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The Influence of the Model on Higher Education in the United Kingdom: Before and After the 2008 Economic Crisis

Has Education in the United Kingdom Become a Marketable Product Like Other Value-Added Services?

L’éducation au Royaume-Uni est-elle devenue un produit marchand comme tout autre service à haute valeur ajoutée ?
Louise Dalingwater

Résumés

Les transformations du secteur de l’industrie avec un déclin du secteur manufacturier et une montée en puissance de l’économie des services ont particulièrement affecté l’économie du Royaume-Uni, notamment à partir des années 60. Cependant, ces mutations ne peuvent pas être réduites à un désinvestissement d’un secteur vers un autre car les deux sont inextricablement liés. De la même manière, il est devenu difficile d’établir une distinction entre les services publics et les services privés, ce qui est notamment vrai pour le secteur de l’éducation. La perception conventionnelle de l’éducation comme un service public avec les caractéristiques d’un bien public a été remise en cause ces dernières décennies au Royaume-Uni. Les services de l’éducation sont désormais l’un des principaux postes d’exportation britannique, comme tout autre service à haute valeur ajoutée (finance, service aux entreprises…). Avec la montée du néolibéralisme vers la fin des années 1970 et l’internationalisation de l’économie britannique, la notion d’éducation en tant que bien public a été véritablement ébranlée. Le rôle du gouvernement dans la transformation de l’éducation en service marchand a été central. Cet article est centré sur l’enseignement supérieur car c’est là où le débat sur la notion de bien public et de bien privé est le plus fort. Après avoir examiné le cadre conceptuel, cet article étudie les transformations des services de l’éducation pour démontrer l’importance du secteur marchand dans le domaine de l’éducation aujourd’hui au Royaume-Uni.

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Introduction

  • 1 There is no universal definition of the “knowledge economy”. The OECD gives a very general (...)
  • 2 Sandra Fisher, “Is There Need to Debate the Role of Higher Education and the Public (...)

1The key to growth in the 21st century is developing a knowledge-based economy1 and the drive towards a service-oriented knowledge economy has transformed educational services in the United Kingdom as they have become more closely linked to economic development than ever before. However, the education sector is a very complex and varied sector which cannot neatly fit into the public or private sphere. With the recent hike in university tuition fees, a number of commentators in Britain have bemoaned the decline of higher education as a public service and its public good aspects.2 Education has become increasingly privatized and market-oriented in the United Kingdom with the benefits accruing to the individual only rather than the nation. This paper will thus consider whether educational services have become marketable services. First, it is important to define marketed/non marketed services and make the distinction between public and private spheres. We will then consider the transformation of educational services since the Second World War and the growing marketisation of this sector in the United Kingdom.

Conceptual issues : marketed/non-marketed services

2In order to determine to what extent educational services have become marketised in the United Kingdom over recent years, it is necessary to define what services are and how they are classified according to whether they are marketed or non-marketed services. Services are difficult to define and categorise because the sector is so wide and varied. The OECD whose definitions are derived from statistical standards in line with other international organizations such as the IMF, Eurostat, ILO…, defines services as a :

  • 3 OECD (STI), The Service Economy, Paris: OECD Publications, 2000, 7.The UK’s national (...)

diverse number of economic activities not associated with agriculture, mining or manufacturing; involving the provision of human value added in the form of labour, advice, managerial, skill, entertainment, training, intermediation.3

3Many of these key words can be applied to educational services and notably : human value, skills, and training. In addition, services, as a whole, are often divided into marketed and non-marketed services. Non-marketed services are generally to be found in the public sector and marketed services in the private sector. Public services tend to refer to government services, contrasting with private services provided by individuals and businesses. Private services are provided by individuals who invest and use their own funds and resources expecting to make a private and personal profit. Therefore, they depend on market provision.

  • 4 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, (...)
  • 5 Pedro Texeira, Ben Jongbloed, David Hill, Alberto Amaral, eds., Markets in Higher (...)
  • 6 This can be said to be close to the corporatist model described by Esping-Andersen.

4Nevertheless, Brown and Caraso4 state that marketisation should not be confused with privatization. Privatisation is the penetration of private capital and ownership into what was previously publicly funded and owned entities. In general terms, marketisation is when state-owned institutions or enterprises take on certain attributes of market-oriented, and essentially private, firms through the reduction of state subsidies, deregulation, restructuration and sometimes a degree of privatization. More specifically, marketisation in education is underlined by Teixeira et al.5 as being essentially three things : the promotion of competition between education providers, privatization of certain aspects of public institutions and autonomy of higher education institutions so that they can respond to supply and demand as necessary6. It is therefore essential to consider the public/private debate in higher education when trying to assess the degree of marketisation in the United Kingdom.

  • 7 Paul Samuelson, “The Pure Theory of Public Expenditure”, Review of Economics and Statistic (...)
  • 8 Pedro Texeira, Ben Jongbloed, David Hill, Alberto Amaral, eds., Markets in Higher Educatio (...)

