Univer­sity deficits mount as mar­kets take toll

Deep­en­ing losses of up to £14 mil­lion at English in­sti­tu­tions trig­ger fears of sus­tain­abil­ity in market-based ed­u­ca­tion sys­tem. John Mor­gan re­ports

THE (Times Higher Education) - - FRONT PAGE - John.mor­gan@timeshigh­ere­d­u­ca­tion.com

The weekly mag­a­zine for higher ed­u­ca­tion

Deep­en­ing mul­ti­mil­lion-pound deficits at a num­ber of English uni­ver­si­ties have prompted warn­ings about the “sus­tain­abil­ity” of in­sti­tu­tions in a market-based sys­tem and a po­ten­tial wors­en­ing of re­gional in­equal­ity if towns and cities re­liant on uni­ver­si­ties see re­duced in­vest­ment.

Sec­tor sources re­port con­cerns about the fi­nan­cial health of some in­sti­tu­tions and sug­gest that a num­ber of uni­ver­si­ties that saw deep falls in stu­dent re­cruit­ment in re­cent years may have con­tin­ued that trend this year.

Times Higher Ed­u­ca­tion anal­y­sis of English uni­ver­si­ties’ fi­nances in 2016-17 shows that deficits at in­di­vid­ual uni­ver­si­ties ran as high as £14 mil­lion, and up to nearly 9 per cent of to­tal in­come.

In to­tal, 19 English uni­ver­si­ties re­turned deficits that year, up from seven the pre­vi­ous year.

Of the 10 large English uni­ver­si­ties with the big­gest deficits as a pro­por­tion of to­tal in­come last year, six also fig­ure in the top 10 in­sti­tu­tions see­ing the big­gest falls in re­cruit­ment be­tween 2010 and 2017. Stu­dent num­ber con­trols be­gan to be lifted in 2012, be­fore a fully un­re­stricted market in stu­dent re­cruit­ment was in­tro­duced by then chan­cel­lor Ge­orge Os­borne in 2015.

The fierce com­pe­ti­tion for stu­dents cre­ated by that pol­icy was cited as a fac­tor by some of the in­sti­tu­tions with the largest deficits; Ucas data have shown that the least se­lec­tive uni­ver­si­ties have lost out in the do­mes­tic re­cruit­ment race to more pres­ti­gious ri­vals in re­cent years. But ac­tu­ar­ial changes adding to pen­sion costs and the spend­ing on trans­for­ma­tion pro­grammes needed to turn in­sti­tu­tions around were also cited.

The Univer­sity of East Lon­don re­turned a deficit of £10.9 mil­lion in 2016- 17, af­ter a deficit of £6.8 mil­lion the pre­vi­ous year. A spokesman said that “a com­plex set of in­ter­re­lated is­sues such as pen­sion in­creases, the chang­ing UK de­mo­graphic pro­file, [and] a hos­tile im­mi­gra­tion pol­icy…re­quire the higher ed­u­ca­tion sec­tor as a whole to…take mea­sures to en­sure the sus­tain­abil­ity of its in­sti­tu­tions”.

He added that UEL was “not a higher risk in­sti­tu­tion” and was “con­fi­dent about our fu­ture and ir­re­place­able role in driv­ing so­cial mo­bil­ity”, a con­fi­dence “re­flected in both our 2017-18 per­for­mance and our medium-term fi­nan­cial fore­cast”.

The Univer­sity of Brad­ford, whose vice-chan­cel­lor Brian Can­tor re­cently an­nounced that he would step down at the end of this aca­demic year, cit­ing “dif­fi­cult ex­ter­nal cir­cum­stances” that had ham­pered ex­pan­sion, re­turned a deficit of £3.4 mil­lion in 2016-17, af­ter a deficit of £1.9 mil­lion the pre­vi­ous year.

A spokes­woman said that the higher ed­u­ca­tion sec­tor had be­come “in­creas­ingly com­pet­i­tive” but added that the univer­sity was “on track” to “con­sol­i­date in re­spect of re­cruit­ment from the UK, and build on our strengths in over­seas mar­kets”.

Sev­eral Lon­don-based post-92 in­sti­tu­tions are among those with the largest deficits. Other uni­ver­si­ties are in re­gional towns and cities with high lev­els of de­pri­va­tion, while many of the cap­i­tal’s uni­ver­si­ties serve ar­eas with ma­jor so­cial chal­lenges.

Alan Palmer, head of pol­icy and re­search at Mil­lionPlus, the as­so­ci­a­tion of mod­ern uni­ver­si­ties, said that while there has “al­ways been com­pe­ti­tion” in the sec­tor, “the in­tro­duc­tion of spe­cific poli­cies by gov­ern­ment since 2010, such as the re­moval of the stu­dent num­ber con­trol, has clearly con­trib­uted to higher lev­els of seg­men­ta­tion be­tween providers”.

“The con­cern is that this re­in­forces ex­ist­ing hi­er­ar­chies and prej­u­dices about higher ed­u­ca­tion providers rather than a proper un­der­stand­ing of the in­di­vid­ual and di­verse strengths of uni­ver­si­ties,” he added.

Mr Palmer con­tin­ued: “This ap­proach is cer­tainly not in the in­ter­est of stu­dents or com­mu­ni­ties where these uni­ver­si­ties are an­chor in­sti­tu­tions. These in­sti­tu­tions, usu­ally mod­ern uni­ver­si­ties, of­fer high­qual­ity, lo­cally based, em­ployer-rel­e­vant pro­vi­sion that cre­ates op­por­tu­ni­ties for peo­ple to study con­ve­niently, in­clud­ing those for whom ma­ture study or learn­ing while work­ing is the only vi­able op­tion.”

Andy West­wood, pro­fes­sor of gov­ern­ment prac­tice at the Univer­sity of Manch­ester, high­lighted the fact that “some of the uni­ver­si­ties suf­fer­ing most – in re­cruit­ment or fi­nan­cial health – from the higher ed­u­ca­tion market” are lo­cated “among the ‘left be­hind’ com­mu­ni­ties ex­posed by the Brexit vote”.

He added that, in higher ed­u­ca­tion pol­icy, the Depart­ment for Ed­u­ca­tion, the Of­fice for Stu­dents and UK Re­search and In­no­va­tion “don’t think in ge­o­graph­i­cal terms or about the geopo­lit­i­cal consequences of the Brexit vote”.

Pro­fes­sor West­wood said that “in a weak lo­cal econ­omy you’re go­ing to de­pend on big pub­lic in­sti­tu­tions such as uni­ver­si­ties and col­leges act­ing as an­chor in­sti­tu­tions much more than in bet­ter-off com­mu­ni­ties. But all the eco­nomic chal­lenges are likely to make it harder for these in­sti­tu­tions to com­pete in na­tional market-based sys­tems – harder to re­cruit stu­dents and staff, harder to get re­search in­come and so on.

“As a re­sult, they get smaller, close de­part­ments and cam­puses and the eco­nomic gaps be­tween them and larger, more suc­cess­ful cities – and their in­sti­tu­tions – just get wider and wider.”

Widen­ing cracks chang­ing gov­ern­ment prior

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