Lars Cornelissen shows that the prospect of university closures was always baked into the defence of student-funded higher education.
Lars Cornelissen
Feature image via Flickr.
University closures are coming. This, in any case, is what the Office for Students warns will happen if no action is taken. The OfS should know: its terms of reference include the formal oversight of orderly ‘market exit’ in what is now an increasingly troubled sector. The OfS is not alone in its gloomy forecast. Independent reporting confirms that several British universities are on the brink of insolvency and, in the absence of government intervention, could be in serious fiscal trouble early as this autumn. Those that remain standing are likely to continue to fight their budgetary fires through mass layoffs, course closures, and fiscal austerity. These swingeing cuts are severely damaging the sector, costings hundreds of staff theirs jobs and leaving others demoralised, overworked, and mentally unwell.
Anyone who works in the sector knows that the root cause of its ongoing fiscal troubles is the marketisation of higher education. Beginning in the 1990s, a number of successive reforms saw the sector move away from a publicly funded model towards one based on student fees, financed by individual loans covering both study and living costs. By making university finances dependent on so variable an income stream as student fees, which ebb and flow with student numbers, demographic trends, and the cost of debt, these market-friendly reforms made the sector especially vulnerable to exogenous shocks. This came to a head in recent years, when the pandemic caused a drop in students numbers, rising interest rates made existing debt more expensive, and inflation eroded the relative value of incoming fees. Though a more robust funding system might have weathered these storms, the one we have sustained serious damage. The question is: how did we get here?
Although its roll-out was staggered and took place over the course of some twenty years, the marketisation agenda has a much longer prehistory. The idea to finance higher education through student fees, paid not by government grants but individual loans, was first floated by the American economist Milton Friedman in 1955. His basic idea was that to improve the quality of education it should be made to resemble a consumer market. This is impossible so long as schools and universities are paid for by the government, as this prevents schools from competing with each other on price or quality. Making students pay for their own degrees would cause them to see school choice as any other consumer choice. In turn, this would force schools and universities to respond to consumer demand or face the discipline of the market. For Friedman, who thought consumer choice and freedom were the same thing, marketising education would not only make the sector more efficient but would also promote individual liberty.
In Britain, Friedman’s idea was quickly adopted by free-market think tanks now widely considered to have been the intellectual vanguard of neoliberalism. In 1960s, economists associated with the Institute of Economic Affairs (IEA) applied the idea to British higher education. The university sector was then going through a period of fundamental reform under the auspices of the Robbins Commission, named after its chairman, Lionel Robbins. Though mostly remembered for expanding Britain’s university sector, a key issue for the Robbins Commission was how to finance the nation’s universities. A close friend of Friedman’s and himself a prominent neoliberal thinker, Robbins personally preferred a loan-based system to finance the expanding sector. He felt this to be politically impossible at the time, however, and hoped such a reform might be more feasible in the future.
In the decades that followed, it fell to free-market think tanks to keep the flame alive. They continued to elaborate plans to marketise British higher education by introducing student fees coupled with a loan scheme. They organised conferences, published policy reports and pamphlets, lobbied elected officials, and targeted public opinion, all to make the idea of student-financed education politically possible. Their decades-long campaign finally began to pay dividends in the 1990s, when successive governments rolled out the student fees and loans system. Some of the key pillars of this policy revolution, like the income-contingent loan scheme, were the fruits of direct neoliberal activism. Nicholas Barr, who helped to design a student loan system suited to British higher education, began his career in the neoliberal think tank industry. David Willetts, who oversaw the tripling of fees in 2012 as the universities minister, was a product of that same industry. He had close ties to the IEA and, between 1987 and 1992, he directed the Centre for Policy Studies (CPS), a free-market think tank established by Margaret Thatcher and Keith Joseph as a more directly policy oriented sister organisation to the IEA. During Willetts’s tenure as its director, the CPS began an in-depth research programme on the state of education, which led to a number of pamphlets advocating a rapid shift to a privately funded university system by means of a loans and fees model.
Philosophically, both Barr and Willetts were Friedmanites and channelled the IEA vision for higher education. Their policy victories were neoliberalism’s victories. And while many neoliberals would consider the reforms to have been insufficiently market-friendly, watered down by political compromise and ministerial cowardice, in truth the marketisation of Britain’s university sector remains one of the neoliberal movement’s most successful policy revolutions to date.
