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Willetts the conqueror (part 2): creative destruction

Originally published: HE Marketisation on February 2, 2018 by David Ridley (more by HE Marketisation)

This is part 2 in a five-part series on Willets: Introduction; part 1; part 3; part 4.

Welcome to part 2 of the multi-part critical review of David Willetts’ A University Education. This part of the Review focuses on Willetts’ plans for so-called ‘alternative providers’ – a euphemistic term which should be read as synonymous with for-profit colleges and universities – and his reflections on wanting to see a British higher education (HE) monopoly rise up to compete with global HE mega-corporations.

One of the most controversial parts of the ‘marketisation’ agenda was my drive to create space for insurgent new providers to challenge incumbents. We have already seen how the story of English higher education in the past two centuries is of successive waves of new entrants. (Willetts, p. 280)

The above quote clearly links Willetts’ own project of “opening up the system” of English HE to competition from for-profit colleges and universities to the ‘revisionist history’ of English, European and U.S. HE outlined at the beginning of his book. The quote also links with a infamous speech Willetts gave in 2011 to the HE employers ‘mission group’ Universities UK, in which he claimed that letting for-profits into the system would be the “rising tide that lifts all boats”.

Six years later, Willetts seems as convinced as ever, despite the growing evidence that marketisation has failed: “I wanted to make it easier for these alternative providers to get student loans for their students and make it easier for them to get full higher education and university status, and make it easier to establish new providers as well. Insurgents drive innovation.” (p. 282)

In the Introduction to this multi-part Review,  I asked whether Willetts was an ‘idiot’, genuinely believing in the power of competition, or a cynic, rationalising the asset-stripping of HE by private interests (HE Marketisation, 16 January 2018). My answer: Willetts was a textbook neoliberal.

Neoliberalism stretches the common sense meaning of competition to its limits by suggesting that anti-competitive outcomes – for example saturated markets with multi-national oligopolies controlling prices and sitting on mountains of cash – are competitive as long as they are the result of competition (at some stage in the past, no matter how long ago) and are open to the possibility of competition (at some point in the future, no matter how remote or unlikely).

In ‘A University Education’, aside from the occasional ideological flourish, Willetts seems to re-trace the neoliberal journey from utopian free markets to market realism. Rather than competing with established universities, alternative providers went for an entirely new market of working class and part-time students, merely introducing another tier to the traditional two-tier system of ‘elite’ and ‘modern’ universities. Rather than driving innovation, or driving up quality for students, all Willetts’ reforms did was reproduce and reinforce the existing class system of English and global capitalism.

By the end of the book, Willetts abandons the market populism described in Pt 1 (HE Marketisation, 20 January 2018), accepting the reality of one monopolistic system replacing another, reflecting wider national and global capitalist systems of inequality and stratification.

The only thing that Willetts is left with is a vague hope that technology will do the job that alternative providers failed to do, and produce a multi-national educational corporation to fly the (neo-imperialist) flag of English HE across the world.

Tide receding, boats sinking

According to the funding body for higher education – the Higher Education Funding Council for England (Hefce) –  as of 13 March 2017 there were 115 alternative providers with specific course designation, which means students at these providers can access support through the Student Loans Company (SLC). Between 2010/11 and 2014/15, maintenance loans paid to students at alternative providers grew from £58 million to £207 million, the Higher Education Policy Institute (HEPI) reported, peaking at £292 million in 2013 (HE Marketisation, 13 November 2017).

Loans for tuition fees grew from £36 million to £175 million, during the same period, reaching a high point of £236 million in 2013. According to BBC figures, “about £400m-a-year is received by 112 private colleges through the student loan system”. Including other alternative providers that do not have access to SLC funding, the Higher Education Statistics Agency (HESA) estimated that there were over 700 alternative providers in England in 2017.

HEPI summarised the wide range of business models that such providers are based on: “‘catch-up’ for profit; sub-degree colleges; generalist colleges, serving both undergraduates and postgraduates; small specialist, not-for-profit colleges; exclusively postgraduate small specialists; for-profit providers focusing on international students; for-profit distance learning; and campuses overseas”.

