Higher education ‘market’ has failure points, says national audit office
Attending university is one of life’s biggest financial decisions. But young people aren’t able to assess the value of their investment, the National Audit Office (NAO) points out.
It isn’t their fault, the NAO says. Young people have ‘insufficient help and advice’. At the same time higher education (HE) institutions are under ‘little competitive pressure to provide best value’.
Delivering public services via ‘markets’ is supposedly aimed to increase ‘competition’ and ‘drive effective and efficient service delivery, better quality, and greater innovation’. This relies on consumers having ‘knowledge of the options and their benefits’.
The Government hopes to ‘achieve social and equality objectives in public service markets’. A typical private market, the NAO writes, ‘would often struggle, or fail’ to ensure all groups have equal outcomes. In HE, the Department for Education (DfE) attempts to reduce this risk by requiring universities charging maximum fees to have ‘fair access agreements’ intended to increase participation from under-represented groups.
But ‘public service market aims’ aren’t always met, the NAO says. There are many reasons behind ‘market failure’. All relate to HE:
- The ‘product’ is complex and ‘personalised’
- It’s likely to be a once-in-a-lifetime purchase
- It’s difficult to make ‘well-informed choices’
- It’s only possible to rate the service ‘during, or after, “consumption”’
- Students are ‘locked in’ – changing provider isn’t ‘realistic or desirable’
- Students have ‘an important role in co-producing the value’ of their university experience
- Disadvantaged groups find it difficult to access HE or ‘have worse outcomes’
- Providers find it difficult to enter or leave ‘the market’
Careers advice, the NAO writes, is ‘poorly targeted’ and ‘doesn’t always reach’ disadvantaged young people who need it most. The poor quality of careers education and guidance is a recurring theme on this site.
‘Point of sale’ protection is weak, the NAO concludes. HE is a complex product and isn’t regulated to ensure customers ‘understand risks and uncertainties’. The Office for Students ‘may make some improvements’ but its remit doesn’t include the kind of consumer protection found elsewhere, the NAO warns.
There are also problems with the ‘supply side’ including:
- Lack of incentives for HE providers to offer courses in expensive subjects such as science
- Competition focuses on marketing rather than ‘teaching quality’
- It’s unclear how students would be protected if their HE supplier fails despite the DfE’s new regulatory framework
- It’s unclear whether the new framework will ‘drive HE quality improvements’.
The NAO lists two further concerns:
- Participation in HE by disadvantaged students is already ‘weighted towards lower-ranked providers’. This risks a ‘two-tier system’ in which some providers ‘find it easy to attract high-achieving candidates’ while others ‘struggle to compete at all’
- Competition won’t result in HE institutions charging different fees
The DfE is ‘taking action on a number of issues…But the HE market has substantial challenges that DfE and the new regulator, the Office for Students, will need to understand and grapple with in taking forward their reforms,’ concludes the NAO.