Product Type: Market Research Report
Published by: Key Note Publications Ltd
Published: July 2006
Product Code: R310-1332Description Students in the UK have the choice of 171 universities, higher-education colleges and other institutions offering qualifications above `A' level standard. Universities have charitable status, but this remains an under-exploited advantage, that could be used to generate larger funding streams.
In 2003/2004, one person in every 22 aged 18 or over was a higher-education student, so the economics of the sector are of direct importance to a wide swathe of the population. The total number of undergraduates rose by nearly three-and-a-half times between 1970/1971 and 2003/2004, to more than 1.9 million. The most startling escalation was in the number of female part-time students, up from 19,000 in 1970/1971 to 445,000 in 2003/2004. The numerical dominance of women in higher education is one of the most significant changes in the sector since 1970/1971. By 2000/2001, women outnumbered men in higher education, and by 2003/2004 there were around four women for every three men in higher education. Women gain more degrees than men at every level except Doctor of Philosophy (PhD).
The huge rise in the number of female students poses difficulties for families in the future, because the need to repay student loans and finance housing will force large numbers of female graduates to work when they may well prefer to stay at home and look after children.
Universities are increasingly dependent on income from foreign students, who in 2003/2004 numbered 304,400 (including both full-time and part-time students), around one in eight of the total full-time and part-time student population. Foreign students account for 48.3% of full-time postgraduates. This has implications for the UK economy. In addition, innovative research into topics that fire the curiosity of individual researchers, and which could lead to new industries, is rare because research funding is tied to priorities that the Government and large employers have already identified.
Higher education accounted for 11.9% of all public spending on education in 2003/2004, down from 13% in 1999/2000. The basic sources of income — funding-council grants and tuition fees and grants — represented 62.8% of the total in 2004/2005, the same proportion as in the previous year. Endowment and investment income rose, but in 2004/2005 still accounted for only 1.7% of total income. The margin between income and expenditure narrowed to 1.2% in 2004/2005, from 1.4% the previous year.
The total input from public funds, around £8.26bn, was just under 60% of the total. The £5.62bn from private sources was indispensable to the functioning of higher education. The potential for fluctuations in these revenue streams creates difficulties for forward planning.
Just six universities, headed by Cambridge, Oxford and Imperial College, London, received more than £100m in research grants and contracts for 2003/2004. Huge savings in public expenditure on student support, £817.5m less in 2003/2004 than in 1999/2000, reflect the near-disappearance of grants and their replacement with loans.
Student-loan debt amounted to just over £13.36bn by the end of the 2004/2005 financial year. Student loans have taken over from the previous regime of non-repayable grants. Students starting courses in England and Wales in 1997/1998 were the last to receive maintenance grants until 2004/2005, when small grants were reintroduced for the poorest students. Means-tested maintenance grants increase again from 2006/2007, with full grants of £2,700 available for students from households with annual incomes below £17,500, and partial grants available on a sliding scale for those whose household incomes are between £17,500 and £37,425.
Means testing also exempted students who came from low-income families from contributing to tuition fees. Therefore the Government opted to increase, from September 2006, the amount of loan available to each student, to enable them all to pay `top-up' tuition fees of up to £3,000 a year.
Students from independent schools still have a better chance of starting (and finishing) courses in elite subjects at elite universities, leading to future high incomes, than young people from comprehensive schools.
The financial support that the NHS and other public-sector bodies provide to the students they sponsor distorts the market for higher education by favouring specific employment-related subjects, such as nursing, over non-vocational subjects such as philosophy and music.
In the 3 years from 2000/2001 to 2003/2004, the number of full-time foreign students in UK universities shot up by 25.2% overall, and by 63.1% for postgraduate students. By 2003/2004, China was the most important foreign buyer of UK higher education, with 42,600 full-time students enrolled, more than half of them postgraduates. Two in every ten overseas full-time postgraduate students in the UK were Chinese nationals. Even more Chinese students came to study in the UK in 2004/2005, but the overall annual rate of increase in foreign students dropped from 9% to 6.1%.
The UK is not a big spender on higher education in relation to other countries' expenditure per student on higher-education institutions. The UK is also rather parsimonious about handing out public money to support students, and relies on repayable loans to a greater extent than most other developed economies.
A quarter of all marketable wealth held by UK residents is in the hands of just 1% of adults, and in 2003/2004 around 19,000 individuals each had an income of more than £500,000. These individuals could help establish a culture of charitable giving to universities.
