Conservative Policy and the Universities

Ralf Dahrendorf, Director of the London School of Economics, identifies a case of over-government

Britain’s 45 universities are attractive, efficient, and cheap. In 1978, they attracted 250,000 home and 40,000 overseas students. While Continental countries, notably France and Germany, make great efforts to attract students from overseas by subsidies and quotas, such students seem to come to Britain naturally, and despite all attempts at deterring them. These universities are also efficient: less than 14 per cent of all British undergraduates drop out without a degree. In the rest of Europe, where tutorials and well-structured three-year degree courses are unknown, the figure is nearer 50 per cent, and those who finish often take five years and more to get their first degree. Finally, these universities are cheap: the unit of resource in Britain – that is, the total cost of universities divided by the number of students – is roughly half that of Continental universities; lower salaries, fewer supporting personnel, less equipment and similar factors play a part. (Incidentally, the unit of resource is the only relevant measure of the price of universities: the share of GNP, which is now sometimes quoted, tells a story about the economy, not about higher education.)

To these striking advantages one must add one which is – or was? – perhaps the most important of all: in a country which has found it strangely difficult to maintain the semblance of a market economy, universities are but one of several important examples of the vitality of a market society. While they are almost entirely publicly financed, global quinquennial grants, distributed by a semi-independent University Grants Committee – the UGC – used to guarantee their autonomy, and, with it, their quality.

Today, every one of these strengths of British universities is under pressure from government policy. One of Britain’s best-known politicians once said to me: ‘Universities cannot win these days. Labour believes that most students come from middle-class families which vote Conservative, and the Conservatives believe that universities have moved to the left, and provide the activists of the Labour Party.’ The suspicion that universities cannot win is certainly borne out by the actions of governments. Measures taken by the last Labour government have led to the suspension of the quinquennial grant system, to increasingly frequent and detailed letters from the UGC, to vast increases in overseas students’ fees from £250 (for postgraduates) in 1974 to £850 in 1978, coupled with instructions to reduce the number of overseas students to 93 per cent of the 1975 figure, and to a deterioration of the unit of resource by several percentage points. Universities have resisted government policy on overseas students, but coped with a general decline, partly because there was widespread realisation of the national economic context in which retrenchment was unavoidable and partly because they were given promises – in the form, for example, of a Public Expenditure White Paper early in 1979 – that things would improve slowly over the next four years.

A hundred and twenty days of Conservative government have wiped out that hope. They have instead brought a series of new measures, this time as a matter of political principle rather than in response to IMF inspectors walking in and out of No 11 Downing Street: a 1 per cent cut of the recurrent grant to universities for the academic year 1979-80; a system of strict cash limits, bound to conflict with national wage settlements by which individual universities are affected but which they cannot influence; an increase of fees for overseas students already on course, or admitted, by 22 per cent (in addition to the 9 per cent already announced by the preceding government), without abolition of quota restrictions; severe cuts of subsidies to Research Councils, with an indication, at least to the Social Science Research Council, that these should lead to a reduction of postgraduate studentships (by 25 per cent); instructions from the UGC to reduce the number of home undergraduates by 6 per cent in 1980; uncontradicted rumours that overseas students’ fees will be raised further until they have reached an ‘economic’ level; clear, though as yet unquantified, statements that there will be further cuts in the coming years.

It is useful to list these measures, all taken or announced in the four months from May to August 1979, not so much in order to add to the predictable groans of vice-chancellors, students and university staffs, as to wonder what it is that the new conservatism seems to mean which is so fashionable a subject in the salons of London (and of other capitals, to be sure). For if what we have listed is meant to be a policy, it manages to combine a curiously contradictory notion of ‘less government’ with systematic levelling, whether by default or by design, with bad arithmetic, and with more than a tinge of parochialism. And if that is a portent of the future, it is not one that promises a way out of the dangers of 1984.

Take the case of overseas students (and of the bad arithmetic I have mentioned). The public is told, notably by government ministers and by journalists, that the country can no longer afford to ‘subsidise’ 80,000 overseas students to the tune of £200 million. Yet the word ‘subsidy’ in this connection is pure rubbish, not to say Newspeak. In fact, the opposite is true, and universities will have to be subsidised if overseas students leave. A simple example tells the story. If a university has, say, 3,000 students and costs £6 million per year, the simple-minded arithmetic used would conclude that each student costs £2,000. (In fact, the marginal cost of the next 100, as well as the marginal savings of 100 fewer, is probably zero.) If 1000 of the students come from overseas, and if they pay a fee of £1000 each, the university is ‘subsidised’ to the tune of the remaining £1000 each, or £1 million. Now it is argued that for that reason, fees should be raised to £2,000, so that the ‘subsidy’ disappears. But what if, say, half the overseas students stay away because Harvard and Stanford have now become competitive, or simply because the attempt to deter them has been successful? Either the university will fill the places with home students who pay lower fees and have grants, in which case it would require a subsidy to make up for the loss in revenue, or the places would remain unfilled, in which case a subsidy would be needed also to keep places going, for the plain fact is that a reduction in student numbers does not automatically lead to a reduction in staff, equipment, buildings. Indeed, it will not reduce the cost of tenured staff and the maintenance of buildings at all. The very least that would have to be said about this kind of arithmetic is that it forgets the time-scales of university development, including undevelopment, and this, of course, is true, not only for the intended reduction of overseas students, but for the 6 per cent cut in home undergraduates as well.