5In practice, the division between public and private is debatable when we consider service delivery and service outputs. The traditional concept of public in neo-classical literature is defined, according to Samuelson7, as services or goods that are non-rivalrous and non-excludable. Non-rivalrous because they can be consumed by an unlimited number of people without depletion and non-excludable because they are available to all. However, nowadays, most services or goods only partially conform to this model. Notions of public and private, particularly when applied to education, are particularly nebulous. Liberal theory creates a dualism between the state and the market. Yet, the two are not necessarily exclusive of one another. Markets can be set up, managed, owned by governments or state agencies for profit. Public and private goods can be seen to be inter-dependent. As Teixiera et al.8 underline, our understanding of the public and private becomes blurred as semi-public organizations, independent agencies, regulatory bodies or public-private networks are involved in the provision of educational services. This is also evident with the tendency for universities to set up private companies, outsource research, teaching or support services and create public-private partnerships. Moreover, there is increasing competition between higher education institutions and private funding has become very significant, as has public management. Yet higher education still remains in the public realm and is seen as contributing to the public good.

Debating educational service outcomes

  • 9 BIS, The Impact of University Degrees on the Lifecycle of Earnings : Some Furt (...)
  • 10 OECD, Education at a Glance, Paris: OECD, 2012.
  • 11 John Stuart Mill, On Liberty, London: Longman Robert & Green, 1869. New York: Bartleby.co (...)
  • 12 Joseph Stiglitz, “Knowledge as a Global Public Good”, Global Public Goods, 1999, (...)
  • 13 Alain Schoenenberger, ‘Are Higher Education and Academic Research a Public Good or a (...)
  • 14 Ben Jongbloed, “Regulation and Competition in Higher Education”, in Pedro Texe (...)

6Even if higher education remains essentially a public service, it is not so clear whether it results in a public or private gain and this is important to determine whether educational services should be marketed or remain exclusively in the public realm. It is clear that most individuals who participate in higher education reap private gains. Research has shown that graduates earn substantially more than those that leave school with only a secondary education. Indeed, the United Kingdom Department for Business, Education and Skills estimated that net lifetime earnings are 28% greater for men and 53% greater for women with degrees than for those with A-levels but no degree.9 An OECD study also found that participation in higher education, in all member countries led to significantly higher earnings.10 The individual will also obtain other private benefits, such as greater opportunities in their personal career, so this is again a private gain rather than a public one. According to J.S. Mill,11 a public good, on the other hand, is when the community benefits from the service as a whole and not the individual. This liberal perspective can thus be distinguished from the neo-liberal point of view whereby the individual is central even in the public domain. Stiglitz12 underlines how education can have both private and public good externalities. Admissions to higher education may be limited, and when knowledge is first created it remains confined to the creator, functioning as a private good, but once it has become accessible knowledge, it becomes a public good because it can be reproduced and consumed by many people. It therefore has non-rivalrous and non-excludable characteristics. Education, whether it is publicly or privately provided, also contributes to the industralisation and advancement of an economy and society as a whole by conferring skills and knowledge. To the extent that education has both public and private characteristics, Schoenenberger13 refers to educational service products as ‘impure public goods’ and Jongbloed14 qualifies educational services as ‘quasi-public goods’.

  • 15 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Chicago: Un (...)

7Countries vary in their appreciation of whether tertiary education, particularly university education, represents a social value or a public good and should be subsidized by the state or a private value whereby the individual must contribute. This choice is a deciding factor in whether or not education becomes a more market-oriented product. Keynesians and endogenous growth theorists underline the importance of public goods in education and encourage public investment. Gary Becker was a leading proponent for the central place of human capital in the economy. He placed emphasis on both the economic returns of investment in human capital and the cultural returns. Scandinavian countries place a high social value on education and therefore heavily subsidise their education systems. In English-speaking nations, Adam Smith’s liberal state theory reinforces the advantages that can be gained from taking a market approach. Indeed, Adam Smith supported a more privatized system of education. He noted that a teacher would teach better if fees from the student supported him rather than the state. He pointed out that, at Oxford University, most public professors had given up teaching properly, which was quite the opposite for private education at that time, like that provided for women.15 While education has not become wholly privatized in any nation, Anglo-Saxon countries have come to believe that the gain is more individual and therefore have moved towards a system of increased individual financial participation. This individualism has of course taken different forms. In the United States private universities compete with state universities. In the United Kingdom, universities remain in the public domain but have taken a more market-led approach to education provision.

  • 16 Simon Marginson, “The Public/Private Division in Higher Education : A Global R (...)
  • 17 Brian Pusser, “Higher Education, the Emerging Market and the Public Good” in Patricia A. (...)

