Why British Universities Are Being Run Like Cartels

This article was originally published as part of our "Is University Still Worth It?" week, but remains as relevant today, in February of 2018, following the news that Prime Minister Theresa May will announce an independent review of university fees and student finance, citing the fact that UK students face "one of the most expensive systems of university tuition in the world". The only thing that's changed, in fact, is that Sam Gyimah is now Universities minister.

Many people are in so much debt from their time at university, they barely bat an eyelid when it comes to getting into more. Another £1,000 overdraft? Why not, I'll take two.

But where exactly does your money end up? Universities in the UK are being accused by some of operating like an illegal cartel because they have almost all been charging the maximum £9,000 a year in undergraduate tuition fees since the cap was raised in 2012. As a result, the government is facing pressure to investigate the fat cat salaries awarded to university vice-chancellors, largely paid for by increased student fees. Despite the 1.1 percent cap on pay for non-managerial staff across the higher education sector, some vice-chancellors are earning up to half a million pounds a year, living for free in luxury houses and on top of that receiving masses back in expenses.

But is this just a drop in the ocean when it comes to the overall turnover of the organisation? Or are they really worth the money?

Sally Hunt, the General Secretary of the University and College Union (UCU), says there's no question that student fees are paying for vice-chancellors high pay. She thinks the current system "stinks", and that such glaring disparity in wages won't be tolerated for long. "It seems to me that where you have salaries in the region of, £300,000 to £500,000, and other staff who have less than inflation pay rises and further cuts to their pensions, then it is not sustainable for those at the top of the tree to keep giving themselves this kind of money," she says. "It's not right, it's not right at all."

So why are these people being paid so much? And how the hell did it come about? Jo Johnson, universities minister, says that vice-chancellors have been operating as a cartel to raise tuition fees. "Institutions are looking around at what other vice-chancellors are being paid and as a result we are seeing a relentless upward ratchet, which isn't correlated with performance," he says. "I want it to be linked clearly to the quality and teaching of those institutions rather than an insiders club operation where the ratchet effect takes place year after year. That's got to stop."

Even though most unis are now set to introduce basic fees of £9,250 per year, sometimes for just nine hours teaching a week with not great job prospects at the end of it, Johnson doesn't think student fees have got out of hand. "Access to higher education is now wider than ever before and if you're from a disadvantaged background you're now more than 43 percent more likely to go to uni than you were in 2009." he says.

He maintains that higher education is still one of the best investments anyone can make in their future. "Your lifetime earnings as a woman are going to be £250,000 higher than those with the same A-levels who doesn't go on to university, for a man it's £170,000 higher. There is a demand for people with university levels of education," he points out.

Others, such as Andrew Adonis, the architect of the last Labour government's education reforms, have said that tuition fees in England should be scrapped. They believe they have become completely unreasonable, loading £50,000 or more in debt, onto the backs of graduates. Hunt agrees, but thinks that putting the cost of university on students and families was a mistake from the start. "When we talk about Frankenstein's monster happening now I think that was going to happen from the very day that New Labour brought this system into place," she says. "Is it out of control now? Completely."

As a result, she says Corbyn's pledge to abolish tuition fees "is one of the most exciting developments in terms of Labour party policy that we've seen in years" and they are doing it knowing that they are confronting years worth of entrenched ideas.

So, other than reducing or scrapping fees altogether, what else can be done to curb fat cat salaries? Sir Anthony Seldon, vice-chancellor of the University of Buckingham, which came at the top in the first-ever Teaching Excellence Framework (TEF) rankings, has taken a pay cut and thinks other should follow suit. He told us that universities shouldn't be worried about people choosing higher salaries in other countries because if they do,"then they're not the kind of people that should be doing the job in the first place". He thinks being the vice-chancellor of a university is a privilege and, although they job may vary depending on the size and challenges of the institution, people need to exercise some restraint.

Anger is growing, and Hunt thinks students are inevitably starting to question where their fees are ending up. "Why would you not want to know how someone's pay is determined if you know you are in part responsible for paying it?" she says. Johnson is hopeful, however, that by assessing factors such as contact hours and class sizes, students will have a clear idea of the kind of experience they will be getting in exchange for their fees.

Ultimately, if this was their generation, would they have gone ahead with it? 25 years ago, would Johnson have studied Events Management at Leeds Beckett for £9250 a year, (the current fees for that course)? He says he's be thinking very hard about it. "I would look very carefully at how the institution was performing compared to its peers and the outcome it's delivering," he says. "I'd make the assessment whether that's value for money."

@tessreidy