A commentator simply using the name Robin posted the comment I reproduce below on the blog yesterday.
I am sharing the post because I agree with its sentiments, but I feel that the scale of the risk that he (I assume it is a man, but I cannot be sure) states exists is too limited. Feedback I am now getting from many universities is that a massive funding crisis is developing.
Some is simple to explain. Students not at universities are not paying hall fees and so cash flow to service debt is not being received.
First-year students, who most universities have now stopped teaching and who are simply being given free passes to their second years, are asking why they should pay tuition fees of more than £3,000 for the coming term that they will sit out and which add to their student debt when they are getting nothing at all in return. I completely sympathise with them. Why should they pay for this?
But the big crisis is the September intake. In many universities Masters courses are highly profitable, and are made up very largely of overseas students paying very high fees. 70% plus overseas students is not uncommon. There are also undergraduate courses where more than 50% of students are from overseas. These courses are at massive risk. Even if the students want to come, their parents, who very often pay for these courses, won't want to send their children to the country with the worst Covid-19 track record in Europe. They would simply be safer at home.
And I suspect some UK based undergraduates may defer too. After all, University is all about social mixing. Why go in that case if lockdown is continuing?
These points being made, this is the comment I wish to share, then I will consider the consequences.
There is a further crisis due to explode onto the scene in a few months time. It is/will be the culmination of the Tory/NL folly of marketising our higher education sector. To explain, one must go back to 2012 and the tuition fee increase.
When the Tories/LibDems, following on from NL initial moves towards a market for education, increased tuition fees by nearly 300%, this was done in conjunction with a removal of state support previously given directly to higher education providers (HEPs).
The reasons for this move were likely many, but one of the main ones, from the point of view of then chancellor Osborne was simple, by removing a stipend and replacing it with loans, he was able to write down (on paper) billions of £ of state spending. This simple accounting trick, turning costs into liabilities, allowed him claim a reduction in overall spending, thereby justifying a massive tax reduction/give away to the wealthy and corporations.
At the time of the change, the legislation which allowed fees to rise from an annual £3465 to £9000 at the stroke of a pen, also did a number of other things. Firstly it lifted the cap on the overall number of HE students, providing an opportunity for HEPs to increase their income(needed to by consent/remove opposition from HEPs to the change), and secondly, it came with built in annual increases. This last detail is key to understand the situation HEPs find themselves in now.
Following on from 2012, several things happened within HEPs. As they were now funded entirely by student loans, for the most part, and given that the cap on student numbers had been lifted, most HEPs across the country raced to massively increase pay rates for their CEO equivalents, and went on debt fueled construction sprees to modernise/beautify their campuses, adding thousands of student residences (those ugly flat-pack high rises that have spouted like mushrooms anywhere there is a university). The funding for this construction boom was in the main debt, and it was predicated on the annual tuition fee increase to make it affordable.
Unfortunately for the HEPs (fortunately for students) the annual increase died somewhere along the way in the following years. There has been one increase since, from £9K p/a to £9250, which happened in 2016, but it has not been enough to keep up with the costs of the debt taken out to fund the spending, which has left many HEPs already teetering on the edge financially. Thankfully, however, given the removal of the cap on overall numbers, and given the increased capacity, HEPs were for the most part able to substitute the expected increase in income from another avenue: overseas students. These pay typically 2-4 times as much per annum as UK/EU students, so increasing their numbers has filled a gaping hole in many HEPs budgets. These students come from all over the world, the UKs ranks highly in HE standards internationally, but easily the biggest single cohort come from China.
