In the 2013 Autumn Statement the Government announced they would increase the number of student places at publicly funded higher education institutions by 30,000 in 2013-14 and remove the cap on student numbers entirely by 2015-16; it is estimated that this will create 60,000 more student places.

The Government stated that the rationale for the change was to remove the ‘cap on aspiration’ by allowing more students to access higher education and to encourage competition in the sector.  The Autumn Statement said that the removal of the cap would cost £120 million in 2014-15 and £290 million in 2015-16 and would be funded by reforms to the student finance system and the sale of the student loan book.

Background to the changes

This change is part of the ongoing process of the marketisation of higher education that began with the Government’s higher education reforms in 2010; these reforms shifted university funding way from direct block grant funding to student loan based finance.  The changes have created a system where funding follows students and this acts as a strong incentive for universities to recruit more students.  The expansion of universities has however been restricted by the cap on student numbers which meant that universities could be fined for recruiting over their allocated number of students.

Loosening student number controls

In response to the changes in the finance system and to encourage more competition in the sector, the Government has been chipping away at the cap on student numbers by introducing a core and margin model for allocating student places and by allowing institutions to recruit an unlimited numbers of students with high A level grades outside their core allocation.  In 2012, the first year of the scheme, the grade criteria for unlimited recruitment was AAB or equivalent, this was lowered to ABB in 2013.  These changes have already created a large pool of uncapped student places, so the complete removal of the cap is in many respects just the logical conclusion of this process.

Cost and sustainability of the proposals

The change however raises significant issues, the main one being the sustainability of the proposal.  The Government has said that the process will be funded by the sale of student loans.  But these proposals create long term spending commitments in the form of the provision of student loans, and maintenance grants to increasing numbers of students and the Government estimates that this could cost around £720 million per year from 2018-19.

It is unclear from current information how these ongoing costs will be funded after the sale of student loans.  The Institute of Public Policy Research have questioned the idea of selling assets to fund the proposal and have suggested that borrowing could be a better way of financing the scheme than selling off assets.  It is also unclear whether cuts would have to be made in the future in student funding, or research budgets to offset these increased costs.

Impact on quality of provision

The other major issue raised by removing the cap is the impact on the quality of courses and on provision; the quantity over quality argument.  It has been loudly stated by universities and unions that any expansion of higher education must be carefully monitored to ensure that high standards are met.  The Russell Group has argued that increasing student numbers will require increased investment in staff and facilities if quality is to be maintained.  Other commentators have said that expansion ideally should not be just more of the same but should increase flexible learning opportunities.

Reaction to the proposals

The removal of the cap was given a cautious welcome by most HE organisations including Universities UK, with some groups commenting on the need for more graduates to meet the needs of the economy.  The Russell Group however expressed concern that the Government had chosen to put additional taxpayers’ money into growing student numbers so substantially.

Previous relaxations in student number controls were accused of favouring selective institutions, like the Russell Group universities, and of having detrimental effects on widening participation by favouring students from selective high achieving schools .  Abolishing the cap entirely would avoid these criticisms by potentially facilitating the expansion of all universities and FE colleges, not just the ‘elite’ universities.  However there is still a risk that the change could see popular universities expand at the expense of other good but less popular institutions and that these proposals could force some institutions to change or merge to survive.

These proposals could potentially change the size and the shape of the higher education sector in future years. Regardless of the merits of the proposal these changes will create more uncertainty in a sector already coping with significant amounts of change.

For background information on student numbers, see Paul Bolton, HE in England from 2012: Student numbers, House of Commons Library Standard Note SN06205, 1 May 2013.

Author: Sue Hubble