Bad arithmetic is only one aspect of the picture (a striking aspect, nevertheless, since it is said that much of the policy described here has been invented in the Treasury). The other, that of parochialism, is no less important. Students like to claim that the concerted attempt to keep overseas students out of British universities is a form of ‘racism’. If the children of immigrant families were seriously underprivileged (and one early day this may well turn out to be the case), the word might be appropriate. It might make sense also if there was a deliberate attempt to reduce the number of Asian and African students to the advantage of North American and European ones. However the opposite, if anything, is the case. No, the underlying sentiment of government policy – all the more significant since it seems to be an all-party policy – is not racism, but parochialism – little-Englandism. Britain can, of course, afford to have 80,000 overseas students if it believes in its worldwide role and responsibility. There may not be a tangible advantage in having, throughout the world, Prime Ministers and Central Bankers and Chief Justices and Chairmen of Boards sporting British degrees, but it shows the sense of openness for which the country was rightly renowned. It would clearly be wrong for the foreign director of one of Britain’s great academic institutions (which has not only contributed to the country’s international reputation but has been repaid in tangible as well as intangible ways) to say that this spirit is gone. But it is threatened. An ineffectual commercialism has taken its place here and there, and one begins to wonder for how long the Bar will continue to be the Mecca of Commonwealth lawyers, or even the City that for financiers from all over the world.

The most important aspect of 120 days of Conservative policy in higher education is the misunderstanding of one of the most timely of current political demands – the demand for less government. This has two surprising features, and both are equally disastrous.

The demand for less government is timely, because in the OECD world, we have seen too much belief in ‘benevolent’ government without realising that power not only corrupts, but is also curiously unable to deal with many of the major issues of the day. Governments not only do not, and should not, make people happy, they cannot protect them against every problem and disaster. They cannot even conduct an economic policy which guarantees inflation-free prosperity, whether they are run by distinguished professors of economics, former union officials, or barristers. Moreover, it is probably true to say that we have reached the threshold of a ‘pocket-money society’ in which it is no longer the individual who decides what to do with his or her earnings, but the state. Proposition 13 in California, Glistrup’s Danish episode, and a number of less dramatic developments in Germany and elsewhere, have their logic. But what does ‘less government’ mean?

One interpretation is obviously that applied to universities and many other institutions in Britain today. To describe it in all fairness, its rationale is this: the first need is to reduce public expenditure, because public expenditure is the essence of government activity. In effecting these cuts, every department must make its contribution. What is cut in public expenditure must then be given to individuals, in the form of tax reductions, and, as soon as the economy responds to a new attitude to incentives, of higher wages and salaries as well.

This is a simple doctrine, although, in the British case, it is complicated by innumerable commitments, such as that to defence and the police, caveats such as the protection of certain social services, dogmatic frills such as a concept of the money supply which not even ardent monetarists support. But one must immediately add that its very simplicity is suspicious in a mixed economy and a changing socio-economic world climate. To leave such externalities on one side, the doctrine has in any case two grave weaknesses. The first is that it is a prescription for more government action. Every single government department will have to look at every major expenditure item, and come up with what are, after all, policy proposals. Thus, government begins to fiddle with research support, overseas students’ fees, the intake of home undergraduates, the total recurrent grant, the desirability of particular degree courses, and other things all at once. Never since 1945 has a government over-governed the country as much as the present Conservative one. The case of universities is a telling example, though unfortunately but one of many. (Nor is it particularly impressive to be offered Lenin’s advice that all this is but a ‘transitional phase’ which will soon lead us all to the open gates of the garden of Eden.)

Yet over-government stops when it comes to differentiating between institutions. At this point, the New Right rather surprisingly overlooks the fact that inaction is, in fact, a policy – a policy of levelling and egalitarianism. Britain has 45 universities and 30 polytechnics. They are different, even in their unit of resource (as the minister responsible for higher education, Dr Boyson, has noted, again surprisingly, with dismay). Some are good in some subjects, some in others. Some cater for postgraduates, some for undergraduates. Some are better than others. All are going to be affected, not only by a new climate of public expenditure, but also by demographic changes, and possibly by changes in the motivation of young people. Can there be any justification for treating them all in the same way? Must not cuts across the board mean that the good and the bad share what Lord Annan has called ‘equality in misery’? Is not this a paradigm of the policy of levelling-down which the New Right professes to abhor?

There are, to put it mildly, strange paradoxes in the attitude of the Conservatives to universities. They are, moreover, unnecessary paradoxes. Less government really means inaction, passive government, a climate in which autonomous institutions are allowed to find their own ways. And insofar as signals are given, they should be signals which encourage differentiation rather than further levelling. There was once something called a ‘Chequers strategy’ (Chequers being occupied by a Labour prime minister at the time). As I understood it, its gist was that government should make life easier for those who are strong, and otherwise keep its fingers out of the economy. The strategy would make sense in other areas of society as well. But unfortunately it was not practised then, and it is not practised today. Universities will not be the only ones to suffer from its absence. It appears that we live in a levelling age.