Government must reconcile desire to cut fees with its aim to ‘level up’ the regions
‘Getting Brexit done’ may have been the dominant theme in December’s general election, but ‘levelling up’ the economy across all parts of the UK has quickly become the most important domestic challenge for the Conservative government.
Of course, this is easier said than done. Regional inequality in the UK is a long-standing, deeply entrenched—and growing—policy problem. The gaps between the best and worst-performing regions are among the largest in Europe and the OECD.
These differences in productivity, and therefore in wages and living standards, have been an important driver of political dissatisfaction, influencing voting patterns in the 2016 referendum and the 2019 election.
This won’t be the first government to try to fix the problem. Like others before them, the Conservatives are promising investment in infrastructure, R&D and public services to close the gaps.
In theory at least, this will incentivise innovation and improve regional productivity. Improved prosperity, living standards and wages will follow.
Shift in thinking
We have been here before. Governments under Blair, Brown, Cameron and May all tried something broadly similar. But this time it is the politics that might be different. The Conservatives owe much of their 80-seat majority to constituencies won in ‘left-behind’ towns and underperforming regions.
According to the Financial Times, prime minister Boris Johnson describes himself as a “Brexity Hezza” after Michael Heseltine, who as deputy prime minister under Margaret Thatcher worked on industrial and regional policy, often in the north of England. Johnson has promised to double government R&D funding (with a boost to make it £18 billion overall) as a way of ‘levelling up’ economic performance across the country.
His chief adviser Dominic Cummings (for whom this is non-negotiable) has pointed to Richard Jones’s Resurgence of the Regions paper as a blueprint for such an approach.
Both wish to repay the trust of those voting Conservative to ‘get Brexit done’, and they want to keep hold of the seats they won in Labour’s old heartlands in the north and the midlands. But this will involve a significant shift in traditional—as well as more recent—Conservative thinking on both higher education and the economy.
The nearest universities to Stockton, Redcar and Sedgefield—now all with newly elected Conservative MPs (as well as Ben Houchen, the Conservative Tees Valley mayor)—are Teesside and Sunderland.
In the Black Country, there are new Conservative MPs in Walsall, Dudley, West Bromwich and Wolverhampton. The nearest university with campuses in many of these places is the University of Wolverhampton. As in the north-east, there is also a Conservative city region mayor for the West Midlands—Andy Street.
In Yorkshire, the University of Huddersfield is the nearest to MPs and voters in Dewsbury and the Calder Valley. In the north-west, where seats were gained by the Conservatives in Bury and Bolton, the nearest universities are Bolton and Salford.
But very few of these are R&D-intensive or likely to benefit very much from the proposals to double government funding, even though all have some expertise in applied research. Instead, they will be much more concerned by the Conservative manifesto promise to revisit Augar and to tackle ‘low-value’ courses in higher education.
Much of Augar—especially its promise to increase funding in further education and to rebuild the ‘missing middle’ of level 4 and 5 provision—is long overdue and will also be essential to rebuilding local and regional economies. But the proposal to cut fees is more worrying. If fees are cut and the government makes up the difference, it allows ministers to shift money around the system and to courses and universities (and places) that they wish to prioritise. At the moment, it is the market that does this, leaving big government subsidies on loans poorly targeted to subject, university or place.
This, then, will be one of several big dilemmas for ministers as they reconsider higher education policy.
Data on graduate salaries tell us that weaker regional and local labour markets pay less and that people staying and working in such places will earn less over their lifetimes. Universities that recruit locally in these areas stand to suffer the most, and their finances are already weakened by a market that tends to favour more established institutions in larger, wealthier cities. But it is also these institutions that offer the best options for increasing innovation, skills and R&D and for growing underperforming local economies.
A more traditional Conservative view might endorse and accelerate the market principles offered by higher education reform since 2010: more powers to the Office for Students, more focus on value for money and possibly fewer or capped graduate places overall, especially on ‘lower-value’ courses. But that is almost a completely ‘place-blind’ approach and creates a big political problem. Withdrawing numbers and weakening institutions is more likely to undermine new local priorities. Those running higher education policy need to accept this tension. The right hand needs to understand what the left hand is doing.
It also raises important questions for nearby universities that might be in Labour-led or Labour-held cities and towns. How will increased R&D funding benefit less well-performing places nearby?
The Civic University Commission—also endorsed in the Conservative manifesto—offers some suggestions for universities to better articulate impact in this new political geography. Augar, too, stresses why the policy solutions to regional inequality and left-behind towns will rely just as much on further education colleges and on hybrid higher and further education institutions in places such as Blackpool, Durham and Grimsby.
Tories of the north
Since the election, you might be forgiven for thinking that these are all places completely new to the Conservatives. But that would be nonsense. There have always been Conservative politicians and voters in or near these places, running local councils and being elected as city region mayors and MPs.
In Lancashire, defence secretary Ben Wallace will have a good understanding of the University of Central Lancashire’s role not just in the “Preston model” but also in the highly skilled and R&D-intensive defence industry, which strengthens the local economy. Jake Berry, minister for the Northern Powerhouse, represents the Rossendale and Darwen constituency, which borders five new Conservative constituencies in Greater Manchester. Education secretary Gavin Williamson lives in Wolverhampton and his South Staffordshire constituency also borders several new and existing Tory colleagues.
All should have a decent understanding of these places and institutions and the problems of traditional policy approaches.
These are not arguments against cutting fees or seeking to identify lower-value provision per se; there may be cases, as with R&D, where the government seeks to be more strategic and hands-on in how it allocates funding to its economic, geographical or political priorities. But these are definitely arguments for maintaining funding overall in the places that need strong institutions every bit as much as higher skills, better infrastructure and more R&D.
As universities minister Chris Skidmore tweeted this week: “If we are going to level up every part of the UK, universities as anchor institutions will be part of the solution.” He’s right.
Andrew Westwood is professor of government practice at the University of Manchester.