Underfunding, and caps on prices, mean universities will have limited incentives to offer enough places in the fields students want.
The Bradley Review’s recommendation of a demand-driven system of funding university places was made without explicit reference to labour market demand for particular skills and qualifications. It has been implemented without much regard for student demand by field of education. It is clear that the Government underestimated both students’ and universities’ reaction to the opening up of the system. For this reason, initial projections of the cost of a demand-driven system were understated.
Student demand has shifted to more expensive fields (Science, Engineering and especially Health), increasing the fiscal cost of the demand-driven system. The gap between funding and costs is biggest in these more expensive fields, and demand-driven funding will reduce universities’ ability to cross-subsidise more expensive programs. Underfunding, and caps on prices, mean universities will have limited incentives to offer enough places in the fields students want. There is fundamental contradiction: volume has been deregulated, while price remains fixed.