4 reasons why Augar's review has sparked uncertainty for Higher Education

Augar's review of post-18 (tertiary) education is a tale of two halves. But one thing's for sure, it's about to stir up change and no more so than in the higher education (HE) space. Specifically for HE, the review addresses four main areas of uncertainty:

• Tuition Fees - The review states that tuition fees should be reduced from £9,250 to £7,500 per year. Although the recommendation is for the government to bridge this gap, the details of this are unclear.
• A rebalance of funding - Augar suggests that there needs to be a rebalancing of funding. High value, high cost subject courses (such as Medicine and Engineering) are likely to take priority over a limited amount of Government funding. Universities with a focus on Arts, Humanities and Social Sciences are likely to suffer as a result. It's unclear whether universities may end up losing some of the courses that are deemed as 'lower value' if they simply aren't efficient to run.
• Student loan repayments - A change to student loan repayment conditions could mean that lower earning graduates may end up actually paying more back (with longer payment terms meaning more interest to pay), and higher earners paying less. Universities need to consider the impact this might have on student engagement, will learners opt to take another route to their post 18 studies? How will student satisfaction fair in terms of value for money?
• An investment in FE - The review recommends more investment in further education. How this will happen is not yet clear. The sector is uncertain as to whether this means there will be less money in HE or whether FE will deliver more lower level foundation degrees, meaning HE may lose out to FE in this market.

With so much uncertainty, we sat down with Benchmarking Consultant, Helen Dove to see what she thought.

Helen, tell me what you know about the Augar review:

From a HE perspective there are a lot of questions, which at the moment, we just don’t know the answers to. It's unclear how the Government will respond to the recommendations and indeed the actions that are going to come out of it - so there's uncertainty in the sector.

What do you think needs to happen in HE as a result of the review?

Universities should prepare for some significant changes. They need to review and consider the implications of the recommendations. If the suggested changes came into force, how will they impact their institution? There is no doubt that HE is going to come under increased scrutiny in the coming months and years. They need to demonstrate:

• Better value for money for students
• Preparation for potential tuition fee cuts and reduced funding
• Financial performance and efficiency

What do you think this means to universities that are struggling?

It's going to be tough, there's no doubt about it. In terms of demonstrating value for money to students, the review provides more of a challenge to improve. In terms of financial struggles, they will need to make sure they are financially sound. Universities need to prepare for what they will do under the new conditions and be proactive rather than reactive.

Universities offering what are often deemed as 'lower value' courses, such as arts, humanities and social science degrees, are potentially going to see a more significant reduction in income, so this could be a worry for them, even if they aren't currently struggling. We know that there's still value in people going to university. We know that there is still demand from students wanting to study and businesses wanting graduates from these types of courses. So I guess the question is around how they will be funded. Courses such as English, Law and Language (generally classroom based courses) cost approximately £8,800 per year to run - which is more than the proposed new fee - so they could potentially be loss generating.

If the Government is going to bridge the gap created by reduced tuition fees, it seems likely that 'higher value' courses like Medicine, will take priority. Universities should be looking at the range of courses they are offering and the costs associated with delivery. It's concerning for them that they might not be able to offer a diverse range of courses if there is a rebalancing of funding between degree subjects.

What do you think this means to universities that are currently in a good position?

No University should rest on their laurels. Universities are big, change can take a lot of time to implement. They still need to be thinking strategically about what this means for them going forward. Usually universities that are in a good position are so because they are good at planning and managing change. 'What If' scenarios and situation modelling will help them see how agile they could be and how easily they could adapt to change, whilst retaining their strong position.

What do universities need to do / start thinking about in the short, medium and long term?

In the short (and medium and long!) term, it's around modelling how the review will impact them. Thinking about what it would mean if income was reduced, the impact on cost base and how they can best structure their University to maximise value for money for students, and in turn positively affecting student satisfaction.

Because there is uncertainty there is time to plan for how this might play out. We know what the recommendations are, so there's potentially also time to bargain against them if they don't agree with them!

Long term, it's unclear. But its suggested that Universities ultimately need to do more for less whilst still upholding their credibility, heritage and long standing value. There needs to be focus on modelling the future of the university. Then organisations are prepared for decisions going forward. Knowing their future strategy is adaptable will give them greater flexibility and mean they can respond quickly and effectively to change in policy.

What would be the one piece of advice you would give to a university thinking about the impact of this review and how they might benefit from it?

To benchmark. That might seem an obvious suggestion but it's true. The review suggests it's time for universities to fully understand their operations at a granular level. They should be preparing by looking at their cost base, modelling the impact of the potential changes, and scrutinising the value derived from their resources , both in terms of student satisfaction and delivery of professional services internally.

Wanting to understand your operations at a granular level and get ahead of the change? Read more about financial benchmarking.