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Augar and the implications for governors

30 May 2019 | David Williams The Augar report into post-18 education and funding has been published. Although these are at recommendation stage, governing bodies will be considering carefully the possible implications for their institution, and develop contingency plans. Here are some initial take outs.

The Independent Panel Report to the Review of Post-18 Education and Funding (the ‘Augar’ Report) in England has been published. In relation to higher education, the Report is focused primarily on undergraduate courses, and does not consider postgraduate provision or research activity. The Report runs to over 200 pages.

Leveling post-18 funding

The report provides an analysis of the existing post-18 systems of funding, concluding that currently the funding of higher and the funding of further education diverge. This, the report concludes, disadvantages those individuals who do not progress to higher education. Augar suggests in the interests of fairness this should be corrected.

The Report draws attention to the lack of individuals studying intermediate and technical qualifications (Levels 4 and 5). Weaknesses in the provision of education and training have been influenced by the current system of higher education funding. This provides an incentive for students and providers to focus on three-year traditional full-time undergraduate programmes.

The Report argues public funding support should be reconfigured to increase the demand for more flexible learning, better suited to those already in the workplace. The Report suggests the changes advocated will offer a more “fair and equal chance of progression” (p.49). More generally, the Report advocates the greater integration of the currently separate mechanisms for supporting post-18 students through further and higher education.

Governors and governing bodies

For Governors and governing bodies there are two aspects of Augur to consider. Firstly, notwithstanding whether they will be implemented in one form or another by government, what would be the impact of the policy proposals contained in the Report on their institution? Secondly, are aspects of the Report directly aimed at Governors and governing bodies?

Potential policy changes

On the first question, Augar makes a number of detailed policy recommendations. Should these be introduced, in full or part by government, they may have a profound effect on the operating environment for higher education. Governors and governing bodies will however be mindful that given differences in mission and strategic positioning, any changes to public policy are likely to offer different opportunities and threats according to the individual provider’s circumstances.

The assessment of the higher education provision

On the second question, although not examining governance specifically, the Augar Report mentions the term in several places within Chapter 3 of the Report.

Chapter 3 analyses the changes in the funding received by the sector since the introduction of the new fee regime from 2012. The analysis indicates that the introduction of the new fee regime has boosted provider’s income, particularly for classroom-based subjects (those in Band D).

The Report notes that while the sector overall is in reasonable financial health, a quarter of providers are in deficit (p.69).

Based on an analysis of the “economic costs” conducted by KPMG, the Report believes the current funding arrangement has “led to the apparent overfunding of low cost subjects and the underfunding of high cost subjects, with cross-subsidies within many institutions from the first to the second.” Further, “we judge that the distribution of funding between subjects is out of line with teaching costs causing over and under funding of many subjects”(p.71).

The Report suggests that “universities spend a large proportion of their income from student fees and teaching grants on non-teaching activities – more than their international comparators” (p.73).

As good governance requires costs to be kept under constant scrutiny, Augar suggests that the senior management and governing bodies of universities will need to work together to find better benchmarking data, highlighting at the same time a concern as to the high level of  the margin for sustainability and investment (MSI) per student on average found by the KPMG study (p.73).

The Report notes a tendency for costs to rise fastest where subject income has increased the most. The suggestion is that there is scope for efficiency savings (p.75).

While expenditure on senior pay is small in comparison to the sector’s total expenditure, it is nonetheless seen as a visible indicator of the “sector’s attitude to resource, accountability and governance” (p.75).

Looking at the costs to the taxpayer broken down by subject studied, the Report suggests that the “current method of university funding has resulted in an accidental over-investment in some subjects and an under-investment in others that is at odds with the government’s Industrial Strategy and with taxpayers’ interests” (p.84).

Overall on the basis of the analysis detailed, the Report concludes “the sector could and should absorb a further freeze on per student resources to help fund investment in other parts of post-18 education” (p.92).

The Report recommends that the current freeze on student income should be extended for a further three years, with inflation-based increases from 2023-24. The Report suggests that resulting costs pressures can be managed through efficiency gains and the future growth of student numbers. The number of 18 year-olds being expected to increase from 2020, enabling providers to increase their student numbers (p.95).

The Report advocates a reduction in the fee cap to £7,500, with an increase in teaching grant funding being used to maintain the average fee per student (p.97). The suggestion is that this could happen from 2020-21 (p.95).

The Report notes that proposals are likely to have a differential effect on individual providers, and acknowledges that there may be a need to protect small and specialist institutions (p.93).

Conclusions

Given the wider political context, it is unclear whether, if any, of the recommendations in the Augar report will be implemented by government and, if so, in what time frame?

Governing bodies, however, will be considering carefully what could happen, the extent to which their institution might be impacted, and what mitigating strategies might need to be adopted.

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