8This is mainly true since the 1970s and the adoption of a neoliberal economic model. According to this model, higher education produces essentially private goods and should therefore be marketised.16 In order to promote the importance of market solutions in higher education, neoliberals undermine the potential of externalities and collective goods produced in higher education.17 Neo-liberals claim that private investment and provision is necessary to produce better outcomes than those that can be gained through public investment and provision. The philosophy of neo-liberalism is that there is a public good but it can only emerge if one focuses on individual rights and freedoms and private goods accumulation. This has meant a move from collectivism to privatization and marketisation of public services. Neo-liberals also claim that marketization of higher education provides more choice for individuals. From their point of view, education is a tradable and marketable commodity. Making education more efficient through marketisation also adds to a greater aggregate public good. The impetus to marketise educational services comes not only from government but also the institutions themselves. Prestigious institutions give great importance to status and the extent of marketisation will depend upon the techniques necessary to attract prestige. But, regardless of neo-liberal influence, marketisation is often pushed by governments to reduce the fiscal cost and by making efficiency gains.

  • 18 That is the fact or policy of not excluding members or participants on the gro (...)
  • 19 Tony Chambers and Bryan Gopaaul, “Decoding the Public Good of Higher Education”, Journal (...)
  • 20 Simon Marginson, “The Problem of Public Goods in Higher Education”, op. cit.

9Those that lament the move towards the marketisation of higher education state that higher education should essentially be for the public good and not a marketed service. When it is oriented to the public good, it can ensure equality, fairness, democracy, diversity, inclusivity,18 and caring for community.19 It has also been underlined that, without state intervention, the market would fail to give the adequate provision to all its citizens. Higher education can contribute to collective productivity at work, in society and in the local community. It can contribute to a wider culture, democracy, civil responsibility and greater tolerance. McMahon20 even finds evidence to support the view that education has positive effects on economic growth, income distribution, infant mortality, life expectancy, health conditions, fertility rates, population control and the social benefits of improved health, better democracy and political stability in a number of countries. It should therefore be protected from market failure by the government. The importance of state support for education and the public goods aspects has therefore been recognised. Apart from the aforementioned Scandinavian countries, which heavily subsidise their education system, China is also going in quite the opposite direction of Anglo-Saxon countries by increasing public investment in universities and individual students.

  • 21 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Educatio (...)

10Nations are thus presented with a choice : whether to provide a purely public service, which is delivered free or nearly for free, or a market-oriented service whereby the market decides on the quantity and quality of the provision and who ultimately benefits. As Brown and Caraso21 underline, in reality, all higher education systems are a mix of the two, but the balance can change.

The transformation of British educational services towards a marketable product

  • 22 Committee on Higher Education, Higher Education : Report of the Committee Appointed by t (...)

11The move towards a more marketised approach to higher education is highly dependable upon the economic situation. This is evident if we look more closely at the changes in the United Kingdom economy since the Second World War, with particular attention given to the period after 1979. The immediate post-war social consensus among left wing and right wing politicians in the United Kingdom meant that education was considered as a public good, particularly when the United Kingdom recovered and enjoyed relative economic prosperity. Immediately after the Second World War, all school leavers were entitled to enter higher education if they had the necessary level. The Robbins Report of 196322 called for a greater contribution of the public purse. It claimed that the universities’ goal was to pursue the aspirations of all the community. This report also underlined the economic and social benefits that would accrue to society, not just to graduates but also to non-graduates.

  • 23 Simon Marginson, “The Problem of Public Goods in Higher Education”, 41st Australian (...)
  • 24 Jane Sullivan, Public Good : Higher Education as Social Value, London: The Wor (...)

12The United Kingdom could afford to take such an approach with only 15% benefiting from a university education.23 It was considered that a well-educated workforce would offer public good benefits to society and promote economic growth. This all changed with the massification of higher education. The last few decades of the 20th century into the twenty-first century saw a substantial increase in the number of people entering higher education. In 1980, the percentage of the labour force with a university education was a mere 5%, but by 2000 over 20% had a university education.24The 1988 Education Act, in particular, encouraged the expansion of access to university education. Under the 1988 Act, universities and colleges were no longer presented as state-subsidised service providers but as economic entities providing specific services to the state or other individuals who were prepared to pay. Although the state continued, at this point, to provide the financial resources, educational services were to be managed according to market-like criteria. Demands for education from outside the European Union were to be treated according to a complete market system. In 2008, the Labour government set the target of a 50% entry into tertiary education. However, to fund the massification of education, it was necessary to change the orientation of educational services.

  • 25 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Highe (...)

13Such a market approach was supported by growing neo-liberalism in the United Kingdom after the election of the New Right into power in 1979. The private benefits of education were underlined more and more in an attempt to move the cost of fees from the taxpayer to the individual benefiting from the service. The new strategy for education, which really took off in the 1990s, was instigated by Sir Keith Joseph, Secretary of State for Education, who wrote to the University Grants Commission in July 1982 to determine with them a strategy for education to move towards an economic-oriented education system. He underlined that the economic performance of the United Kingdom had been disappointing since 1945 compared with its principal competitors and, to improve the United Kingdom’s performance, it was necessary to change the orientation of education, and higher education in particular. It was stated that higher education needed to contribute more to the economy. Responsibility for research policy was subsequently transferred from the Education Department to the Office for Science and Technology and the University Grants Committee was replaced by the Higher Education Committee.25

  • 26 Lord Leitch, “Prosperity For All in the Global Economy : World Class Skills”, London: Th (...)
  • 27 The report describes these as skills which provide real returns for all parties (...)
  • 28 In that order.

