Fixing the broken market in part-time study

Posted on 16 November 2017 • The OU speaks out

Open University says part-time students ‘learning while earning’ need direct funding

• A new report by The Open University, “Fixing the Broken Market in Part-Time study”, published on the website of the Higher Education Policy Institute (HEPI), says the collapse in part-time higher education is a symptom of a broken market
• It says part-time higher education can support the Government’s objectives on social mobility, the economy and public finances
• The OU says the only way of tackling the crisis is to reduce the substantial financial barriers caused by the impact of the 2012 reforms on tuition costs.

Separate and direct funding for part-time higher education students and providers to reduce the cost of study in England is essential if the UK Government is serious about developing the skills the country needs, argues Peter Horrocks, Vice-Chancellor of The Open University, in a report published on the website of the Higher Education Policy Institute (HEPI).  The report is calling on the Government to put the crisis in part-time at the heart of its review of university funding announced by the Prime Minister, and the forthcoming Industrial Strategy. It argues that direct funding could be in the form of a part-time ‘premium’; or specific learning and earning incentives of direct support such as tax credits, learn and earn vouchers, or increased flexibility in the apprenticeship levy.

Funding reforms devastated part-time market

Peter Horrocks says that the sharp rise in tuition fees prompted by the 2012 education funding reforms devastated the market for part-time higher education in England, which has seen a 61% fall in the number of students since 2008.  The shortfall in funding, particularly affecting those in the working age group aged between 30 and 49, risks undermining attempts to boost skills training and increase economic productivity.

Part-time higher education is solution to skills crisis

Incentivising people to choose part-time over more expensive full-time courses brings savings to the public purse and increases productivity through better skills training which is implemented quickly as students ‘learn and earn’.

Peter Horrocks says: “Part-time study, particularly the ability to learn and earn, is not only the key to tackling the UK’s slow growth and low productivity but also a vital engine of social mobility. Employers already decry a lack of skills within the workforce, yet the shortfall cannot be made up simply from the ranks of young full-time graduates.

If we are to truly provide the skills the country needs, we need to put in place direct financial incentives to develop solutions to the market failures affecting part-time higher education.

He says that Ministers must now give “urgent consideration” to solutions which would cut costs for people who want to learn while they earn.

Radical financial solutions to market failure

Peter Horrocks says: “The market for part-time higher education in England is in crisis. That creates major economic and social disadvantages. Changes to the part-time loan system could help. But truly transforming learning and earning will require new funding streams aimed at reducing the costs of study, targeted at where market failures are most chronic. Appropriately targeted and using relevant incentives and available funding, this could be done in a fiscally responsible manner.”

The report paves the way for further research into detailed costings but suggests that a new system could be cost effective and pay for itself in time. The Open University will work with employers, education experts and think tanks in coming months to develop detailed proposals for direct support to part-time students.

Find out more

Read Peter Horrocks’ blog on the value of lifelong learning.

The Open University previously published an essay in a collection curated by the Higher Education Policy Institute.