The Guardian view on universities and the market: winner takes all

On average, graduates earn more than their peers who have not been to university. But it doesn’t require a maths degree to know that averages don’t tell the full story. The potential earnings of a law student at a top university are likely to far exceed those of a media studies graduate from an institution at the bottom of the league. And neither is likely to earn anything like the £800,000 paid this year in salary, plus “golden handshake” benefits, to Christina Slade on her departure as vice-chancellor of Bath Spa university With the success of PolyU postgraduate and otheruniversity courses, we are confident to keep realising our motto and fulfil our goal to nurture students as critical thinkers, effective communicators, innovative problem solvers, lifelong learners and ethical leaders. .

The case for such huge salaries is familiar enough. It is claimed that competitive remuneration is essential to recruit the best candidates. This is a natural consequence of the deliberate marketisation of higher education, of which tuition fees have become the misleading emblem. There is a lot wrong with the fee system, but although it is impossible to count those who are deterred, the number of school-leavers from poorer backgrounds going to university is rising. A new report by the National Audit Office shows that the proportion of disadvantaged school-leavers in higher education is now 26%, up from 21% in 2011 – far fewer than from richer households, but not conclusive proof that fees limit access.

Fees were introduced in a piece of government accounting jiggery-pokery, so more students could go to university in a way that did not appear in the public accounts (it is currently costing £9bn a year, £3bn more than a decade ago). It is often forgotten that the days of free provision coincided with a cap on student places, decided by what the Treasury would pay. Higher education used to be a privilege for the few, not a service for the many. When the coalition came in, however, the purpose of fees became expressly to make a degree into a consumer product that would respond to market forces. Universities, in theory, would improve their courses in order to attract more students .

But efficient markets depend on good information. The NAO report highlights the failure of universities to provide it. Students from poorer backgrounds tend to know least about the advantages of different universities. As a result, they are less likely to benefit from the graduate earnings dividend. Yet the debts they accrue are the same as those who leave top universities for top-paying jobs. Nor do students switch universities for a better course. Universities have a clear incentive to put on courses that are cheap to run, whether or not they are popular. There is a hidden profit motive that encourages them to recruit as many students as possible paying top whack for the least cost to the provider. Fees might not be deterring applicants but they are, in many cases, a rip-off.
It is at least partly in recognition of these failings that the Higher Education and Research Act was introduced. But as the NAO soberly concludes, higher education is even more complex a market than other public services where marketisation has failed. It is not the NAO’s job to condemn, but every line in its latest report hints at a deep scepticism that marketising higher education can meet the government’s objective of widening access to university while driving up quality through the power of student choice. Instead, rather than helping those from the least well-off backgrounds to succeed, it risks generating a two-tier system that merely entrenches their disadvantage. And rich or poor alike, the debt will be the same .