This is where the current situation matters. Given the UKs haphazard handling of the COVID crisis, particularly when compared to their native China, and seeing as a vaccine is still anywhere from 6-18 months away, meaning a second or third COVID wave may be likely, how many prospective Chinese students will be preparing to pack their bags and move to the far side of the planet in the current climate? Most, I imagine will be heeding their parents concerns, particularly in view of how transport and movement can be so easily disrupted, and choosing to remain closer to home.If this alone were not bad enough, the fact that this crisis is occurring in the same year as a likely hard Brexit (seeing as BoJo insists there will not be any extension to the negotiations) means the impact on HEPs finances will be felt like a heavyweight one-two punch. This is because, while they don't account for the same percentage of income per head, EU students make up a large and significant amount of the overall student numbers necessary to fill the HEPs coffers. There will by all accounts be a massive reduction in new EU student numbers this 2020/21 cohort given the uncertainties remaining around Brexit.
I fully expect to see a number of HEPs enter administration before the end of 2020. More still will be effectively bankrupt before the 2020/21 academic year is finished. This is entirely predictable and should be clearly visible to government, but I doubt any action will be taken until it is effectively too late. Most likely when the eventual crisis explodes fully onto the scene we will see additional government bail outs of the sector, coupled with market consolidations, mergers and take overs, etc, further entrenching the current market-based education system.
My difference from Robin is that I think there will be many more failures than he implies. Of course the old colleges can make it. But they are few in number in the sector as a whole, and I do not think it just the old polytechnics who will be in trouble here: I think the problems will be right up to the Russell Group. Mass failures are likely. Universities are simply geared up for a scale of operation that they cannot now enjoy and putting that into reverse will be very hard, and in some cases likely to be impossible without insolvency.
Their reaction will include redundancies: I know of whole departments who have been told that they are at risk.
Universities are already stopping capital spending, completely: expect to see mothballed buildings on campuses for years to come.
And universities will also start cutting, very reluctantly, the vast number of staff whose role I have never got near understanding. When 50% of staff are not academic in many universities and absolutely no admin support is provided to almost any academic, ever, what the rest are doing has always been baffling, to say the least. The empire building that Robin describes has been rampant.
But most of all, they simply won't be able to pay their bills without government support.
Will that be forthcoming? I simply do not know.
But this I do know: because of the failure of the government's Covid-19 strategy a massive foreign exchange earning industry is going to be virtually wiped out in the UK, and will probably never recover in the way it has existed. If this government thought its policy was all about putting the economy first it got that very, very badly wrong.
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Having seen my three go through university recently at different levels of institution (Durham, Leicester and Oxford Brookes) i really question now whether university education is just a money making exercise. I firmly believe in higher education and equality of opportunity. But with so a high proportion of 18yr olds going to Uni and the vast majority doing social sciences i really doubt whether this is a good grounding for both the individual and the needs of the country going forward. The old poly system offered more vocational courses which were definitely more valuable than say a history degree from Oxford Brookes or Angela Ruskin. Employers certainly think this way. And this comes with being saddled with student debt. Maybe now is the time for a radical rethink on higher education?
Agree entirely – another imminent crisis. Also very vulnerable are the student halls of residence, which are all too often provided not by the university but by ‘speculative’ private companies.
Agreed..
ah yes – speculative property aimed at housing students – I get e-mails every day offering me new build student accomodation as an investment – amazing returns (10 – 12%). lt always struck me as dodgy & now with the virus it starts to turn into if not a ponzi scheme certainly boom/monster bust. Which leaves the open question: who was buying (undoubtedly some people were investing) & how many people with pensions invested into this area. Dominoes – the dominoe impact of the virus has yet to work its way through.
In terms of the future structure of education: I went to Birkenhead Tech then Liverpool Poly – seven years with six months @ college and 6 months with the companyeach year (a UK electricity board as was). The UK needs engineers and this is the way to make sure than on finishing college they have a good grip on the work aspects. For the record, over 7 years I did just about everything: helped re-wired houses, appliance repair, power station operation, networks, build a pylon, you name, I did it. I wonder what happens now? I mention this to show how thngs were & how they could be.
You’re like my father – he did a degree and an engineering apprenticeship
Mind you, he was great at 440kv, but hopeless on changing a fuse…
I did an engineering degree and the summers spent first at RollsRoyce and secondly in shipyard were hugely valuable, not just in technical terms. (The latter was in Portugal when it was under a real fascist regime. A different education…) A sandwich course would have been even better.
