Marketisation could undermine higher education innovation

The university sector in the United Kingdom is hugely diverse and that diversity is increasing rapidly. It is not just that devolution to Wales, Scotland and Northern Ireland has encouraged regional diversity but that institutional missions, modes of operation and methods of governance are so different.

For some, universities are about creating and disseminating knowledge. For others, students are at the heart of everything they do and others are very directly reliant on tuition fees. Many for-profits, meanwhile, are about the bottom line. This diversity has important implications for policy-making. A policy that favours one kind of institution may severely disadvantage another.

One might expect, bearing in mind the degree of diversity in the system, that policy-making at a national level would have sought to reintegrate the sector. But current policies seem designed to further diversify the sector and also to advantage some institutions at the expense of others.


That, of course, raises the question as to whether damage done to some institutions weakens the reputation of the sector as a whole in the eyes of the public and the international community.

Changing role of the state

A second issue is the changing role of the state and its influence on universities. What we have seen, particularly in the last decade, is a qualitative change in the state’s behaviour towards higher education with more intrusive regulation, fines and powers for the Office for Students to intervene in institutions. The Office for Students is not set up to be a university-friendly body but to be a regulator on behalf of students who it regards as consumers in a higher education market.

In its 2016 White Paper, Students at the Heart of the System, the government states: “Competition between providers in any market incentivises them to raise their game offering consumers a greater choice of more innovative and better quality products and services at lower cost. Higher education is no exception.” This statement represents the essential intellectual underpinning of the English higher education policy framework.

My view is that a policy of ‘competition and choice’ does not result in more innovative and better quality products, at least not in higher education.

The market is based on two key principles: that institutions are funded primarily from tuition fees rather than through a block grant; and that the previous government cap on student numbers per institution is removed, creating a competitive free-for-all for institutional growth or for institutional contraction.

Both principles broke new ground and together have had a huge influence on the governance and management of higher education in England. In Scotland, however, the cap has not been raised and fees are not charged; in Wales the cap remains but fees have crept up nearly to English levels, while in Northern Ireland fees have stuck at the £3,000 (US$3,900) level plus inflation and the two universities have lowered their student number targets to match reductions in the unit of resource.

More corporate

With the implementation of these principles has come the expectation that universities will be run in a more corporate manner and much less as communities of scholars, with the primarily lay governing body acting as a board to which an executive is answerable – ‘the business model’ of university governance.

Governing bodies are not just to be accountable for financial and strategic planning but are now to be regarded as responsible for giving assurance on academic standards and the quality of the student experience. This is in spite of the provision in the statutes of most universities founded before 1992 that the senate represents the ‘supreme authority’ over academic matters.

Governors also have to take responsibility for signing off the complex statistics which have to be submitted in support of the Teaching Excellence Framework. This can take them deep into academic policy issues. They can no longer be regarded absolutely as ‘a critical friend’, the traditional role of a university governing body, but more as bodies being charged to enforce Office for Students’ policies.

In some universities lay members are seeking access to senates and academic boards to assure themselves as to the processes of academic decision-making. This has the potential to be the thin end of the wedge of lay intrusion into what is taught and by whom. One of the ways that universities have injected innovation and creativity into the national skills base is through challenging and academically demanding teaching based on the interests and intellectual curiosity of the teacher.

But the effect of the policies handed down by government has been to encourage a risk averse regime in a significant segment of the higher education system. This has been particularly the result of the removal of the cap and the substitution of tuition fees for grant.

One result has been the rise of centralised marketing departments often using executive authority to reorganise the curriculum, cutting out options, demanding new ones, employing recruitment agents and paying incentives to them to attract students, imposing marketing strategies and vetoing academic departments’ freedom to promote and recruit in the ways they think best.

Failure to recruit has become a Sword of Damocles across the sector. It discourages academic risk-taking, induces safety-first course offerings, management intervention into matters of the curriculum and loss of staff morale. It can breed a retail outlet mentality where what sells is preferable to what is original and new. The perception of risk at the centre promotes bureaucracy which strikes at the autonomy of the individual academic.

Our traditional, developmental, critical and intellectually creative vision of university teaching is under threat.

Customer questions

Where does the idea of ‘customers’ fit into this picture? It is clear that students are deeply embedded in universities’ academic processes and in key governance bodies, and are partners in the teaching enterprise – they do not at all see themselves as customers. We interviewed student union officers in case study universities, and only one student president endorsed the idea of students acting as customers.

His views exposed the extent to which institutions can become vulnerable to market pressure: “Students are consumers because the university is run by students – if students are not here staff are not here, so obviously they are consumers. They [the university] must look after these consumers. If they don’t they are going to change university, go to a different university, they [the university] are really going to lose students. In 2011-12 we had around 25,000 students, now we have 14,000.”

