Funding in Higher Education and Economic Growth in France and the United Kingdom, 1921-2003

Vincent Carpentier
2006 Higher Education Management  
The 2004 Higher Education Act generated important debates about the relationships between higher education (HE), economic growth and social progress. The range of positions expressed in relation to the increase of annual tuition fees raises crucial questions about the public and private funding of HE and its individual and social economic benefits. The analysis of new historical data from the 1920s onwards shows that the expansion in university resources was not linear and may be related to
more » ... economic cycles. Moreover, private funding periodically increased in order to replace diminishing public funding, rather than taking the form of additional resources. In consequence, private funds did not provide an overall rise in the universities' income. The considerable fluctuations of funding, combined with a more consistent growth of enrolment, led to a recurrent mismatch between resources for and access to HE, explaining the wide fluctuations of resources per student over the period. Such historical trends question whether, in the future, increased fees will be a substitute for public spending. Or will variable fees rather combine with even greater increases in public funding as part of a national project to support HE students from all social backgrounds and to boost expenditure per student? tuition fees of up to £3,000. Following the Dearing Report's recommendations (1997), the government considered higher fees as necessary additional resources in a context of competition from international universities. Access to HE will not be compromised, the government argues, because upfront fees are to be abolished and financial support is to be offered to students from poor backgrounds. But opponents have drawn attention to the deterrent effect of the increased levels of debt for students upon graduation (Callender, 2003) and a potential increase of inequality between higher education institutions (Ainley, 2005; Brown, 2005). Similar concerns were directed towards the Conservatives' counter proposition to replace fees with higher interest rates for students' loans (Carpentier, 2004a) . Although there is a consensus on the need to reform HE, different views are expressed about the extent and the nature of changes to be implemented. Most controversies focus on alternative ways of financing HE and on the orientation its development and democratisation should take. Key issues concern the relative contributions of private and public finance, the possible effects in terms of attendance and equity and the benefits for the society as a whole. The range of positions expressed in relation to top up fees raises crucial questions about the public and private funding of HE and its individual and social economic benefits (Barr, 2003a; Dearden et al, 2005). This article draws on findings from an ESRC-funded research which sought to inform current debates by examining the long-term links between HE funding and economic fluctuations (Carpentier, 2004b). The aim was to construct and analyse historical series on funding and development of UK universities since the 1920s in order to explore continuities and contrasts with previous HE controversies. The analysis is strengthened through comparison with France where the UK debate starts having a strong resonance (Belloc, 2003; Aghion & Cohen, 2004). The article is divided into four parts. The first part presents the methodology. The second provides an overview of the main transformations of HE since the 1920s charting the fluctuations of funding and access. The third part draws on historical perspectives distinguishing different regimes of HE with specific articulations of funding and access policies. Finally, some conclusions are drawn. 2 1) A multidisciplinary approach on HE finance This article combines economic and historical perspectives within a quantitative approach in order to locate some of the socio-economic driving forces behind the expansion of HE. a) Economic theory and HE policy Both before and during the debates surrounding the White Paper, there have been fruitful attempts to assess the links between funding and access in HE and the economy (Barr, 1993; Williams, 1992) and to provide an answer to the fundamental question of "how to pay for mass, high quality higher education?" (Barr, 2003b) . Following the path of human capital theory (Becker, 1962; Schultz, 1961), many research sought to evaluate and arbitrate between public and private funding of HE and its private (wages and social capital) and social (externalities) returns (Blundell et al This article seeks to contribute to these debates by examining the links between the funding and development of HE and socio-economic changes through the theory of systemic regulation. This theory attempts to interpret transformations of the economic system in terms of developing connections with spheres (like education) that are influenced, but not fully determined, by economic dimensions (Fontvieille, 1990; Michel, 1999) . The theory suggests that, as education may not only represent a cost for the economy, but also furnish a main determinant of its growth, the development of the educational system may be interpreted, in part, as the outcome of regulation processes between public expenditure on education and long economic cycles. Previous work has shown that the fluctuations of public expenditure on education in the UK since 1833 were connected to 50-year Kondratiev economic cycles (Carpentier, 2003) . Moreover, the fluctuations were reversed to economic cycles before 1945 and then synchronised. Before 1945, the rapid growth of public expenditure on education during periods of economic downturn may be explained in terms of an attempt to revive the economy. On the contrary, after 1945, the growth of public educational resources accelerated during the period of post-war prosperity, only to go into decline following the economic crisis of 1973. The 1945 transition to procyclical public educational expenditure may represent the recognition of education as a driving force in the economic system rather than simply a means of correction. In this context,
doi:10.1787/hemp-v18-art16-en fatcat:63icub2ai5fprj5t5ksc3hbgte