However, I’m not sure that there are many companies left who are prepared to fund and support such formats – it’s their loss and part of the wider cut backs in training by companies. I also wonder whether students have the patience and commitment for such a long programme. Let alone whether the current funding systems would support them.
Are there any UK HE institutions who are not focussed on overseas students? There must be some.
Am I being as thick a the big print version of Charles Dickens but would distance learning solve some of this ? I guess with massive differences in time zones not sure how much would salvageable
A bit
But not much
The interactions which are so key to learning do not happen
In regards to your admin staff comment, I can tell you that the “invisible” increase in admin staff since the tuition fee rise has been due to two factors:
– Universities are being asked to do much more by the government than before. This includes mandatory diversion of tuition revenue to ‘outreach’ activities and bursaries. This also includes a vast amount of data collection for the yearly census. You would be surprised how invasive this required data collection is, and how many staff it takes to prepare.
– Competition between universities (now that there are no caps) is now about facilities and experience. Students now expect a complete range of amenities including sports, food, and entertainment. Students expect 24/7 onsite support for IT and accommodation. Students expect a fully digital online experience with instant access to lecture notes, recordings, timetables, results. Universities must also market themselves online and hold events every few weeks (or lose business).
This is what all the new staff are doing, and if universities don’t do it they get sanctioned by regulators or beaten by the competition. The universities themselves are not entirely to blame; the badly designed regulatory and competitive environment is.
But as I noted, almost none of that actually adds much value, even to the students, who have simply been turned into consumers – and remember, I still deal with them
So we need to remember what universities are for and, like the NHS, bring them back under a state net
And get rid of the waste
When i went to university in the 90s all my reading was done the old fashioned way – a book. Sure i used the university pc suites to word process my essays, but i wrote them out first. When i checked some universities i was shocked, how online a lot of stuff students had access too. They had lecture notes, academic papers (massive amounts of it), exams questions, articles , periodicals etc. If i wanted lecture notes either i went to the lecture or ask a friend to let me have a copy of his or hers.
I am not knocking the new system, it is great – no wonder degree classifications are skyrocketing,- students have great access to about 70% more stuff. So now after 20 years of doing stuff online if i did a degree today. I would just use an old cheap laptop straight away (With a SSD hard disk to make it 4x faster), which would save lot of time. Most of my time at university was copying handwritten essays into word 97 et al. I spent a fortune on photocopying articles from periodicals. I never saw any articles online, so no chance of them being download on to my pc or a USB drive. I did not have a computer at home or any laptop, the latter was not invented etc. All this cost money, ie licences to allow students to copy articles, fees to be paid yearly for all types of academic journals etc. Then of course you have the need to update pcs, and internet connections et al. It all cost big bucks and you need a big staff to keep it running and updated. Then of course you need to provide for new books, photocopying machines, study areas et al. Universities are very expensive to run now.
Conversations with several profs at major universities made exactly this point in the context of just Brexit. They saw that as being pretty disastrous both in terms of the loss of fees from overseas students and the loss of academic strength that comes from the diverse range of staff. They also acknowledged the over expansion that has gone on
COVID will make those problems far, far worse
Agreed, Robin
Brexit accelerates this if not deferred
I once saw a man step out of an expensive Mercedes car wearing a sweatshirt with printed text on the front side stating “university of nowhere”.
I imagine that was his response to being able to buy a Mercedes and to be upwardly mobile wasn’t predicated on attending a university to achieve that purchase.
Ir maybe he was just making fun of others?
Yes, of course……..but which surgeons, architects and car designers would he choose to take care of himself, build his home and design the car of his dreams. I imagine he gets witch doctors and shaman at discount.
Thanks for your posts Richard. You have a unique voice.