14The importance for the United Kingdom of having a competitive education system was underlined in the Leitch report26 commissioned by New Labour. It states that, in an increasingly global economy, developed countries ─ the United Kingdom included ─ can no longer compete on natural resources and low labour costs, so they must focus on a service-led economy and high value-added industry. The report underlines that the natural resources of the United Kingdom are people, and skills are the vast and untapped potential of people. This puts significant pressure on education systems to compete. It points out that productivity in the United Kingdom lags behind that of its main competitors. The emphasis is therefore on improving skills to improve productivity. To do so, the report states that it is important to focus on “economically valuable skills”.27 In order to achieve this goal everybody must pay: the state, the employer and individuals. Furthermore, it underlines that skills must provide real returns for individuals, employers and society.28 Although the Coalition set a different strategy to achieve a world class skills system, it has been argued that many of the recommendations of the Leitch report have been applied by the government that came to office in 2010. The focus is again on individuals and employers, encouraging both individuals to contribute to higher education and employers to offer more and more apprenticeships.

15Nevertheless, as late as 1997 education reviews still underlined the importance of the public good as an outcome of education. For example, the 1997 Dearing Review underlined the public goods outcomes of higher education :

  • 29 Ronald Dearing, Report of the National Committee of Inquiry into Higher Educat (...)

to inspire and enable individuals to develop their capabilities to the highest potential levels throughout life, to increase knowledge and understanding for their own sake but also to apply its benefits to economy and society and to serve the needs of an adaptable, sustainable, knowledge-based economy at local, regional and national levels.29

  • 30 BIS, Higher Education : Students at the Heart of the System, London: The Stationery Offi (...)

16However, a new discourse began when New Labour was actually in office and tuition fees were introduced in 1998. The public good of Higher Education was pointed out but in relation to social justice and this is how introducing fees was justified. The same kind of discourse was continued under the coalition government. Indeed, Students at the Heart of the System30 underlines that individual social mobility brings social justice and thus greater earnings. Social justice is brought about through individual social mobility which, in turn, is defined as increased earnings potential and greater job security. According to this discourse, the public good is ensured by encouraging more individuals from disadvantaged backgrounds to participate in higher education. But students are no longer perceived as contributing to the public intellectual capital of the nation, but rather they are private investors looking for a financial return on their investment. The individual benefits of higher education are seen to be greater than the general public as stated in the Browne Review :

  • 31 BIS, An Independent Review of Higher Education Funding and Student Finance, London: The (...)

The 2006 reforms were widely debated and strongly opposed by some on the basis that higher education should be free for students and graduates. Since then the debate has changed… there is broad agreement among groups with an interest in higher education that those who benefit directly from higher education as graduates ought to make a contribution to the costs …. The primary reason for this is that graduates benefit directly from higher education. The public also receives a benefit but this is less than the private benefit.31

17Furthermore, the report uses OECD data to show that individual gains are 50% higher than public gains. Yet, they fail to measure the indirect externalities of educational services. Indeed, education contributes indirectly to growth because it equips individuals with the necessary skills to make a productive contribution to the economy and enhance the economy’s knowledge base and drive innovation. Universities and university spin offs can help stimulate innovation in industry and are an asset to the local community. Indeed, it has been estimated that a one percentage point increase in the number of people obtaining a higher education degree or diploma increases GDP per capita by 1.1 percentage points. This growth potential can be passed down from generation to generation, since a well-educated parent is more likely to produce well-educated children. United Kingdom tertiary graduates are estimated to generate £55,000 in income tax and social contributions. Those without a secondary qualification saw their employment rate fall by 3.3 percentage points from 2008 to 2010.

  • 32 BIS, Higher Education : Students at the Heart of the System, op. cit.

18The current coalition government is seen to be moving away from the concept of higher education as a public good altogether and towards a market economy with students becoming consumers of a marketised product : higher education. In the white paper, Students at the Heart of the System32, the government justifies the move towards fee-paying, and what can be seen as an increasingly marketised system, by explaining the financial need to cut costs. Higher education has become accessible to all, moving from a minority to a mass system which means that the public purse can no longer afford to finance the system. According to the report, there is a need to invest in order to stay alive with increased competition from other countries. This higher education white paper sets out the plan for the government to respond to this through more individual contributions, through the application of the 2012 Higher Education Bill. Under this bill, fees were raised from £3,375 on average to a maximum of £9,000 for the 2012/13 academic year. It can be seen as the fruition of a marketisation programme, which began in 1979. This has involved finding faster and more flexible ways of budgeting, managing and accounting for delivery of services and minimization of costs, otherwise known as New Public Management.

  • 33 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Highe (...)