Adult children are increasingly dependent on their parents for financial support. This restricts the parents' saving for retirement. The Government's rising reliance on repayable loans for student support will result in larger debts for graduates. This, combined with still-rising property prices leading to larger mortgages, could significantly restrict future parents' capacity to aid their own children financially.Table of Contents
Executive Summary
1. Introduction
THE TOPIC
OBJECTIVES
METHODOLOGY
ORIGINAL RESEARCH
PROBLEMS IN THE RESEARCH PROCESS
DEFINITION
2. Strategic Overview
MARKET DYNAMICS AND SEGMENTATION
Occupational Scatter
Table 1: Qualifications and Jobs: Percentages of Adults of Working Age With First-Degree and Postgraduate-Level Qualification as Their Highest Qualification, 2005
Chinese-Origin Residents the Most Qualified
Table 2: Percentages of Great Britain Residents with a First Degree or Higher Qualification, 2004
Charitable Status
Mass Market
Table 3: Growth in Higher Education in the UK by Number of Higher-Education Students by Sex (000), 1970/1971-2003/2004
Figure 1: Growth in Higher Education in the UK by Number of Higher-Education Students by Sex (000), 1970/1971-2003/2004
Table 4: Growth in Full- and Part-Time Undergraduate Education in the UK by Number of Undergraduate Students by Sex (000), 1970/1971-2003/2004
Students: More Women, More From Abroad
Table 5: Number of Degrees Awarded in the UK by Type by Sex of Student, 1999/2000 and 2003/2004
Figure 2: Degrees Awarded in the UK by Type (%), 2003/2004
Table 6: Full-Time Undergraduate Students in the UK by Most Popular First-Degree Subject Areas by Sex (number of students and % from the UK), 2003/2004
Masters Degrees Are the New First Degrees
Table 7: Growth in Full- and Part-Time Postgraduate Education in the UK by Number of Postgraduate Students by Sex (000), 1970/1971-2003/2004
Foreign Students Flock to Technology Courses
Table 8: Full-Time Postgraduate Students in the UK by Most Popular Postgraduate Subject Areas by Sex (number of students and % from the UK), 2003/2004
The Rise of the Mature Student
Table 9: Students Aged 30 and Over in the UK by Type of Study by Sex (000 and %), 2003/2004
COMPETITIVE STRUCTURE
ADVERTISING
THE CONSUMER
MARKET FORECASTS
KEY POINTS
3. Funding for Institutions
SPENDING: HIGHER EDUCATION'S SHARE FALLS
Table 10: Higher Education in the UK by Source of Income (£m), 2003/2004 and 2004/2005
Table 11: Higher Education in the UK by Type of Expenditure (£m), 2003/2004 and 2004/2005
FEES FROM FOREIGN STUDENTS ARE VITAL
Table 12: Sources of Finance for Higher-Education Institutions in England (£m and %), 2003/2004
WORRYING PAY ISSUES
TEACHING VERSUS RESEARCH
Table 13: Universities in England with the Highest Annual Resources (£m), 2006/2007
Table 14: Most Efficient Institutions in the UK for Award of PhDs in Relation to Staff Costs, 1999/2000 and 2003/2004
OPEN UNIVERSITY FARES BETTER THAN UNIVERSITY FOR INDUSTRY AND E-UNIVERSITIES
STUDENTS TO PAY MORE
Table 15: Public Spending on Student Support in the UK (£m), 1999/2000 and 2003/2004
Figure 3: Public Spending on Student Support in the UK (£m and %), 1999/2000 and 2003/2004
KEY POINTS
4. Funding for Undergraduates and Postgraduates
STUDENT LOANS APPROACH £3BN A YEAR
Table 16: Student Loans in the UK — Public Debt (£m), 2002/2003-2004/2005
THE QUIET RETURN OF MAINTENANCE GRANTS
Table 17: New Students' Main Concerns (% of new students), May 2005
SPLIT BY SOCIAL CLASS
Table 18: Percentage of New Students from State Schools and Colleges by Subject Area, 1999/2000 and 2003/2004
Table 19: Highest Drop-Out Rates in the UK — Percentage of 2003/2004 Entrants No Longer in Higher Education After the First Year
NHS HAS A BIG IMPACT ON HIGHER EDUCATION
LEARNING AS A CONSUMER PURCHASE
KEY POINTS
5. Promotion and Advertising
HSBC AND NATWEST
Table 20: Main Media Advertising Expenditure on Student Bank Accounts (£000), Year Ending March 1998
Table 21: Main Media Advertising Expenditure on Student Bank Accounts (£000), Year Ending December 2000
