A-LEVEL FIASCO HITS UNIVERSITIES
U-turn is likely to destabilise budgets as students flock to better-performing institutions from lesser rivals, finds Rachel Millard
The Government’s U-turn on A-levels this week brought relief to students but will do little to alleviate the money worries of university bosses. Coronavirus has heaped financial pressures on the sector, putting many at risk of bankruptcy as they try to cope with a prospective fall in international students, the loss of income from events and ballooning pension deficits.
If that was not enough, the decision to upgrade A-level results by relying on teacher-assessed grades rather than Ofqual’s algorithm is likely to destabilise delicate budgets as students flock from poorer-ranked institutions to higher-performing rivals – with stark consequences.
“In previous years, students who
‘There might be some who had not thought about going to university but now might do, given the decisions on grading’
missed out on their first choice would review their options and decide to enrol with other universities that offer strong academic support, a primary teaching focus and support suited to the student,” says Ian Dunn, provost at Coventry University.
“This may not take place now. These changes may see universities struggle financially, or close altogether. We need to retain the breadth and experience of the UK higher education sector and avert any narrowing of the range of educational experience that it offers.”
Financial pressure has been building in the sector, with universities in deficit by a reported aggregate £3.5bn last year.
About £7bn of the university sector’s annual £40bn income comes from international students, about £7bn from research grants and contracts, and £5bn from direct public funds, according to a recent study by the Institute for Fiscal Studies.
The IFS warned in early July that much of that income had been put at risk due to the coronavirus crisis, which could turn international students away, posing a particular problem for the likes of the London School of Economics, almost 70pc of whose students are from overseas.
In its central scenario, the IFS predicted universities could lose about £11bn in the long term in fee income, pension provisions and conference income due to the pandemic.
The losses would impact universities very differently depending on the strength of their finances, with the IFS predicting that up to 13 unidentified institutions, likely among the least prestigious, could be at risk of bankruptcy without a government bailout.
Under pressure from industry group Universities UK, which highlighted the 940,00 jobs in the sector, ministers stepped in back in July to allow institutions to apply for government repayable loans as a “last resort” as part of restructuring plans.
But they come with strings attached, in line with the Tory Party’s 2019 manifesto promises to tackle what the party deemed “low quality courses”, as well as “the problem of grade inflation” – one reason for the ditched Ofqual algorithm. The
Department for Education said universities receiving support would need to deliver a “high-quality offer aligned to local and national economic and social needs”.
Ministers also want universities to keep in check vice-chancellors’ pay, which in 2019 rose above £250,000 on average for the first time, triggering anger among unions.
Gavin Williamson, the Education Secretary, said at the time: “We need our universities to achieve great value for money – delivering the skills and a workforce that will drive our economy and nation to thrive in the years ahead. My priority is student welfare, not vice-chancellor salaries.”
Some experts have suggested the restrictions might deter universities from applying to the scheme. In any case, Universities UK says the support will not be enough to mitigate for the sudden flux in student numbers for many universities due to the about-turn on A-level grades.
In a letter seen by The Daily
Telegraph, it asked the Education Secretary this week to “urgently put in place alternative forms of support to mitigate against the damage to otherwise financially stable universities”.
They were, it added, “going to take a severe financial hit over the next three years due to this sudden change in government policy – with knock-on implications for local economies and communities”.
Although it is too early to say which universities will be affected and to what extent, some could be in the regions at the heart of the Government’s agenda to “level-up” the economy. Universities are also asking for money to take on the extra students who now have the grades.
Simon Oldroyd, interim deputy vice-chancellor at Leicester’s De Montfort University, agreed that some universities could be in a “precarious” situation, but noted that lower-ranked universities might also benefit from the A-levels U-turn.
“There might also be some students who had not thought about going to university but now might do, given the decisions on grading,” he said.
“Higher education in this country is a wide spectrum and there is a place for all kinds of universities.”
He added: “Interest remains really high [for us] and we are in a good position as we have had strong recruitment for a number of years. We are fortunate we don’t have immediate fears.”
Jack Britton, a senior researcher at the IFS, also believes that the impact on A-level students may ultimately balance out.
“It’s really hard to know how far student numbers are going to drop among universities further down the rankings,” he says. “I suspect it won’t be as bad as people are thinking.
“I think the bigger risks to university finances are probably the possible drop in international students and in the value of pension funds. Those could well dwarf all of this.”
Universities such as Oxford are likely to see a surge in student numbers, but others will not be so lucky