19However, educational services in the United Kingdom are not completely marketable. There are still restrictions on entry to the market, prices are still controlled with a maximum band (£9000), financial limits have been placed on the number of funded places, loans for fees and maintenance are still subsidized and grants and bursaries are available for students from disadvantaged backgrounds. Moreover, university research is still subsidized by the government. However, there has definitely been an increasing move towards marketisation of educational services since 1979, which can be seen through the fact that there is easier access to education. Indeed, limits on student intake have been lifted for certain categories of students and controls on numbers have been relaxed. Research is no longer funded through funding councils or research councils and a quasi-market has been created. But perhaps the biggest indicator of the extent to which higher education has been marketised, as Brown and Caraso33 underline, is that the majority of resources to finance institutions come from private sources : students, former students, companies, charities or individual donors.

The consequences of the move towards a market-oriented approach to education

  • 34 Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Trade”, op. (...)

20There is thus much more emphasis now on education as a private good rather than a public one. Each individual must treat education as a marketable commodity and consider whether it is worth their while to buy this commodity. As Tilak34 points out this shift can have a number of consequences. It may have a crowding out effect on the social returns because only the economic returns of education are considered, that is the returns from a private commodity. There is no longer consideration of the need to pursue knowledge for its own sake, for social gains. Although the government claims that there is fairer access to education, pursuing higher education will certainly be more difficult for students with fewer means. There is no longer a collective decision-making process on how one generation contributes to moving their country forward.

  • 35 Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Tr (...)
  • 36 Knowledge capitalism is know-how that results from experience, knowledge, lear (...)
  • 37 General Agreement on Trade in Services. Treaty of the World Trade System that entered in (...)
  • 38 Agreement on Trade Related Aspects of Intellectual Property Rights. This is also another (...)
  • 39 Making into a commodity or commercializing a product or service, especially one that can (...)

21Tilak35 also underlines that higher education risks becoming disengaged from public interest and just serving narrow interests. Such an approach may reduce government intervention and financing and can limit the scope and area of study with important disciplines becoming extinct. It can also affect knowledge production and what is often referred to as “knowledge capitalism”.36 If it really becomes a commodity, like other commodities, it would be subject to GATS37 and TRIPs38 and there would thus be obstacles to its provision on a national and global level. Since it may restrict access to higher education and increase education inequalities, marketising and commodifying39 education can also affect basic human rights. Indeed, article 13 of the 1948 UN Declaration on Human Rights states that every nation has a right to equal access to education (The United Nation Covenant on Economic, Social and Cultural Rights).

  • 40 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Educatio (...)
  • 41 Reported in : Roger Brown, Helen Caraso, Everything for Sale ? The Marketisati (...)

22Moreover, introducing market competition into education tends to increase resources devoted to management and administration and diminish funds devoted to teaching. There is fear that increased marketisation means diminished collegiality and the ability for academics to control or influence what is being taught. Although it can be argued that market competition can improve quality as institutions must respond to students and research funders to improve the quality of service, it may also diminish the quality of educational services through the lowering of standards, through grade inflation and the acceptance of plagiarism40. There may be a crowding out effect with resources being concentrated on activities such as marketing and enrolment. The idea that there is less choice has been confirmed by a University and College Union (UCU) 2012 survey which found that, over the past six years, the number of degree courses on offer in United Kingdom universities have been reduced by at least a quarter, particularly in humanities and languages.41

  • 42 Anthony Lowrie and Jane Hemsley-Brown, “This Thing Called Marketisation”, Taylor & Franc (...)

23According to Lowrie and Hemsley Brown,42 marketisation has increased quality as institutions are forced to implement improvements to attract students. However, to keep up with the game, institutions may be forced to accept students who are not really capable of following undergraduate courses, which could bring the overall level down. As mentioned earlier, they may often be forced to pass students who do not really merit it. But it is difficult to judge whether these changes that have started to emerge in the United Kingdom are entirely down to the marketisation of services. They may be the result of the demands of an increasingly globalised education system and labour market, since neighbouring countries, such as France, have encountered similar problems in recent years.

  • 43 Anthony Lowrie and Jane Hemsley-Brown, “This Thing Called Marketisation”, op. cit.

24Lowrie and Hemsley Brown43 state that the marketisation of United Kingdom educational services has led to a highly segmented system benefiting the most privileged who are the only ones that can afford to attend the high-priced prestigious institutions. The least advantaged have to attend the lower-priced institutions. Marketisation thus exacerbates inequalities.

  • 44 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Educatio (...)
  • 45 The Times Higher Education World University Rankings, for example, takes into account th (...)

25Yet, for all these possible negative outcomes, it is worth considering the value of education as one of the United Kingdom’s leading export commodities. It cannot be a pure coincidence that countries that have taken a more market-oriented approach, like the US and the United Kingdom, are the most competitive in world markets for educational services. According to Brown and Caraso,44 this increased marketisation has had a number of benefits for the education sector in the United Kingdom. It has made British universities and colleges more efficient and competitive on an international scale. They come second only to the US on research performance indicators and teaching is seen to be of a very high standard45 in international league tables.