I teach international students and I fear, very much, that this analysis correct. Chinese students were stunned by the UK’s inaction regarding the virus – and many quickly headed home. Our government’s stance did damage to the image of the UK as a mature, stable and rational state – though I’m fully aware that this was always a somewhat false narrative – trouble is, the students (and their parents) are now aware of this too. The intangibles associated with the UK brand have been damaged by government inaction (I’m framing this in the terms that those responsible for the marketisation of HE would understand). As David Harvey has highlighted – in a post industrial capitalist world these intangibles are very important. I have very little doubt that the government have no idea regarding the damage they have done – primarily as they have very little understanding regarding the inherent contradictions of capitalism, despite being ardent capitalists.
I would hope that university leaders are anticipating this crisis and are urgently seeking talks with government, but hope is as far as it goes. I have neither seen, nor heard, of such moves. Robin and Richard are right – the marketisation of HE now leaves the sector very vulnerable. Without international fee income, many universities (and, like Richard, I feel this will be more than a few) will become financially unviable. Many other lecturers I know are very worried – unless the government steps in we will likely be made redundant in the not too distant future. For the moment the universities are carrying on as if we will be back to normal by September/October, which feels a little optimistic. Even if we manage to stagger to this position numbers will undoubtedly be down – significantly down. The government will need to support the sector – but my fear is that they will use this crisis to re-shape HE – back to fewer institutions for an alleged ‘elite’ and poor implementation of an expansion of the vocational sector. Personally I feel this would be a grave mistake – an advanced economy needs a highly educated workforce and, despite what many may think, the university sector does this well (and is perceived abroad as doing so). I’m in favour of good vocational education – but I severely doubt this governments ability to deliver such. If this comes to pass a world class education sector will be massively impoverished and the country less well equipped for the future. There are changes needed in HE and this crisis offers an opportunity to do so – unfortunately this government has neither the wit or the will to do so. Winter may well be coming. I hope I am wrong.
Thanks
And I also hope you are wrong
But I suspect your concerns are all well placed
Agree with most of this. The sector is facing a dramatic fall in income. Was it a good idea to bet the house on overseas students? Does not look so clever now. Who is to blame? Government for creating perverse incentives to take risks. Or university managers for taking those risks.
Was watching “Inside Job” last night and the situation has some similarities. All markets are regulated in some form and what we should care about is whether those regulations create good outcomes for all stakeholders over the longer term. Unfortunately, this has not been how governments have behaved for the last 40 years.
Durham should be a survivor
If you compare the industrial benefit of UK universities with European, Scandinavian and many American ones you have to wonder what their real value to the economy actually is nowadays. I’m in Scotland and frankly I could happily swap most Scottish universities for one Massachusetts Institute of Technology..
Not if you value Scotland you wouldn’t
Universities UK does have a set of demands it says it has put forwards to Rishi Sunak and others via an “announcement” – their words (see here https://www.universitiesuk.ac.uk/news/Pages/Package-of-measures-proposed-to-enable-universities-to-play-a-critical-role-in-rebuilding-the-nation-.aspx ) and have created a paper (below) to outline what it sees as the solution. Whilst it’s encouraging that they at least have some notion of what’s coming, I feel it falls rather short of what is required, and would have preferred more ambition, as has been made clear in the excellent points above, the old model is kaput. Here is their paper:
https://universitiesuk.ac.uk/news/Documents/uuk_achieving-stability-higher-education-april-2020.pdf
I work at one the places that is less likely to immediately go under, but all the flaws are there – reliance on international students, square box buildings put up ‘on tick’ that they’ll struggle to pay back etc, horrific exploitation of super qualified staff on precarious fixed term contracts (FTC’s) over *decades* (I kid you not)…. actually I could go on and on, and I work at one of the better ones, frequently described as ‘Hobbiton’ as compared to the ‘Mordor’ that is so many of them
Sadly the paper is already talking about mergers and redundancies.
Thanks
It is not inspiring
It has the appeal of a corporate bail out begging letter