“Alternative providers are hard to classify because they have different legal forms, different objectives and different target audiences,” HEPI commented. “They provide a diverse range of academic offers and have a variety of organisational arrangements.”

Rather worryingly, according to Willetts this confusion about what alternative providers are and how many of them currently exist in the system is reproduced within Westminster:

When I arrived at BIS [the Department of Business, Innovation and Science] it thought higher education in our country was just those institutions funded by HEFCE [the Higher Education Funding for England].… Nobody knew much about the rest.

This is significant because Willetts’ 2010 White Paper ‘Higher Education: Students at the Heart of the System’ proposed not only opening up the system to alternative providers but also moving towards a ‘risk-based system’ of regulation:

We will introduce a risk-based quality regime that focuses regulatory effort where it will have most impact and gives power to students to hold universities to account. All institutions will continue to be monitored through a single framework but the need for, and frequency of, scheduled institutional reviews will depend on an objective set of criteria and triggers, including student satisfaction, and the recent track record of each institution. (BIS, p. 10)

Problem was, this ‘risk-based system’ – predictably (and as pointed out by pretty much everyone who knew anything about HE) considering how little was known about such providers – didn’t really work.

Willetts acknowledges that “there was some abuse of the system” and that “some courses received loans which should not have done” (p. 283), but does not spend much time dwelling on the actual consequences of his intervention.

In 2014, the National Audit Office (NAO) published an ‘Investigation into financial support for students at alternative higher education providers’, which found that:

EU students at some alternative providers had claimed or attempted to claim student support they were not entitled to.

Dropout rates at 9 alternative providers were higher than 20% in 2012/13. By comparison, the average dropout rate across the higher education sector was 4%, but no-one had defined what might be an acceptable dropout rate when students were benefiting from public support.

20% of Higher National students recruited by alternative providers and claiming student support may not have been registered with the qualification awarding body in 2012/13.

Between 2012 and 2014, the Department for Business, Innovation & Skills (BIS) suspended payments to 7 providers and their students owing to concerns that providers had enrolled students on to unapproved courses. Furthermore, a lack of clarity has existed within BIS and its partner organisations about which courses were approved for student support.

In 3 cases, BIS suspended student support payments to providers or their students where it had concerns that the providers had supplied incorrect information about student attendance.

In 2017, the NAO published a ‘Follow-up on alternative higher education providers’ which concluded:

The Department for Education had made progress towards addressing weaknesses in its oversight of alternative higher education providers, but still had important issues to address before it can provide assurance on current and emerging problems.

The rate of students at alternative providers who drop out of their studies had fallen, but it remained much higher than in the rest of the higher education sector. Between 2012/13 and 2014/15 the non-continuation rate reduced from 38% to 25%, but remained three percentage points higher than the sector benchmark, and 15 percentage points higher than for the rest of the higher education sector.

Many critics pointed to the inevitability of such results within a risk-based system, especially as Ministers were ill-informed about alternative providers, and had made little effort to look at what had happened in other countries.

John Holmwood in 2014 pointed to a two-year investigation by the Senate Committee on Health, Education, Labor, and Pensions into for-profit universities in the U.S. higher education system, known as the Harkin Report, as evidence of what would happen if alternative providers were allowed into the system without sufficient regulation. This Report found that:

Federal taxpayers are investing billions of dollars a year, $32 billion in the most recent year, in companies that operate for-profit colleges. Yet, more than half of the students who enrolled in in those colleges in 2008-9 left without a degree or diploma within a median of 4 months.

Many for-profit colleges fail to make the necessary investments in student support services that have been shown to help students succeed in school and afterwards, a deficiency that undoubtedly contributes to high withdrawal rates. In 2010, the for-profit colleges examined employed 35,202 recruiters compared with 3,512 career services staff and 12,452 support services staff, more than two and a half recruiters for each support services employee.

This may help to explain why more than half a million students who enrolled in 2008-9 left without a degree or Certificate by mid-2010. Among 2-year Associate degree-seekers, 63 percent of students departed without a degree … During the same period, the companies examined spent $4.2 billion on marketing and recruiting, or 22.7 percent of all revenue.

