FEfocus Editorial - Quality is lost in the fog of the price war

6th May 2011 at 01:00

Pressure being brought to bear on colleges to charge the same pound;9,000 fees as universities is perhaps the most dramatic example yet of how the higher education system is closing ranks against the attempt to introduce market reforms (page 1).

It is easy to criticise them for it. The sky-high maximum tuition fee is bitterly unpopular and any attempt to undercut it is likely to win support. But it is still worth considering how far universities are trying to make pound;9,000 the standard because they fear competition, or whether they see a general risk to education standards in competition over price.

The University of Central Lancashire's explanation - that its franchised colleges should charge the same fees as the university because they provide an equivalent student experience - looks weak in the context of the kind of competitive market with which colleges are relatively familiar and which Lord Browne explicitly wanted to encourage. Price is no guarantee of quality, and if providers believe they can do better, why not let them? Quality issues are better addressed through the accreditation system, where they belong.

Moreover, it is embarrassing for the Government, which has explicitly said anti-competitive measures will not be tolerated, but which does not yet have the mechanisms to do anything about them. In the world of real markets, private schools have been fined for merely discussing their future fee plans.

Regardless of the exact measures the Government introduces in its white paper, however, it looks like the influence that accrediting universities have over franchises will be on the wane. When funding comes from individual students with loans, and as Government spending increasingly becomes a fringe part of the HE economy, the distinction between directly funded colleges and those that depend on university funding will weaken. HE minister David Willetts has already hinted that there may be a greater trend towards allocating places to colleges in their own right.

However, universities deserve the benefit of the doubt that closing ranks around the maximum fee is not merely greed, but that they are concerned to forestall a race to the bottom.

Buying your education is not like buying cereal or a laptop: it is much harder to evaluate in advance the quality of a three-year programme with multiple teachers and complex outcomes (many colleges have 16-19 students enrolling in multiple institutions for the first few weeks of term as they try before they commit, but then they do not have to pay).

So if price competition is unleashed, competition on quality will be on a weaker footing. While the elite of internationally famous institutions would no doubt be able to maintain their margins, everyone else would face the difficulty of selling uncertain and complicated benefits against a very stark bottom line.

This is not to say that HE could not benefit from competition, and perhaps it will. But vice-chancellors are a conservative bunch, and they know that competition will bring changes no one can predict, many of them perhaps for the worse. That is why they will stick together as long as they can.

Markets require not just competition but information, so that buyers can make good decisions. So far there are signs that ministers are prepared to address one half of the equation. But by 2012, will students be any better equipped to know in advance which institutions are worth their money?

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