is the quality of a graduate from University A to becompared with that of one from University B, Polytechnic C or collegeof Higher Education D? And how do we define quality with regard todifferent types and levels of Higher Education course? Of course someUniversities have a certain cachet which would attract particularlythose who were paying their own fees and could afford to pay apremium, or those commercial companies which valued the assumedsuperior social status or social grooming thought to be derived fromattendance at them. But would Government or large companies find ita good bargain to buy these additional benefits? Would scientificcompanies find it worthwhile to pay thirty per cent above the teachingcost to contract with Universities where the teaching staff were alsoengaged in research, so that their graduates would acquire thatspecial ingredient which is supposed to be derived from such asituation. Or would the Universities rather do their best to cut theirown costs so that they could undercut their competitors, even if thismeant endangering the quality of experience and knowledge of theirstudents?

Perhaps we can gain some insights here by looking at the nearest we

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have in Universities to a voucher system. This is the full cost fees foroverseas students. In this case too Education Departments haveacquired more experience than most other departments. I suggestthat the experience has not been an altogether happy one. There havebeen two major problems. The first is that there has been atemptation, which some have found irresistable, to whittle away atconditions of entry, course requirements, and examination require-ments and standards in the competition to attract clients. Oneoverseas contracting body, known to several universities, indicatedthat their main requirements were student satisfaction - even if thismeant that few academic demands were made on students - low costand a negligible failure rate. If one wanted to maintain that profitablefinancial relationship, certain modifications of academic requirementswere essential. Precisely the same might be true of individualstudents. Will they continue to come to Departments which have ahigher failure rate than others because higher standards are expected?Or should one perhaps reduce one's expectations? Those who havebeen involved in this area of work for thirty or more years and havemaintained parity of standards as an article of faith have beendistressed to see how the openly commercial market place of the lastfew years has led to the appearance of many institutions entering thefield for the first time yielding to the temptation of maximisingincome.

It goes without saying that no institution would admit to providingdifferential levels for different markets, but there are signs, includingletters of protest from interested parties overseas, that such actions aresuspected. If one wanted to look more closely at this problem, wecould do so by examining Universities' reactions to the local control ofteacher in-service training known originally as GRIST (GrantRelated In-service Training).

As a result of the abolition oí the Teacher Training Pool, and theplacing of all the funds for in-service training in the hands of the LocalEducation Authorities the number of teachers registered for full-timeadvanced degrees in University Departments of Education fell from2112 to 673 in the first year and to 439 in the second year of the newarrangements. As a result many Universities, in an attempt tocontinue to provide a practicable route to advanced teacher qualifica-tion, modularised their programmes, particularly at MEd level, sothat teachers could split their programmes into smaller and cheaperunits, which students would be able to study in their own times and attheir own cost. In addition UCET adopted a credit transfer scheme,based on a twelve-module Masters' degree, which allowed students inthe participating Universities to transfer up to one third oí their

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programme from one University to another. While this has at leastmaintained a route for teachers to advanced qualifications, and haskept taught Masters' degrees in being, it has not been done withoutsome cost. In many cases, for example, the fragmentation of carefullythought out and integrated programmes, designed as a single whole,have caused the loss of a great deal of their coherence. The teachershave lost the opportunity to immerse themselves in their studies, andhave lost ready access to libraries and recourse to large numbers ofteaching staff in other departments and faculties as well as their own.Attempts are also made to accredit in-service courses, generallydesigned for other purposes and often, or even generally, taught bynon-university staff, as fragments of longer taught awards. While thecooperation between LEAs and institutions which this sometimessignals is a clear benefit, the loss of academic integrity in the studyprogramme may not only be bad in itself but might present adeleterious teaching model.

The other major problem that our Departments have found in thevoucher system is discontinuity of staff. Where unforseeable demanddetermines income there is little alternative to employing staff, bothteaching and support, on temporary, and, if quick adjustments are tobe made, very short-term contracts. Again experience with coursesdesigned predominantly for overseas students illustrates the difficultiesof the situation. In a number of Universities which have specialised insuch courses a high proportion of the specialist staff are on shortcontracts. In some cases this has been a matter of policy to ensure thatsuch staff have 'recent and relevant' overseas experience themselves,so that they do not become progressively out of touch with existingconditions in developing countries. In other cases, however, theseshort contracts are dictated by financial necessity: one-year contractsare common, and a person who has a three-year rolling contract feelspampered. The nature of the normal short-term contracts for researchstaff has demonstrated the difficulties of keeping together anincreasingly experienced team of specialist researchers: the problemsof getting committed long-term scholarship and excellent teaching ina group of lecturers on one-year contracts are overwhelming. How is itpossible to develop a coherent research strategy in such a department?Were the whole higher education system to be transferred to such asystem one can only envisage a serious decline in both the teachingand research quality. In the case of research, the proposed disaggreg-ation of teaching and research is likely to cause such a decline, withfundamental research being gradually replaced by grant-drivenapplied studies. One can already see this happening in EducationDepartments where the search for external grants has led to the

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proliferation of developmental rather than pure research programmes.I make no apology for concentrating on a financial view of the

future, since it is money which has driven the various changes whichhave been seen in Higher Education during the last seven years andwhich will determine the ways in which Universities will react to theopportunities and challenges of an open market. If one wanted toobserve the same factor operating in the public sector one only needsto see the change in the provision of inset courses of a certain length asone moves from NAB to PCFC rules. By a simple change in the natureof financial provision for short courses one can strike at the root ofeducational provision and drive the providers to a frenzy of activity inrestyling programmes.

