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Hyperbole and illegal cartels – the latest attack on the university sector

Chris Hale

Chris Hale

Director of Policy
Universities UK


Another week and we seem to have another accusation of universities running a cartel. 

This time, it came from UK2020, trailed on the BBC over the weekend. Today sees a launch of the report at the House of Commons with the thundering title 'Timebomb: How the university cartel is failing Britain's students'.

This report appears to be ostensibly about two-year degrees, but covers a wide range of issues and the frequent and strong use of 'cartel' would imply that universities are deliberately restricting supply and colluding to fix prices. There are many issues in this (very) long report, but the accusation of the sector being a cartel is my main concern here.

Unlike those casually using this accusation, I'm happy to admit I'm not a specialist in market regulation, but I do know this is a very serious accusation. Cartels are illegal and have serious penalties attached to them. Some may explain this away as just a cynical ploy to drum up some easy coverage off the back of this summer's anti-university bandwagon and land some political points.

But parking the question of motivations for talking down one of the country's national assets, the fact is that serious criminal accusations are coming from a report associated with politicians and with an event in Parliament. And even more concerning is that the narrative being used to promote this report is largely baseless and not actually supported by the evidence or by those public authorities that have statutory responsibility for regulating markets, notably the Competition and Markets Authority (CMA).

It's also a little disappointing that a genuine issue of supply-side reform, innovation and how we can ensure the higher education sector meets the needs of consumer, is completely lost in the midst of the hyperbole. Yes, let's have a serious discussion about how universities need to respond to the skills needs of the country, provide choice and value for money – what are the barriers to progress, how do we maintain high quality, how do we stimulate and respond to demand given constraints on the market?

Universities are central to the prosperity of the country and if they are going to continue to be so we absolutely need these sorts of debates and the sector needs to be challenged, but why does it need to be couched in this way? Why paint a picture, that isn't backed up by the evidence, of a sector and then seek to demolish it?

In terms of two-year degrees, even a scratch at the evidence would suggest the sector is not colluding or deliberately restricting the development of these. It simply isn't a cartel – but there are a complex set of institutional, regulatory and market issues that need to be addressed if further progress is going to be made (I think we can all agree that making progress on this is a good thing, by the way).

Better evidence is also needed. It would be glib of me to say that there has been less progress just because of a lack of demand. We've seen the government respond to some of these challenges, both through provisions made in the HE and Research Act and guidance to the Higher Education Funding Council for England. We need to build on these measures alongside a greater focus on understanding the market and growth potential that can inform university decision making and planning. This makes business sense for a demand led system. There is a slight irony that the UK2020 report goes further and appears to advocate engineering the supply side, while laying the accusation of cartel like behaviour at the door of the sector.

The other concern implied by the accusation of the sector being a cartel is that they collude to fix prices. Again, it isn't a cartel (did I say that already?). Let's go back to the Office for Fair Trading (OFT) report (now the Competition and Market Authority) further to a call for evidence on this very issue. It is worth copying the relevant paragraphs on pages 49-50:

It has been widely reported that, since the 2011 reforms, a large number of higher education institutions have set fees at, or around, the £9,000 cap, raising concerns as to whether this is the result of collusive behaviour.

If such collusive behaviour were taking place it would be to the detriment of students, as it would result in higher fees and/or lower levels of quality than under more competitive conditions.

To date, the OFT has received no complaints or evidence of either explicit or tacit collusion between higher education institutions with respect to fee setting.​​

The sector itself has been exptremely senstive about ensuring compliance with competition law, and its obligations under consumer law. We at UUK have provided the sector with legal advice and supported them to ensure they are compliant. My advice would be for anyone that has evidence of a cartel or anti competi​tive practices taking place to let the CMA know. You can do it here.

There may be ongoing debates and genuine public policy concerns to consider, but I have a hunch that there is still no evidence on anti-competitive or cartel like behaviour in UK higher education. Perhaps therefore those interested in joining the debate, whatever your views, could agree to use language more carefully and responsibly and perhaps that way, we might make some progress.


 

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Charles Hedghes
Charles Hedghes says:
19 November 2017 at 20:31

Perhaps you can reveal which UK universities have campaigned against rises in tuition fees? And which UK universities have reducaed the salaries of Vice Chancellors? 

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