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Education Summit 2023

18th October 2024 Business Design Centre, London



03 Aug 2023

Guest blog: Where are the Higher Education sector’s inefficiencies – and what can be done?

Guest blog: Where are the Higher Education sector’s inefficiencies – and what can be done?
Professor Carl Lygo, Vice Chancellor and Chief Executive of Arden University, examines potential inefficiencies in the English Higher Education sector and considers what can be done to tackle them.

Higher Education boardrooms around the UK will have one eye on the general election due in 2024 and what changes, if any, will be made by a potential change in Government.

What does the future hold for HE?

The official opposition has scrapped the policy of abolishing tuition fees. In January 2023, the UK Government announced that tuition fee loans for domestic undergraduate students in England would be frozen at £9,250 for at least a further 2 years. The fee cap was set at £9,000 in 2012 and increased by £250 in 2017. It has been estimated that allowing for inflation, the current £9,250 fee level is worth £6,350 in 2012 prices.

Understandably, this is having a squeeze on investment and margins. The independent regulator for English HE, OfS, reported in May 2023 that whilst the financial health of the sector was good: “The trend in recent years shows an increase in the number of providers in deficit (excluding the accounting impact of pension provision adjustment).”

They have the benefit of scrutinising the 5-year financial plans of all registered providers and noted that: “Providers continue to expect high levels of growth in student numbers towards 2025-2026, from both the UK (16%) and from overseas (35%). Some providers are forecasting very significant increases and there is a real risk that some of this growth will not be achieved.” The UK Government has recently tightened up the visa rules for international students studying in the UK as Government misses its immigration targets.

Government has also announced that maintenance loans for undergraduate and postgraduate students in England would increase by 2.8% for the 23/24 academic year. The announcements came at a time where domestic inflation was running at 10.7%.

Research from the NUS (National Union of Students), reported in July, suggested that after all bills, students had only £50 to live on. Not surprisingly, the Annual Student Academic Experience survey, released in June 2023 by HEPI/Advance HE, reported that 55% of students were now in paid employment alongside their full-time undergraduate studies (an increase from 34% in 2021 and 45% in 2022).

In a productivity crisis, we can see that today’s students are learning that they can study full-time and work part-time. It was, however, reported that 78% of students think that the cost of living crisis has affected their studies.

Where are the inefficiencies in HE?

Combined with the revolution in artificial intelligence and its potential cost saving deployment, board rooms will obviously be turning to the big consultancy providers for reviews on efficiency savings.

Where are the potential inefficiencies in the English HE sector? Some of it could be said to be “in-built” through time and custom. It has then been solidified by the sector into “quality and standards expectations” which must be met to offer HE programmes in England.

Some areas to think about:

A year is not a year. It is typically 24-32 teaching weeks. In the secondary school world, we are familiar with long holiday periods which were traditionally associated with ensuring children were free to work in agriculture during the summer months. A 3-year undergraduate degree of, for instance, 32 teaching weeks amounts to 96 teaching weeks, which is less than 2 years in a normal calendar.

Why do we allow a degree to be stretched in this way? A whole extra year of not working (opportunity cost), an extra year of maintenance loans and tuition fees, and low annual utilisation rates for real estate?

Remember that the tuition fee pays the annual salary of staff even though the student is taught for, say, 32 weeks in the year. In-built inefficiency? It’s true that there are 2-year degrees on offer at some Universities, but they are certainly not the norm.

A week is not a week. According to the 2023 Academic Experience Survey, a week typically involves 16 hours of contact teaching (a near all-time high when looking at the historical results).

Typical employment contracts have faculty teaching about a maximum of 16 hours per week, and of course this reflects all of the other duties that faculty have such as preparation, assessment, feedback, personal tutoring, research, etc.

Student housing costs subject to hyper-inflation. The equivalent weekly rent allowing for inflation from when I was an undergraduate would be approximately £68 per week. You’d be hard-pressed to find student accommodation for under £150 per week nowadays.

I looked up the annual accounts of the large accommodation providers and the influence of their boards, finding that they are doing rather well, even taking the Covid years into consideration. The NUS advocates larger maintenance loans/grants, but nobody is looking at the efficiency of the student housing sector.

The Education Select Committee in the House of Commons is regularly asking why tuition fees in HE have to be so high and its members say they have never received a satisfactory answer. With a year being more like 32 weeks and a full-time teaching load being 16 hours within those 32 weeks, you can see their thinking. Yet they ignore affordable student housing. A petition to reduce fees to £3,000 per year attracted over 581,000 signatures but failed to gain parliamentary time.

What can be done?

Realistically, what can be done? In the absence of radical change then the usual options apply: increase class sizes (especially with the demographic bubble of 18 year olds on its way), increase the amount of non-fee cap work (i.e. international students), move into areas that operate outside of the usual timetable… Despite the poor pilot results, perhaps the LLE (Lifelong Learning Loan Entitlement) will at last herald a new revolution of stackable credentials.

Perhaps generative artificial intelligence (AI) offers a path to shaking up the model? We can see how Khan academy is deploying Khanmigo to help students learn maths and English. I have been informed of some providers looking at reducing their staffing costs by over 50% by replacing staff with AI. It strikes me that AI enhances rather than replaces, but time will tell.

Whether it is Generative AI or an impending General Election, we continue to live in interesting times…










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