This is the ugly reality of the impact of a policy of ‘competition and choice’ in universities which face the prospect of falling rolls. Removing the student number cap without safeguards both increases institutional inequality within the sector and enhances the vulnerability of institutions already affected by demographic downturn or other changes in their environment.

Then there is the government’s Research Excellence Framework, the REF. It is difficult to criticise the REF because in a situation of finite resources and the recognition of the benefits of research concentration, a peer reviewed measurement of research quality aligned to resource allocation has served the country well both reputationally and in terms of performance.

Operationally, however, particularly at the institutional level, it has in most universities contributed to a top-down organisational culture that among other things excludes individuals from institutional submissions and in some institutions forces individuals to accept humiliating ‘teaching only’ contracts.

There is no doubt that the REF and its predecessor, the Research Assessment Exercise, has changed the culture less because of the funding involved but much more because of the league table rankings. Many universities set annual performance targets for staff. Research conducted under conditions of stress is unlikely to be ground-breaking or innovative.

Narrowing the research agenda

The research environment itself has become more restricted. The operation of the REF within many institutions is a symptom of a wider governance issue – the replacement of academic participation by executive authority.

This is characterised by the diminution in the role of senates and academic boards and their effective replacement by small executive boards or leadership teams that are answerable to central authority not to the academic community.

They are not ‘the central steering core’ with close links to academic departments, as advocated by Bob Clark in his Creating Entrepreneurial Universities, but operate as management or directing groups, rendering senates and academic boards rubber stamps for policies made elsewhere.

As a consequence, universities increasingly lack the opportunity to debate issues in a relatively unstructured and some would say unbusiness-like way before decisions are reached. The academic community does not feel any sense of ownership of a policy if it has not had the opportunity of discussing it.

A little over a decade ago, the government published a White Paper for an Innovation Nation that has been the long term inspiration for its commitment to investment in the knowledge economy.

It argued that innovation was essential to the UK’s future prosperity and quality of life and it contained the following paragraph: “Most new ideas do not come as a flash of inspiration to a lone genius inventor, they come from how people create, combine and share their ideas. The UK’s capacity to unlock and harness the talent, energy and imagination of all individuals is crucial to making innovation stronger and more sustainable.”

The White Paper went on to say that universities provide the setting for people to acquire skills vital for innovation: specialist knowledge and higher level skills, exposure to independent thinking, debate and creative problem-solving; informal opportunities to learn through music, drama and third sector organisations.

The English experiment

The ‘business model’ of university governance, the product of what one might call the English experiment in higher education policy-making, because it does not apply or certainly applies with much less force in Wales, Scotland or Northern Ireland, seems in danger of producing an academic climate which represses rather than stimulates creativity and innovation.

It cannot be emphasised too often that the core business of universities is teaching and research, and that to achieve excellence in these activities the academic community must play a critical role in the governance of the processes involved.

While collegiality, intense discussion about academic ideas, hierarchical exchanges about policy continue to occur in universities below stairs, as it were, their universities’ overall policy framework encourages top-down decision-making and lines of authority that foreclose open ended and apparently inefficient, controversial and time-wasting debate.

Yet this is the organisational culture that offers the seedbed for those very qualities of originality and innovation that society calls for from its university system.

There is no apparent research evidence that a policy based solely on the market principles of competition and choice will stimulate innovation and creativity in universities. Rather, it seems likely to produce caution, retrenchment and a compliant mentality.

The real risk for universities is not to become ‘failing providers’, which the Office for Students has promised it will not ‘prop’ up, but it is to lose those sparks of intellectual adventure that have distinguished them in the past. The danger is that over reliance on ‘competition and choice’ will negate just that need for innovation and creativity that the government said it was looking for from higher education.

Currently the crisis that is talked about in England is financial in the light of rumours about possible cuts in fee levels. But I believe that the more serious crisis is governance – with good governance we can overcome financial crises as we have before.

What I have called ‘the English experiment in higher education policy-making’ has served to reinforce a growing reliance on governance through executive authority and corporate structures.

We need to recognise that the governance of higher education, like its functions in society, is sui generis – that, with all its apparent weaknesses, it is not improved by the importation of practice from other walks of society and that, unless the academic community is placed at the heart of its processes, higher education will lose many of those characteristics that have made it internationally successful.

Professor Michael Shattock is a co-investigator on the global higher education engagement research programme of the Centre for Global Higher Education (CGHE) and a visiting professor at the University College London (UCL) Institute of Education, United Kingdom. This is an edited version of his Burton R Clark lecture on higher education at the recent fourth annual conference of the CGHE at the UCL Institute of Education in London. The full version is available here.