  • 46 BIS, Estimating the Value to the UK of Education Exports, London: The Stationary Office, (...)
  • 47 Oxford Economics, The Economic Impact of the University of Exeter’s International Studen (...)

26In 2012, education industries, government and health combined contributed the most to GVA, around 19.9% or £261 billion. The value of British education exports has been estimated at £14.1 billion in 2008/09, with education-related projects attracting a total of £9.6 million Foreign Direct Investment.46 The analysis suggests that, from the current baseline of £14.1 billion, the value of the education-related export market might be approximately £21.5 billion in 2020 and £26.6 billion in 2025 (in 2008/09 prices). This represents an annual growth rate of approximately 4.0% per annum in real terms. There is also a spin off effect for the reception of international students. A recent study carried out by Oxford Economics estimated that for every 10 international students, 6 jobs were supported in the South West.47 The United Kingdom has a leading position in terms of attracting international students based on its international reputation for education and research, historical trade and political links and the universality of the English language. Transnational education, that is United Kingdom courses provided overseas, is also very popular. In 2009/10, transnational education was worth more than the gains from overseas students coming to the United Kingdom to study.

  • 48 Geraint Johnes, “The Global Value of Education and Training Exports to the UK Economy” (...)
  • 49 BIS, Estimating the Value to the UK of Education Exports, op. cit.

27Estimates have been made to evaluate the contribution of education-related services and goods to the British economy, and notably exports and FDI. This is larger than the scope of educational services alone because “education-related” can include inputs (training etc.) or outputs. Examples of education-related activities include fee income from non-UK domiciled students studying at an institute of education, income from courses administered abroad, income from research grants, contracts and collaboration from overseas, contributions from alumni located overseas, charitable donations from overseas, income from internationally-located spin-outs and licensing of intellectual property overseas. The total value of education and training exports is therefore much greater than the government’s estimates. Such values were published in two reports, both commissioned by the British Council.48 These studies found that the education sector generated income originating from overseas ranging between approximately £22.1 billion in 2001/02 to £27.8 billion in 2003/ 04. Adjusting these analyses to account for inflation implies that the estimates of the value of British education-related exports stand at between £25.1 billion and £30.9 billion in 2008/09 prices.49

  • 50 Lorraine Dearden, Emma Fitzsimons and Gill Wyness, The Impact of Tuition Fees and Suppor (...)

28Nevertheless, the hike in tuition fees in 2012, as a move towards greater marketisation of educational services in the United Kingdom, might have an adverse effect on the value of educational services. Indeed, the Institute for Fiscal Studies used cross-sectional information taken from Labour Force Surveys between 1992 and 2008 to analyse the effects of various Higher Education student reforms carried out, and notably the introduction of fees from 1998/99. It estimated that an increase in tuition fees of £1,000 per year led to a decline in the participation rate of 4.4 percentage points. The increase in grants and loans in the period after 1998/9 was not sufficient to make up for this decline.50 This would suggest that the most recent hike in fees will have a significant impact on participation rates and thus affect the strength of educational services, exports and FDI. The effects of the introduction of higher fees will, however, be difficult to distinguish between the possible fall in FDI due to the proposed change to immigration policy, which might also have an adverse effect on exports and FDI. Indeed, non EU students are to be restricted on the type of courses they can apply for.

  • 51 A business that involves both the manufacture of goods and the provision of se (...)

29It would seem, therefore, that there are mixed messages on the possible consequences of an increasingly market-oriented approach towards the provision of educational services. The present coalition government strongly calls for a marketised approach towards higher education, not only because it is believed that the benefits of education accrue to the individual, but also because the economic future of the United Kingdom lies in the expansion of private knowledge-intensive industries, the growth of a low carbon, manu-services,51 creative and cultural industries and high-tech and business service intermediaries, which can only be achieved through a more efficient education system. According to the coalition government, the benefits of the development of such industries through enhancing educational services are essential for the economic future of the United Kingdom. Enhanced economic growth should have a trickle-down effect to benefit the whole of society and thus contribute to the public good.

Conclusion

  • 52 Charles T. Clotfelter, Buying the Best : Cost Escalation in Elite Higher Education(...)

30It is clear from our analysis that the United Kingdom has increasingly moved towards a marketised system of higher education, in line with ambitions set forth by Keith Joseph in the early 1980s. State intervention is still necessary to ensure the provision of education for all, but marketisation and commodifying higher education also risks excluding underprivileged students from attending the most prestigious institutions. As a number of commentators have pointed out,52 in the increased move towards a marketised system and a quasi-private provision of higher education, it should be recognized that higher education institutions are not private firms providing a business commodity. The public goods aspects and benefits to the wider society need to be taken into consideration. In many cases, they are not pure products to be bought and sold on the market. They must be considered aside from commercial endeavours to ensure that our culture heritage, intellectual independence and the values of each society are protected. This idea is reinforced by Andre Beteille, emeritus professor of sociology :

  • 53 Andre Beteille, “Universities as Public Institutions”, Economic and Political Week (...)

