Live or die? Other options must be available

For watchers of higher education, and those working in it, it has been strange over the past year or two to witness a slow-motion crash that the rest of the world seems not to have noticed.

Has it been too slow? Have the cries for help gone on for so long that people have tuned out? Or is it just that so many other sectors seem to be careering towards a wall at the same time?

There has, in fairness, been a recent awakening to the deterioration of university finances, albeit a limited one – it can seem as though the media are more interested in the identity of the University of Oxford’s next chancellor than in the potential calamity awaiting large swathes of the sector.

Part of the unpalatable reason is that the swathes at most immediate risk are those seen as fair game by many: modern universities, which ironically are doing much of the heavy lifting in addressing inequality and local skills gaps. If anyone doubts that these are things the country needs, this summer’s anti-immigration riots should be offered as exhibit one.

With only limited interest within the UK, it is often left to others to call the crisis what it is – as US-based Bloomberg News recently put it: “Britain’s famed universities near a financial cliff”.

This gets to the urgency of the situation, and brings to mind the quote attributed to various 20th-century bon viveurs that one goes bankrupt two ways: first slowly, and then suddenly.

Universities have been in the slowly phase for some time, as the financial foundations of the domestic tuition fee have been eroded, while the subsidy provided by ever-increasing international students has been hit by policies to reduce immigration.

Throw in the fact that much research is loss-making (see our cover story in the last issue of Times Higher Education) and inflation, and the structural reasons they are struggling are clear.

It is not, much as some might suggest it, because vice-chancellors are highly paid.

The sense that there could be a quickening of the pace for universities in the most trouble was exacerbated by the scramble for students following A-level results earlier this month.

It revealed a new world in which high-tariff universities hoovered up additional students at the expense of lower-tariff institutions, compounding the challenges at the bottom of the pyramid.

Meanwhile, much as the passing of the baton from the former Conservative regime to the new Labour government earlier this summer gave renewed hope for a reset in relations, there has so far been precious little in the way of concrete action to address the crisis.

As promised, education secretary Bridget Phillipson has gone out of her way to say how welcome international students will be in the UK, but the riots targeting immigrant communities might offer the world a different perspective.

Meanwhile, the minister in charge of higher education, Jacqui Smith, says the government is willing to allow universities to go bust, should it come to that, a message that – while having the virtue of clarity – will hardly encourage those considering travelling to the UK to study. What international student would want to bet their future on a university that might go to the wall?

That sobering possibility would spring vividly to life were a bankruptcy actually to happen, with a domino effect on international recruitment that would prove disastrous.

None of this is new, of course, but when Sir David Behan, the new Office for Students chair, said in his first interview in the role that “it’s important that universities revise their medium-term financial strategies…They can’t just carry on”, he was right in more ways than one.

While universities must look again at what they do and how they do it, his message is equally applicable to the government in its approach to managing what is a fundamental, structural problem with university funding – they cannot just allow it to carry on.

Ideas are being offered – this week, the Higher Education Policy Institute has a new report on the variety of structures that could be employed to find efficiencies and new ways of operating and sharing costs and services, for example.

It is a reminder of the sorts of new thinking that are needed: there must be viable alternatives to the binary “live-or-die” approach that is often touted for university sustainability, as well as a recognition that universities, the government and the public are ultimately all on the same side.

john.gill@timeshighereducation.com