Table 22: Main Media Advertising Expenditure on Student Bank Accounts (£000), Year Ending September 2001
Table 23: Main Media Advertising Expenditure on Student Bank Accounts (£000), Year Ending December 2005
KEY POINTS
6. An International Perspective
CHINA VALUES BRITISH DEGREES
Table 24: Number of Overseas Students in Full-Time Higher Education in the UK by Type of Study by Country of Origin, 2000/2001
Table 25: Number of Overseas Students in Full-Time Higher Education in the UK by Type of Study by Country of Origin, 2003/2004
Figure 4: Number of Overseas Students in Full-Time Higher Education in the UK by Country of Origin, 2000/2001 and 2003/2004
HOW THE UK SHAPES UP INTERNATIONALLY
Table 26: Annual Expenditure on Higher-Education Institutions Per Student by Country (US$ at purchasing power parity), 2002
Table 27: Subsidies for Higher Education to `Private Entities' (Students and Students' Households) by Country (% of gross domestic product†), 2002
KEY POINTS
7. PEST Analysis
POLITICAL FACTORS
Promotion Overseas is a Top Priority
University Funding Rises Up the Political Agenda
ECONOMIC FACTORS
Financial Strains for the Less Affluent
New Class of Super-Wealthy
SOCIAL FACTORS
Extended Dependence
TECHNOLOGICAL FACTORS
E-Learning — Cheaper But Lonesome
KEY POINTS
8. Consumer Dynamics
INTRODUCTION
OVERVIEW
Table 28: Summary of Public Opinions on Funding for Higher Education (% of respondents), November/December 2001 and April 2006
HAVING/STUDYING FOR A DEGREE, AND BELIEF THAT A DEGREE IS ESSENTIAL FOR A WELL-PAID JOB
Degrees Becoming the Norm
Degrees Regarded by Many as Essential for Well-Paid Jobs
Table 29: Belief That a Degree is Essential for a Well-Paid Job (% of respondents), November/December 2001 and April 2006
Table 30: Those Who Have or Are Studying for a Degree, and Belief That a Degree is Essential for a Well-Paid Job (% of respondents), April 2006
VEERING TOWARDS TOO MANY UNIVERSITY STUDENTS, YET ONLY A MINORITY AGREE THAT STUDENTS SHOULD PAY THE FULL COSTS THEMSELVES
Towards the End of Expansion?
Table 31: Opinion That Too Many Students Go to University Nowadays (% of respondents), November/December 2001 and April 2006
Apparent Support for Public Funding for Students
Table 32: Opinion That Students Should Pay the Whole Cost of Their Courses (% of respondents), November/December 2001 and April 2006
Table 33: Opinions That Too Many Students Go to University Nowadays, and That Students Should Pay the Whole Cost of Their Courses (% of respondents), April 2006
UNIVERSITY IS TOO EXPENSIVE — BUT ONE PERSON IN TWO OBJECTS TO PAYING MORE TAX TO HELP STUDENTS
Less-Affluent Students Disadvantaged
Table 34: Belief That Poorer Students Are Discouraged from University Because of the Cost (% of respondents), November/December 2001 and April 2006
Objections to Higher Taxes to Support Students
Table 35: Belief That Poorer Students Are Discouraged from University Because of the Cost, and Objection to Paying More Tax to Help Students (% of respondents), April 2006
LUKEWARM ON HIGHER TAXES, BUT FIRMLY AGAINST FURTHER GROWTH IN STUDENT NUMBERS
Minority Favours More Taxation to Aid Higher Education
Focus Should be on Quality of Courses, Not Increasing Student Numbers
Table 36: Those in Favour of Higher Taxes to Support Students, and Belief That the Government Should be More Concerned with the Quality of Courses Than the Number of Students (% of respondents), April 2006
CALL FOR PRIVATE SECTOR TO GIVE UNIVERSITIES MORE MONEY, BUT DIVISION AS TO WHETHER TO CONCENTRATE FUNDING ON A REDUCED NUMBER
Business Should Pay More
Opinion Split on Reducing the Quantity of Universities to Fund the Remaining Ones Better
Table 37: Opinions That the Government Should Reduce the Number of Universities and Fund the Remaining Ones Better, and That Business and Industry Should Give More Money to Universities (% of respondents), April 2006
IMPORTANCE OF FUNDING AND LEVEL OF EXCELLENCE FOR UNIVERSITIES
Universities Not Regarded as a Top Priority for Funding...