Publicly traded companies operating for-profit colleges had an average profit margin of 19.7 percent, generated a total of $3.2 billion in pre-tax profit and paid an average of $7.3 million to their chief executive officers in 2009.

Rather than driving up quality, the reality has been that alternative providers drag down the widely-accepted world-class quality of the English HE system pre-Willetts.

Everyone in their right place

For Willetts, alternative providers are “entrepreneurs” that “might spot a gap in the market for training which mainstream providers did not meet” (p. 282). “They are more willing to take risks and they are devoid of the assumption that they should still be around a century from now – that all depends on the market” (p. 286).

Ironically – when it is remembered that Willetts’ intention was to drive up quality through competition – alternative providers did spot a gap in the market that mainstream providers weren’t meeting: “no frills” HE for working class, mature and working students who were less interested in the status of going to university and more interested in getting a signed piece of paper that would help them in the labour market.

Andrew McGettigan has repeatedly pointed that the market in HE has failed to appear not just because of the nature of the ‘income contingent loan’ system – through which students never really see the money they pay in fees, and therefore do not consider the up-front cost of their education – but also because alternative providers did not compete with existing institutions for students, but went for a different market altogether.

Speaking at a UK Parliament Treasury Committee in October last year, Andrew McGettigan said:

The feeling was that you could run a degree in business or law for £4,500 or £5,000, make a bit of profit, but offer something that would undercut the established provision. Therefore, there would be a downwards pressure on prices elsewhere. That did not happen at all, because by and large the most aggressively expanding of those institutions did not compete for the kind of students who were applying to universities.

McGettigan pointed out that there were lots of “[alternative providers] in Whitechapel and other parts of London offering the kinds of subjects, like business and law, that they could run for under £6,000 a year”. Between such providers there could be price competition. But as for alternative providers coming in to the system and “challenging established universities”, this “did not work, because those providers, by and large, went to whole new constituencies of people who were not previously applying to university”.

According to an IFF Research report commission by the Department for BusinessInnovation and Skills in 2016, “data returns from 276 alternative providers showed that their population of students was a diverse one” in 2014, with ‘mature students’ aged over 25 at the point of starting their course “represented in greater proportion than in the publicly funded HE sector (44 per cent and 36 per cent respectively)”.

Furthermore, there “was some evidence” that alternative providers were “fulfilling a widening participation role insofar as these students were more likely to be from an ethnic minority background (46 per cent compared to 19 per cent of students in publicly funded HE institutions), the report pointed out, and to have a disability (15 per cent) than students in publicly funded HE institutions (nine per cent)”.

A particularly high proportion of alternative providers’ students were domiciled internationally, outside of the EU, prior to starting their course, the report added. “Such students comprised around a quarter of the known alternative provider student population (27 per cent) compared to one in eight (13 per cent) of the publicly-funded HE population.”

It was also common for students in the sector to come to their course having previously been in full-time employment, the report said, and for them to have a “comparatively low level of prior academic achievement compared to the publicly funded sector”.

What this points to is that Willetts’ market reforms, far from driving up quality or introducing competitive pressure on existing providers, only served to reinforce existing divisions in the English higher education system. Middle and upper class students compete, as they always have done, for places at elite universities and for access into the upper tiers of the British class system.

The majority of other students make decisions as to where they go based on practical considerations – cost of living, distance from home, reputation for student experience, etc – but there is now a division within this category as to how far applicants feel they can commit to a ‘real’ HE experience or just want to get a piece of paper representing a degree. In other words, by creating a new tier below the already second-class ‘teaching-focused’ post-92s, Willetts has made higher education itself into a luxury that not everyone can afford, both in terms of time and money.

This jars with Willetts’ attack on this same class system as represented by Oxbridge and the Russell Group, which for him have a negative effect on not just the English school system – which for middle class children has become a factory for producing successful elite university applicants – but also on the geographical division of wealth, with middle class families clustering near ‘excellent’ rated primary and secondary schools in the hope of getting their kids into good universities.

