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Free universities! Re-configuring the Finance and Governance Models of the UK Higher Education Sector

In this paper, Cato argues that there are wider motives behind the increasing marketisation of the higher education system, and drawing on experience in a number of other countries, argues that there are alternatives which would do much less damage to the basic ideals of higher education

The government claims that massive increases in student fees are needed to help eliminate the budget deficit this Parliament. Yet because of the student loans system, the effect on the deficit will be minimal.

The changes to the financing of higher education in the 2011 Education Act were proposed as part of an austerity budget: yet our research shows that their impact on the deficit reduction plan is minimal.

The university system that will emerge under the recently introduced financing model will select on the basis of wealth rather than intelligence, will favour foreign students over domestic and European students, and will lead to a shift in expertise away from abstract thinking and towards business objectives.

The total cost of funding our higher education sector is small compared to the size of the deficit: the decision to cease to support the majority of university courses is thus a political one, and one not taken by other European governments that are facing equally difficult deficits.

The increasing size of students’ debts also represents an asset, ripe for securitisation, but again we should question whether young people should be required to pay back in interest more than they borrow, directly transferring money to financial intermediaries.

For example in the Czech Republic, where the same proportion of young people attends university, they are not required to pay fees.

Most urgently, with record rates of youth unemployment, Scott Cato and Heatley argue that government should invest in the future of our young people through their education rather than supporting their inactivity.

The withdrawal of the teaching grant from the majority of university courses was a de facto privatisation of those sectors of higher education.

Our universities are now the responsibility of the Department for Business, Innovation and Skills and are viewed as businesses. As such a key question is who should own the value generated there.

Scott Cato and Heatley propose a model for university governance that ensures that the value generated by universities is shared between staff and students, through the creation of multi-stakeholder co-operatives.

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