A lot rides on market bet

The pos­si­bil­ity of a univer­sity fail­ing as it is ex­posed to com­mer­cial forces could have consequences that rip­ple out far be­yond cam­pus

THE (Times Higher Education) - - LEADER - Chris.haver­gal@timeshigh­ere­d­u­ca­tion.com

Lord Man­del­son was haunted through his time as a min­is­ter in the UK’s last Labour gov­ern­ment by his state­ment that his party was “in­tensely re­laxed about peo­ple get­ting filthy rich”.

In the phrase – which, it should be said, was the first half of a sen­tence that fin­ished “as long as they pay their taxes” – the for­mer busi­ness sec­re­tary seemed to be­tray what many per­ceived to be the fail­ure of Tony Blair’s and Gor­don Brown’s ad­min­is­tra­tions to do more to tackle in­come in­equal­ity.

Per­haps an­other min­is­ter, Jo John­son, might come to be re­mem­bered as hav­ing been in­tensely re­laxed about English uni­ver­si­ties go­ing to the wall.

John­son, min­is­ter for uni­ver­si­ties un­til ear­lier this year, did not ex­press him­self quite as pithily as Man­del­son – stat­ing that a “prop­erly func­tion­ing market has to have scope for both market en­try and market exit”.

But John­son’s market, now be­ing over­seen by a new reg­u­la­tor, the Of­fice for Stu­dents, nev­er­the­less rep­re­sents a sig­nif­i­cant shift from the regime pre­vi­ously su­per­vised by the Higher Ed­u­ca­tion Fund­ing Coun­cil for Eng­land, which was pre­pared to step in with loans or to drive through a merger when an in­sti­tu­tion got into trou­ble.

Just how soon the “market exit” of a ma­jor higher ed­u­ca­tion in­sti­tu­tion be­comes a re­al­ity is yet to be seen; Adam Tick­ell, vice-chan­cel­lor of the Univer­sity of Sus­sex, spoke openly at Septem­ber’s Labour Party con­fer­ence of “well-founded ru­mours” of a univer­sity “tee­ter­ing on the edge”.

In our news pages this week, how­ever, we high­light how some UK uni­ver­si­ties find them­selves in in­creas­ingly chal­leng­ing fi­nan­cial sit­u­a­tions, with some run­ning up deficits in ex­cess of £10 mil­lion in a sin­gle year.

Many of these in­sti­tu­tions have lost out in the stu­dent re­cruit­ment race to more pres­ti­gious ri­vals that have ex­panded since stu­dent num­ber con­trols were fully re­moved in 2015.

For these uni­ver­si­ties, the most re­cent re­cruit­ment round, and the one that is now un­der way, will be vi­tally im­por­tant.

What is strik­ing is that some of the English uni­ver­si­ties with the largest deficits are lo­cated in parts of the coun­try where the higher ed­u­ca­tion sec­tor has a cru­cial role to play in re­ju­ve­nat­ing the lo­cal econ­omy, par­tic­u­larly as Brexit ap­proaches: in the north-east, the north-west and the south-west, for ex­am­ple.

Pol­i­cy­mak­ers risk un­der­es­ti­mat­ing the myr­iad ways, vis­i­ble and in­vis­i­ble, in which a univer­sity is wo­ven into its fab­ric of its com­mu­nity – and thus can­not grasp just how dam­ag­ing a univer­sity clo­sure could be. As Nick Hill­man, di­rec­tor of the Higher Ed­u­ca­tion Pol­icy In­sti­tute and a for­mer spe­cial ad­viser to Lord Wil­letts when he was uni­ver­si­ties min­is­ter, wrote in Times Higher Ed­u­ca­tion in Au­gust, for all the talk of OfS-man­dated pro­tec­tion plans de­signed to en­sure that stu­dents at a failed in­sti­tu­tion can con­tinue their ed­u­ca­tion else­where, the clo­sure of a univer­sity would cre­ate a huge po­lit­i­cal headache. Very of­ten, uni­ver­si­ties are one of the big­gest em­ploy­ers in their town or re­gion, and the knock-on ef­fects of a clo­sure on a lo­cal econ­omy would soon send the area’s MPs howl­ing to the Depart­ment for Ed­u­ca­tion.

These is­sues are by no means re­stricted to the UK. As we re­ported in July, some 100 pri­vate uni­ver­si­ties in the US have closed since 2009, leav­ing an­gry stu­dents, par­ents, em­ploy­ees and alumni, and mil­lions in un­paid debts.

Else­where in our news pages this week, we re­port on how some Aus­tralian uni­ver­si­ties, too, have run up mul­ti­mil­lion-dol­lar deficits in the space of a year. There, com­pe­ti­tion for do­mes­tic and in­ter­na­tional re­cruit­ment is in­creas­ingly in­tense and, again, more pres­ti­gious uni­ver­si­ties are able to take the cream of the crop, leav­ing the rest to scrap it out for the re­main­der.

Even if Aus­tralian pol­i­cy­mak­ers are felt to be more likely to bail out an in­sti­tu­tion that gets into trou­ble, the quandary they face is the same as it is for their UK coun­ter­parts: uni­ver­si­ties can­not lead the coun­try’s trans­for­ma­tion into an in­no­va­tion-led na­tion if they get into fi­nan­cially per­ilous sit­u­a­tions.

As the fig­ures we re­port this week show, this is a sit­u­a­tion that no one can af­ford to be re­laxed about.

Very of­ten, uni­ver­si­ties are one of the big­gest em­ploy­ers in their re­gion, and the ef­fects of a clo­sure on a lo­cal econ­omy would soon send MPs howl­ing to the Depart­ment for Ed­u­ca­tion

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