Of course, Willetts has got this upside down: it is the English class system based on inherited and accumulated wealth and advantages bestowed on those with greater economic, cultural and social capital that determines where people live, go to school and ultimately study. The English HE system merely reflects this stratification, with Oxbridge and Russell Group universities providing access to elite jobs in business, government and the media.

“Perhaps we shouldn’t be surprised or shocked if our elite universities reflect our class structure,” Willetts concedes (p. 192). But like the neoliberal rationalisation of monopoly, class is accepted on the condition that people can and do travel up through this class system, that barriers of entry are not absolute.

Willetts holds out hope for this “cautiously meritocratic approach” – which could be better described as pure ideological fantasy – that higher education could counter-balance this class system, succeeding where all previous levels of education have failed.

The English system is riddled with selection not only to identify the candidates with the greatest potential but to ensure the producers get the most prestige with the least effort to add value. That is why it is right to put them under pressure to broaden access. We are trying to create an open, fair, national higher education system on top of a deeply divided school system. (p. 201-2)

The problem is that, if alternative “no frills” providers do not challenge this class system and only attract those students that would not have gone to elite or even post-92 ex-polytechnics, then what we have is a system where everyone has their place, much like the Tripartite school system that was abolished in the 1960s and 1970s.

When faced with the facts, Willetts’ meritocratic premise for marketisation is revealed for what it really is: ideology.

Columbus in a mortarboard

Perhaps the strangest and most self-contradictory parts of A University Education are those on ‘The Future’. In the space of three chapters, Willetts abandons the heroic iconoclasm of the first few chapters, describing instead an almost Platonic system of HE divided by class, and then arguing for ‘a broader education’ that the reader cannot but read as a utopia that the masses will soon no longer have access to.

Along the way, Willetts also embraces with open arms monopoly-capitalist future for HE, urging for a bizarre and frankly offensive educational imperialism which suggests it is the duty of vice-chancellors and government ministers to lift the developing world out of economic backwardness through the export of English HE.

Willetts starts the chapter on ‘Globalisation’ with an extended attack on his hard right Tory colleagues, who have insisted that international students be included within immigration figure. For him, recent immigration policy “confuses selling a service with migration” (305), and misses a trick, as the internationalisation of UK HE is a “great British export opportunity’” (p. 305)

Universities are significant export industries. They are now the leading export industry of towns and cities from Exeter to Bradford. One study showed that Sheffield enjoyed a new benefit of £140 million form its overseas students. (p. 305)

International students should be seen as “permanent migrants” – an OECD category which covers “regulated movements of foreigners considered to be settling in the country from the perspective of the destination country” – and even if they do decide to settle permanently should be seen by the UK Government as a “national gain not a loss” (p. 309).

Instead “taking a growing share of a growing global market” in international students HE, Willetts berates his colleagues for “deliberate policies” that have “instead seen overseas student numbers in the UK broadly flat, which means we have been losing market share” (p. 307).

This tirade against current policy – which is, without a doubt, absolutely ridiculous and driven by an entirely Sisyphean and reactionary-nationalist project of insulating the UK as much as possible from the outside world – is meant by Willetts to set up a larger argument about transnational education as an ‘investment opportunity’.

Basically, Willetts argues that there is a growing middle class in the ‘developing’ world that needs good quality HE, and that the UK should be exporting – in the sense of international students coming here to study, which counts as an export, but also of setting up foreign campuses to supply these markets directly –  its good quality to these countries.

Yes, this argument is as bad as it sounds. Why do these countries need us to set up shop in their countries or entice their students to come to us instead of studying at home? Willetts names China, Malaysia, Iraq, and sub-Saharan Africa as possible ’emerging markets’ for HE exports – but China has two universities in the top-50 Times Higher World Rankings.

If Willetts, and anyone else trying to sell HE exports in terms of social benefit for that matter, is serious about wanting to help other countries to build their HE systems, he would be suggesting a demand-driven, Government sponsored consultancy service, where representatives from UK HE would go and help in any way they could – if asked – without any expectations of economic returns.