The changes that have resulted from recent financial constraintshave certainly not all been detrimental to the health of highereducation or to the prospect of increasing public access to the teachingand other resources of the universities. In large measure the need forstudent-led income has persuaded many of the intransigent to changetheir operating rules and to adopt reforms which would have beenunthinkable a few years ago. For example many Universities whichhad previously considered external first degrees as being foreign totheir ethos, in that they did not give the opportunity to students toengage in a full University life, have conquered their scruples andstarted very successful part-time undergraduate programmes. Manyof them are making use of 'access' qualifications for entry as well asusing the A level route. And virtually all Universities are looking attheir curricula and syllabi to see whether they will be suitable for thenew generation of post GCSE students. The traditional single subjecthonours degrees are giving way to combined honours and generalhonours degrees and systems based on credit units are being widelyadopted. Credit transfer is also being adopted very widely; althoughmany Universities had the power to exempt transferring studentsfrom a part of their course - usually up to a third — it was a powerwhich had been rarely used.

We are already sacrificing in our Universities the notion of thestudent as a scholar, knowing precisely what s/he wants to do, andeager to dedicate three years to the single minded pursuit of a singlecoherent subject area along with such other ancillary studies as mightilluminate the main subject of interest. Indeed the idea that to be astudent is a full-time occupation disappeared some time ago when thesummer vacation was forfeited to employment to enhance grants, achange which was followed by the abolition of a grant for the longvacation and the accompanying official change in status from studentto paid worker during the summer months. Instead we are moving

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closer to the American practice of credit accumulation with thevarious degree building blocks often relating only exiguously to somehardly discernible central core. If we continue to go this way, we shallhave to develop a student profile, which the individual can take withhim/her when they transfer to other institutions and at the end of theirprogramme into the labour market. The Data Protection Act hasalready obliged us to adopt a transcript on the American model; wetherefore now have the tools at hand to enable us to move to thedevelopment of a flexible and detailed student profile system whichwould be common between all higher education institutions. Aboveall we are increasingly realising that education does not stop at initialqualifications, but that higher education must be concerned withoffering provision for a constant updating of qualifications and anenhancement of knowledge and skills throughout professional life.Perhaps we are not far from a general adoption of the periodicreaccreditation which is commonly practised in certain professions inthe USA.

I think it is clear too that there will be an increasing amount ofcooperation between the two sectors of higher education and betweenboth sectors and the Open University. We have several examplesalready of programmes of study leading to named awards offeredjointly by two or more different institutions across the binary line, apractice which will surely grow more common as the pressure onresources increases. And who can doubt that we shall see a continuedgrowing together of the two sectors until they are eventually a singlesystem. In several of our big cities, for example, there are Universitiesand polytechnics, and, in some, colleges of higher education also,which all have Departments of Education, and English and mathe-matics and physics, and which yet do not pool their resources or evenplan their disposition in anything other than a most half-hearted way,at best. Yet as University teaching and research are disaggregatedand we can move towards a single student unit of resource on theteaching side, there will be little profit in keeping the distinctionbetween the UFC and the PGFC, and joint planning will leadinevitably to some mergers in the interests of cost effectiveness. Themost pessimistic would foresee a National Higher Education Curri-culum with little opportunity for innovation and little incentive towork for quality rather than quantity.

The open market for higher education simply means that the clientwill determine the nature and length of his/her course. Employers willcommission their research or contract for the provision of graduateswith precisely the subject content they specify. In-service educationwill be provided to meet the exact needs of the consumer, whether

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these are for a course in Yoga, on musical appreciation or conversionfrom one kind of industrial process to another. The demand for theproduct will determine the size and nature of the system. Toaccommodate frequent change of subject specialisation the labourmarket for academics will become increasingly volatile. The wholesystem will be much more difficult to plan, and we may be driven tosome sort of mixed economy with a basic grant providing a part ofeach University's income, differing in proportion to the national orregional resources provided by the University, but with the majorincome depending upon contracts and/or vouchers. In this way itmight be possible to safeguard, at least to some extent, the thesaurusrole of higher education and to maintain the teaching of fundamentaldisciplines which may be difficult to market at particular times.

But this is to look at it from the institutional point of view. For theconsumer the prospect looks much more exciting. The portals of thehigher education world will not be guarded by A Level dragons, butwill yield to those who have a voucher or other finance and who havethe ability to start a course, even if their entry qualification might benon-standard.

Many of these students will be people with a good deal ofexperience, who are continuing their academic education after aperiod in work. The average age of undergraduates will be likely to besubstantially higher than now. The array of courses open to them willbe very varied and will enable them to build up different patterns ofcourse, from a few weeks or months to a full degree programme. Andon the same campus will be many other post-experience students whowill be seeking reaccreditation, greater depth of study of their chosenprofessions, or a change of career. Much of the work of the universitieswill be on a part-time basis, and will be conducted in the twilighthours or at weekends. Each student will have a profile which willdescribe precisely what educational experiences each one has had,and will define their level of performance.

All this is very exciting. It is certainly better than the alternativescenario in which competing institutions lower costs and conditions toattract more clients with the least competitive and most scrupulouslosing the competition and consequently their resources.

But how good it would be if the reform of our higher educationsystem were to be carried out rationally as the outcome of muchcorporate thought, and not just as a series of barely planned reactionsto a variety of threatening financial stimuli.

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REFERENCES

1. This paper was given at this SCSE Annual Conference 'The Open Market',December 1988.

2. Stuart Maclure: Education Reformed (Hodder and Stoughton, London, 1988).3. Robert Jackson: 'The Funding of Higher Education' Education 4.11.88, p. 428.

Professor John TurnerSchool of EducationThe UniversityManchester

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