Higher education institutions act as bastions of rich traditional values at the same time as providing the setting for a new kind of social imagination and experience…They are important social institutions that provide the setting for a very distinct kind of interaction among young men and women, between the generations and the nations.53

  • 54 Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Trade”, op. ci (...)

31This is why the social values of education must be protected and the public good nature underlined. If education moves too much towards a market system and the so-called “WTO-enforced marketplace”,54 it may lead to the eventual decline of higher education as we know it today.

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Notes

1 There is no universal definition of the “knowledge economy”. The OECD gives a very general definition : “trends in advanced economies towards greater dependence on knowledge, information and high skill levels and the increasing need for ready access to all of these by the business and public sectors”. A White Paper written by the UK Department of Trade and Industry underlines that : “the generation and exploitation of knowledge has come to play the predominant part in the creation of wealth. It is not simply about pushing back the frontiers of knowledge ; it is also about the most effective use and exploitation of all types of knowledge in all manner of economic activity”.

2 Sandra Fisher, “Is There Need to Debate the Role of Higher Education and the Public Good”, Level 3, Issue 3, Dublin Institute of Technology, May 2005, 1-29; Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Trade”, Prospects, Issue 38, 2008, 449-446; Charles T. Clotfelter, Buying the Best : Cost Escalation in Elite Higher Education, Princeton NJ: Princeton University Press, 1996; Gordon Winston, “Subsidies, Hierarchy and Peers : The Awkward Economics of Higher Education”, Journal of Economic Perspectives, vol. 13, no. 1, 1999, 13-36.

3 OECD (STI), The Service Economy, Paris: OECD Publications, 2000, 7.The UK’s national accounts are in line with international standards and are based on the international definition of services (i.e. the International Standard Industrial Classification).

4 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, London: Routledge, 2013.

5 Pedro Texeira, Ben Jongbloed, David Hill, Alberto Amaral, eds., Markets in Higher Education : Rhetoric or Reality ? Dordrecht: Kluwer, 2004.

6 This can be said to be close to the corporatist model described by Esping-Andersen.

7 Paul Samuelson, “The Pure Theory of Public Expenditure”, Review of Economics and Statistics, vol. 36, no. 4,

26 February 2007, 387-389.

8 Pedro Texeira, Ben Jongbloed, David Hill, Alberto Amaral, eds., Markets in Higher Education : Rhetoric or Reality ? Dordrecht: Kluwer, 2004, op. cit.

9 BIS, The Impact of University Degrees on the Lifecycle of Earnings : Some Further Analysis, London: The Stationary Office, 2013.

10 OECD, Education at a Glance, Paris: OECD, 2012.

11 John Stuart Mill, On Liberty, London: Longman Robert & Green, 1869. New York: Bartleby.com, 1999.

12 Joseph Stiglitz, “Knowledge as a Global Public Good”, Global Public Goods, 1999, vol. 1, no. 9, 308-326.

13 Alain Schoenenberger, ‘Are Higher Education and Academic Research a Public Good or a Public Responsibility ? A Review of the Economic Literature’, in Luc Weber and Sjur Bergan (eds.), The Public Responsibility for Higher Education and Research, Strasbourg: Council of Europe Publishing, 2005, 45-94.

14 Ben Jongbloed, “Regulation and Competition in Higher Education”, in Pedro Texeira, Ben Jongbloed, David Hill, Alberto Amaral, eds., Markets in Higher Education : Rhetoric or Reality ? Dordrecht: Kluwer, 2004, op.cit.

15 Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, Chicago: University Of Chicago Press, (1977) [1776].

16 Simon Marginson, “The Public/Private Division in Higher Education : A Global Revision”, Higher Education, no. 53, 2007, 307-333.

17 Brian Pusser, “Higher Education, the Emerging Market and the Public Good” in Patricia A. Graham and Nevzer G. Stacey (eds.), The Knowledge Economy and Postsecondary Education, Washington D.C: National Academy Press, 2002.

18 That is the fact or policy of not excluding members or participants on the grounds of gender, race, class, sexuality, disability, etc.

19 Tony Chambers and Bryan Gopaaul, “Decoding the Public Good of Higher Education”, Journal of Higher Education Outreach and Engagement, vol. 12, no. 4, 2008, 59-91.

20 Simon Marginson, “The Problem of Public Goods in Higher Education”, op. cit.

21 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, op. cit.

22 Committee on Higher Education, Higher Education : Report of the Committee Appointed by the Prime Minister under the Chairmanship of Lord Robbins 1961-63, London: HMSO, 1963.

23 Simon Marginson, “The Problem of Public Goods in Higher Education”, 41st Australian Conference of Economists, Melbourne, 8‐2 July 2012.

24 Jane Sullivan, Public Good : Higher Education as Social Value, London: The Work Foundation, 2011.

25 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, op. cit.