Otherwise this is just state-sponsored neo-colonial, educational imperialism. What is this, the 19th century? But this uncomfortable truth – and its not the first time neoliberalism is associated with neo-colonial foreign policy – see the Chicago Boys documentary or read Naomi Klein’s The Shock Doctrine – begins to emerge alongside Willetts’ acceptance of monopoly:

One reason why I was so keen on promoting alternative providers was that I hoped at least one big British based global higher education chain would emerge. But there is no sign of this. The world now has fifty mega-universities, several with around a million students. But there is only one British institutions on the list – the Open University with around 200,000 students. There are global university chains such as Amity, Phoenix, Laureate, Manipal, and Kaplan but none of these are British. (p. 317)

Let’s ignore the fact that top executives at Phoenix took home $6m each in 2008 and that in the same year, the U.S. Federal Court jury found the Apollo Education Group – which owns Phoenix – guilty of “knowingly and recklessly misleading its investors” and were forced to pay $280m in reparations. Even more surprisingly, as if Willetts was himself making the link between marketisation and monopoly capitalism, he points to the importance of financialisation in growing such UK-based ‘mega-universities’:

A major investment bank came to seer me as minister to say that of we could create a commercial model of British higher education they could immediately raise $1bn to invest in it because the global brand was so strong and the international opportunities would create a vehicle to list on the Stock Exchange, and the structure to go global, but none has yet done so. That would give it access to private capital and the capacity to create the broader management structures for a big international organisation. (p. 318)

Sausage factory

Willetts laments the fact that neither Pearson nor Buckingham University have “so far tried to create a chain delivering higher education across the world” (p. 318). His hope now is with neoliberalism’s ultimate ‘blue pill’: technological ‘disruption’.

We are now at the moment when the technological revolution which has changed so much else in our lives is going to transform education. (p. 320)

Predictably, Willetts focuses on Massive Open Online Courses, or MOOCs, in particular the way that they “replace the conventional economics of rising marginal costs of output with a new model in which the marginal costs of an extra student on a course are close to zero” (p. 322). What he means is that, once you have set a MOOC up, it is not only significantly cheaper than traditional HE to run – Willetts estimates that it costs about £55,000 a year – scaling this model up in terms of student numbers makes little difference on this cost.

In this way, MOOCs mirror the wider revolution in logistics that other digital commodities, like music, have already gone through. It still costs roughly the same to produce the original piece of music, but once finished and recorded in digital form, it can be endlessly reproduced with no additional cost(as long as people buy the digital form) and with no cost for storage or distribution.

What he is suggesting is that MOOCs could cut out the need for teachers, who are replaced by videos or online activities. In reality, of course, someone still needs to make the videos, but as Willetts points out, the business model – once a way is found to monetise courses through the additional payments for qualifications or through advertising content – is one of moderate initial outlay and diminishing costs in the future.

The attractiveness of MOOCs for business-focused universities – with ex-polytechnics leading the march towards marketisation since their incorporation in 1992 (HE Marketisation, 4 October 2017) – can only be understood in terms of the introduction of monopoly-capitalist norms into the HE system via market reforms.

In response to the rapid and large-scale changes introduced by Willetts, but even before this when New Managerialism was introduced into modern universities in the 1990s, universities have sought to restructure themselves into what Ron Barnett calls ‘entrepreneurial universities’, led by the figure of the CEO as ‘entrepreneur’ who attempts to move the university through this situation of intensified risk.

Following the rules of the neoliberal game, the VC as CEO must aim at monopoly or bust, seeing marketisation as an opportunity to gain temporary ‘first mover advantage’, establishing the university’s brand before the entry of new providers.

Within this context, ‘lecture capture’ – which provides the material for MOOCs and ‘flipped classrooms’ – provides a way for entrepreneurial universities to push down on costs while increasing margins: “Radically egalitarian peer learning begins to look like a suspiciously neat way to save money on educators,” admits Willetts (p. 326).

Meanwhile, modern universities seeking to gain first mover advantage, such as University of Central Lancashire (UCLan) and to a larger extent Coventry University, have experimented with the post-92 corporate form in response to the opportunities presented by marketisation, creating wholly-owned for-profit subsidiary colleges within an over-arching group structure.

