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The shape of things to come

Higher education in England is now a low-margin industry, says Paul Clark.

When the coalition government introduced its recent reforms, it aimed to increase competition in order to drive up quality, choice and innovation. More recently, the Office of Fair Trading has taken an interest in universities, issuing a call for information on undergraduate education in England. Such clear commercial interest, coupled with the language of markets, is new for universities. It raises the question of what shape the market will adopt as it settles down over the next few years, specifically in relation to undergraduate education, which is by far the largest sub-market in higher education.

So far the effects have proven difficult to predict. Several levers have been pulled simultaneously: the introduction of an annual £9,000 tuition fee cap, combined with significant cuts to the grants for teaching and to capital expenditure; deregulation on the basis of qualifications (the AAB reform) and, to a much smaller degree, on price (the 20,000 places available for institutions charging less than £7,500); a relaxation of barriers to entry to the system for private providers; and strong government pressure on universities to become more efficient.

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