Closures Foretold
The Friedmanites always had mixed motives, however. Though to the outside world they framed their arguments in terms of consumer choice and individual liberty, they had ulterior motives too. Many of them felt that the university sector was not just bloated and inefficient but staffed with left-leaning lecturers. Both issues were facilitated by the sector’s funding structure, which operated not on price signals but government largesse. And both could be solved, the neoliberals thought, by subjecting the sector to market discipline, which would prune it of inefficient institutions even as it would loosen the left’s ideological vice grip.
The neoliberals were candid about what this would look like. Funding reform would act as a truncheon, the lash of market discipline cleansing the sector of its inefficiencies and socialists. And if that meant a campus closure or two, no harm done. This point was expressed vividly by Arthur Seldon, one of the driving forces behind the IEA who spent most of his career advocating the marketisation of all levels of British education. Seldon regularly decried progressives’ hold on the country’s universities and suggested that the sector was in dire need of discipline. As he wrote in a 1980 paper:
The Government […] has said it has no plans to close down any British university within the next five years. I do not see why not. British higher education is overgrown, undisciplined, wasteful. It would improve by pruning. The weeds are stunting the flowers.
This sentiment quickly became a common motif in free-market literature. One 1988 CPS pamphlet argued that universities ‘must take their chance in a hazardous world where, like everyone else, unless they know how to swim, they will surely sink. And why not?’ And in 1991, an IEA pamphlet stated that market ‘freedom must include the freedom to go out of operation. When the first university fails we should cheer, not mourn. Human capital must circulate if the knowledge society is to thrive.’
Here the psychic life of neoliberalism is on full display. Libidinally, what motivated the free-market radicals was less a beatific vision of consumer choice than rancour at the marginalisation their shallow philosophy experienced in institutes of higher learning. Confined to their own think tanks and other para-academic spaces, they saw their failure to influence serious academic debate as the result of undue government intervention. Dressed up in the language of liberty but rooted in grievance, the idea of sector reform became infused with a McCarthyite fantasy of punishment of progressive university staff. If university closures are on the horizon today, this was not just foreseen but happily welcomed by those who set out to reshape higher education.
The Coming Crisis
The idea that university closures signal not an existential crisis but the market righting itself remains the political consensus today. It became official government policy with a 2016 White Paper, which channelled the IEA neoliberals when it described the possibility of market exit as ‘a crucial part of a healthy, competitive and well-functioning market’. Little has changed with the new Labour government. Bridget Phillipson, the new secretary of state for education, has ruled out university bail-outs, saying the government expects individual institutions to manage their finances responsibly. Jacqui Smith, the minister for education, has gone on record saying closures are on the table. This rhetoric remains beholden to the neoliberal bromide that the market knows best.
A load-bearing idea here is that of orderly market exit, as if a university closing is little different from one high street café replacing another. This is, of course, a travesty. Universities are part of the fabric of the community. They are large employers, centres of research, places of symbolic value. They host libraries, sports centres, and events that are used by entire communities. What is lost in a university closure is not just brick and mortar but livelihoods, knowledge, socialities, networks, books, and much else besides. At best, these things will disperse; more likely is that they are consumed in the conflagration.
What is needed is a return to a publicly funded system. Anyone can see that marketisation has been a dismal failure. Though sold to the public as a way to increase efficiency and boost consumer freedom, in truth the opposite has happened. The fees and loans system has thrown an entire generation into crippling debt. Governance reforms have led to authoritarian, top-down management by increasingly reckless VCs. An obsession with metrics and outcomes has replaced creativity with endless audits. And while their fees are what funds ballooning management salaries, vanity estates projects, and expansive audit infrastructures, students have vanishingly few ways of actively shaping university policy, exposing the idea of consumer freedom as an empty chimera.
Once all of its fantasies and lies are stripped away, what remains of the free-market agenda is the cruelty of market discipline. This may have been a boon in the eyes of aggrieved neoliberals, who regarded the university sector with disdain and welcomed a market cull, but everyone else can see that all it breeds is misery.
This article is based on a research project on the intellectual history of university financing in Britain. My gratitude goes to Christopher Newfield for comments on earlier drafts.