...But Excellence is Seen as Being in the National Interest
Table 38: Opinion That There Are Higher Priorities for Government Funding than Universities, and Belief That Having Universities That Are Centres of Excellence is in the National Interest (% of respondents), April 2006
MOST IMPORTANT ADVANTAGES OF UNIVERSITY EDUCATION
Skills for Employment Rated First, Expanding Knowledge Ranked Second
Table 39: The Most Important Advantages of University Education — Those Citing Skills for Employment and Expanding Knowledge (% of respondents), April 2006
Creative Thought and Friendship Networks Not Highly Rated
Table 40: The Most Important Advantages of University Education — Those Citing Enablement of Creative and Independent Thought, and Extension of Networks of Friends and Colleagues (% of respondents), April 2006
Different Views
Table 41: The Most Important Advantages of University Education — Those Citing None of the Suggested Benefits (% of respondents), April 2006
TIME TO EMPHASISE QUALITY
KEY POINTS
9. Company Profiles
INTRODUCTION
ABBEY NATIONAL PLC
Corporate Strategy
Advertising and Distribution
Profitability
Table 42: Financial Results for Abbey National PLC (£m, number, % and £), Years Ending 31st December 2002-2004
Future Company Developments
BARCLAYS PLC
Corporate Strategy
Advertising and Distribution
Profitability
Table 43: Financial Results for Barclays PLC (£m, number, % and £), Years Ending 31st December 2003-2005
Future Company Developments
THE CO-OPERATIVE BANK PLC
Corporate Strategy
Advertising and Distribution
Profitability
Table 44: Financial Results for The Co-operative Bank PLC (£m, number, % and £), Years Ending 10th January 2004 and 8th January 2005, and 53 Weeks to 14th January 2006
Table 45: The Co-operative Bank — Operating Profit, Average Retail Customer Deposits and Lending, and Total Assets (£m), Financial Years Ending 8th January 2005 and 14th January 2006
Future Company Developments
HBOS PLC
Corporate Strategy
The Halifax
Bank of Scotland
Advertising and Distribution
Profitability
Table 46: Financial Results for HBOS PLC (£m, number, % and £), Years Ending 31st December 2002-2004
HSBC HOLDINGS PLC
Corporate Strategy
Advertising and Distribution
Profitability
Table 47: Financial Results for HSBC Holdings PLC ($m, £m, number, %, $ and £), Years Ending 31st December 2003-2005
Future Company Developments
LLOYDS TSB GROUP PLC
Corporate Strategy
Advertising and Distribution
Profitability
Table 48: Financial Results for Lloyds TSB Group PLC (£m, number, % and £), Years Ending 31st December 2003-2005
Future Company Developments
THE ROYAL BANK OF SCOTLAND GROUP PLC
Corporate Strategy
The Royal Bank of Scotland
National Westminster Bank
Advertising and Distribution
Profitability
Table 49: Financial Results for The Royal Bank of Scotland Group PLC (£m, number, % and £), Years Ending 31st December 2003-2005
Future Company Developments
KEY POINTS
10. The Future
DEPENDENCE ON FOREIGN STUDENTS
Table 50: English Higher-Education Institutions Receiving the Highest Proportion of Income from Non-EU Foreign Students (£m and %), 2003/2004
Table 51: Impact of a Hypothetical 25% Drop in Fees from Non-EU Students on University Surpluses (£m and %) — 2003/2004 Outturn if Revenue from Outside the EU Were 25% Lower
HIGHER-EDUCATION STAFF: TOO FEW, TOO TEMPORARY, PAID TOO LITTLE
Table 52: Open-Ended and Temporary Employment in UK Higher Education (number of contracts), 2003/2004
Table 53: Full-Time Academic Staff in Higher Education in the UK by Grade by Sex (number), 2004/2005
CLOSING THE FUNDING GAP FOR INSTITUTIONS
More Endowments and Charitable Giving
Table 54: Comparative Endowment Per Student — UK and US (number and £), 2003
CLOSING THE FUNDING GAP FOR STUDENTS
Further Accelerating the Programme to Offer 2-Year Foundation Degrees, and Expanding the Range of Degrees
Table 55: Foundation-Degree Courses in the UK by Subject Area (number of courses), as at 12th June 2006
2-Year Honours Degrees
SUMMARY
KEY POINTS
12. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
Confidence Declines Again
Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), May 2005, August 2005, November 2005, February 2006 and May 2006
Signs That the Decline Could be Bottoming Out
Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), May 2005, August 2005, November 2005, February 2006 and May 2006
THE WILLINGNESS TO SPEND FROM SAVINGS
Sharp Decline in Spending from Savings
Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), May 2005, August 2005, November 2005, February 2006 and May 2006
Table D: The Proportion of Adults Without Any Savings (%), May 2005, August 2005, November 2005, February 2006 and May 2006
Borrowing Grows in Relative Importance
Table E: The Average Amounts Adults are Confident Spending to Purchase Expensive Items (£ and %), May 2005, August 2005, November 2005, February 2006 and May 2006
13. Further Sources
Banks
National Press/Other Published Sources
Government, Official and Representative Sources
General Sources
Bisnode Sources
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