Commenting in 2013, in his important book The Great University Gamble, McGettigan wrote that CU Coventry (formerly Coventry University College) “offers a stripped-back model of learning and tuition: classroom-only subjects with all learning materials provided as handouts or online”.

Less diplomatically, University and College Union’s general secretary Sally Hunt pointed out that this “no frills” model is possible because this ‘wholly-owned (for-profit) subsidiary’ presses down radically on staff costs by de-professionalising academics into ‘tutors’, relying on large levels of casualisation, offering only minimal terms and conditions, all possible because workers are taken out of existing local and national collective, union-negotiated agreements.

Essentially such universities are creating what Megan Kimber calls a ‘centre-periphery’ model of exploitation, emulating the global division of labour within a single institution (which is itself increasingly globalised), pitting an expanding reserve army of under-employed ‘early career researchers’ against a shrinking core of traditional academics.

The automated university

Modern universities thus become permanently “restructured universities“, with a two-tier workforce, a shrinking percentage of quasi-tenured star academics in the ‘centre’, producing content and research-funding income, and an army of relatively secure but deprofessionalised and/or ‘permatemp’ service workers delivering standardised ‘products’ in the periphery, all micro-managed through audit by the administrative-entrepreneurial leadership team.

Flipping and (enforced) lecture capture allow expert knowledge to be captured in discrete multimedia packets, distributed via online technology to be administered by de-professionalised, outsourced and casualised tutors. These tutors only need to receive minimal training, much like Costa Coffee baristas, in order to deliver low-cost, minimum effort, ‘life shaped learning’.

This model can be easily scaled up: educational corporations such as Edexcel can offer MOOCs with material supplied through open access research, as well as face-to-face support provided either in-house or in partnership with existing institutions.

Academics uncritically celebrating the revolutionary potential of ‘openness’ do not realise how they are unwittingly obscuring the way that open access functions within a wider process of neoliberal restructuring of HE enabled by the ‘enclosure’ and commercialisation of publicly-funded research.

What we are seeing in higher education is the same process of rationalisation that occurred in the heavy industries in the early 20th century under Fordism and Taylorism, which through management and technology successfully emptied the tacit knowledge of the skilled worker into the machine, and alienated him or her from the labour process the industrial working class (HE Marketisation, 26 November 2017).

This process is also the first part of a neoliberal rationalisation of public services – which we have seen most clearly in the NHS – through which Tory privatisation is prefaced by simultaneous expansion and underfunding to create a ‘crisis’ in the service in question, while – as Ursula Huws explains – public sector work itself is standardised and de-professionalised so that it can be easily outsourced brought in line with the pay and conditions of a globalised reserve army of labour, enabling these pay and conditions to be squeezed collective organisation to be undermined:

Tacit knowledge is progressively codified; tasks are standardised, output measures are agreed; management processes are reorganised; organisations are broken down into their constituent parts; the constituent parts are formalised, sometimes as separate legal entities; and market-like relationships are introduced between them … Only when the activity has been actually or potentially transformed into something that can be made or sold by a profit-making enterprise is the ground prepared for further restructuring in ways that form part of the normal practices of multinational companies: mergers, acquisitions, reconfiguration of parts in new combinations, and the introduction of a global division of labour. (Huws, p. 140)

As with his pseudo-imperialist reflections on English HE as economic export, Willetts seems disappointed that this rationalisation hasn’t done it’s disruptive work yet in the English HE sector:

The next stage could be for the conventional higher education institution and the examining bodies to be disintermediated themselves. The digital revolution exposes universities to these risks as it lowers barriers to entry … It also makes it easier to unbundle the different functions of the university and pick-off specific ones. But so far this unbundling has been more of back-office functions and has not affected the core academi8c functions which students m ost value: the university has not yet been dismantled in front of our eyes. (Willetts, p. 337)

But as argued in the Introduction, it is enough for the threat of disruption to exist to justify marketisation. That marketisation will end with one monopoly replacing another is a moot point, this is just the market going about its business of ‘creative destruction’.

Monthly Review does not necessarily adhere to all of the views conveyed in articles republished at MR Online. Our goal is to share a variety of left perspectives that we think our readers will find interesting or useful. —Eds.