26 Lord Leitch, “Prosperity For All in the Global Economy : World Class Skills”, London: The Stationary Office, 2006. It is worth noting that the government’s notion of competitive is questionable. Nevertheless, international league tables analyzing the quality of research and teaching have positioned a number of British universities at the top (Oxford university and Cambridge university for example).

27 The report describes these as skills which provide real returns for all parties concerned : skills which can deliver mobility in the labour market for both individuals and employers.

28 In that order.

29 Ronald Dearing, Report of the National Committee of Inquiry into Higher Education, London: The Stationery Office, 1997 (Chapter 5, 5.11).

30 BIS, Higher Education : Students at the Heart of the System, London: The Stationery Office, 2011.

31 BIS, An Independent Review of Higher Education Funding and Student Finance, London: The Stationery Office, 2010, 20-21.

32 BIS, Higher Education : Students at the Heart of the System, op. cit.

33 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, op. cit., 124.

34 Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Trade”, op. cit. ,460.

35 Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Trade”, op. cit., 459.

36 Knowledge capitalism is know-how that results from experience, knowledge, learning and skills applied to the economy. Mark Olssen, and Michael A. Peters, “Neoliberalism, Higher Education and the Knowledge Economy : From Free Market to Knowledge Capitalism”, Journal of Education Policy, vol. 20, no. 3, 2005, 313-345.

37 General Agreement on Trade in Services. Treaty of the World Trade System that entered into force in 1995 intended to liberalise trade in the service sector. Detractors claim that this system risks compromising national authority over service provision. National governments can exclude specific services from liberalization under the GATs but there is increasing pressure to provide public services on a commercial basis and adhere to the GATS clauses, opening the way to more marketisation or privatisation of educational services in Britain.

38 Agreement on Trade Related Aspects of Intellectual Property Rights. This is also another international agreement of the WTO that entered into force in 1994 in order to establish minimum standards for all forms of intellectual property.

39 Making into a commodity or commercializing a product or service, especially one that cannot normally be considered in market terms.

40 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, op. cit.

41 Reported in : Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, op. cit.

42 Anthony Lowrie and Jane Hemsley-Brown, “This Thing Called Marketisation”, Taylor & Francis Journal of Marketing Management, vol. 27 (11-12), 2007, 1081-1086.

43 Anthony Lowrie and Jane Hemsley-Brown, “This Thing Called Marketisation”, op. cit.

44 Roger Brown, Helen Caraso, Everything for Sale ? The Marketisation of UK Higher Education, op. cit.

45 The Times Higher Education World University Rankings, for example, takes into account the quality of teaching, but also research, knowledge transfer and international activity. The indicators for teaching include a faculty-student ratio, an institution’s total resources scaled for its size, the doctorate-to-bachelor’s ratio and the results of the world’s largest invitation-only survey of global academic opinion.

46 BIS, Estimating the Value to the UK of Education Exports, London: The Stationary Office, 2011.

47 Oxford Economics, The Economic Impact of the University of Exeter’s International Students, Exeter : University of Exeter, 2012.

48 Geraint Johnes, “The Global Value of Education and Training Exports to the UK Economy” British Council and UK Trade and Investment, 2004 ; Pamela Lenton Global Value, The Value of UK Education and Training Exports : an Update, British Council, 2007. Available from : <http://www.britishcouncil.org/global_value_-_the_value_of_uk_education_and_training_exports_-_an_update.pdf>.

49 BIS, Estimating the Value to the UK of Education Exports, op. cit.

50 Lorraine Dearden, Emma Fitzsimons and Gill Wyness, The Impact of Tuition Fees and Support on University Participation in the UK, IFS Working papers, July 2011.

51 A business that involves both the manufacture of goods and the provision of services.

52 Charles T. Clotfelter, Buying the Best : Cost Escalation in Elite Higher Education, op. cit. ; GordonWinston, “Subsidies, Hierarchy and Peers : The Awkward Economics of Higher Education”, op. cit.

53 Andre Beteille, “Universities as Public Institutions”, Economic and Political Weekly, vol. 40, no. 31, 2005, 3377-3381.

54 Jandhyala B. G. Tilak, “Higher Education : A Public Good or a Commodity for Trade”, op. cit.

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Louise Dalingwater, « Has Education in the United Kingdom Become a Marketable Product Like Other Value-Added Services? », Revue LISA/LISA e-journal [En ligne], vol. XIV-n°1 | 2016, mis en ligne le 31 mai 2016, consulté le 17 décembre 2017. URL : http://journals.openedition.org/lisa/8890 ; DOI : 10.4000/lisa.8890

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Louise Dalingwater

Louise Dalingwater est maître de conférences en civilisation britannique et anglais économique au département du Monde Anglophone, à l’université de la Sorbonne Nouvelle, Paris III. Sa thèse de doctorat intitulée « Les services dans l’économie britannique de 1979 à 2007 » étudie l’apport des services à l’économie britannique. Cette étude l’a menée à d’autres pistes de recherche telles que le rôle des services financiers au Royaume-Uni et la contribution des exportations des services à l’économie britannique.

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