Even before coronavirus, university finances were on the brink | Catherine Fletcher

Even before coronavirus, university finances were on the brink | Catherine Fletcher

The government’s announcement of a Covid-19 support package for universities on 4 May comes with the promise that it will “help stabilise most providers’ finances”. The killer word is “most”. Read between the lines and the conclusion is obvious: some universities won’t make it. On the same day, Roehampton University announced a plan to cut 15% of posts. Even the institutions best equipped to survive are facing considerable pain. But the problems didn’t start with coronavirus: it’s just making an already bad situation worse.

The immediate problem for universities is the prospect of a collapse in international student recruitment. Along with the loss of income from accommodation rentals and summer conferences, the resulting financial black hole is estimated to be at least £2.5bn. Tens of thousands of jobs are at risk as applicants consider whether attending university this autumn – when it’s likely social distancing will still be in place – is their best option.

The government’s response addresses universities’ immediate cashflow problem by bringing forward payments of research funding and tuition fees (which are not paid directly by students but come from government). It promises to fund up to 10,000 extra student places, half of them in health and social care. But that in no way fills the financial gap. In an effort to prevent poaching, universities have agreed not to increase their intake of home students by more than 5%. This sounds a reasonable compromise, but a 5% increase to a cohort of 300 students at a large university could ripple through other institutions leaving the last in the chain with a devastating drop in numbers. Similar trends in recruitment following the removal of student number controls in 2015 have already left some departments in crisis. It is not at all clear that the promised new rules to “prevent destabilising behaviours” will change the longer-term trend.

On top of that, research funding has fallen by 12.8% in real terms since 2010. The gap has been filled, in part, by international students, who pay much higher fees than home undergraduates. The number of Chinese students in the UK increased by 62% between 2011-12 and 2018-19. There were already concerns that the impact of Brexit and the hostile environment on international recruitment left some universities dangerously exposed – now thousands of those prospective international students may stay at home this year. With staff pay squeezed in real terms since 2009, university managers have little room for manoeuvre.

It is clear, moreover, that the government is unlikely to intervene if things go wrong. In November 2018 the head of the Office for Students, Michael Barber, warned that “failing institutions” could not expect a bailout. The Augar review of higher education, which reported in May 2019, got limited attention amid the preoccupation with Brexit, and its headline proposal for a cut in tuition fees from £9,250 to £7,500 a year was said to have been “quietly shelved” a few months later.

The broader proposals, however, are still well worth a look. Augar was concerned about the amount of money universities were spending on marketing: up to £500 per student. Marketing spend and investment in attractive campuses that appeal to open day visitors are predictable consequences of a highly competitive market, but they take vital cash away from education.

Also prominent in the Augar review was a plan to clamp down on courses perceived to offer poor employment prospects and long-term earnings (with a note that nursing and teaching should be exceptions). But this failed to take account of the structural problems in access to high-earning jobs. It’s well documented that working-class students face particular barriers to entry to the arts sector, for example. Even if a performing arts student never makes a full-time career of it, he might well make a big contribution to society by running a theatre group in his spare time, something that employment and earnings measure simply don’t capture. Access to arts and culture online has kept many of us going through the lockdown. Let’s not write these subjects off as low value.

There is a good case for maintaining a strong university sector. The demographic dip in the number of 18-year-olds that has exacerbated admissions problems for the past few years is about to end. More young people typically go to university during recessions. But without further support, their prospects are grim.

Redundancies now mean there will be fewer experienced staff to teach and support students in future. There is a real risk that between the mergers of institutions in financial trouble (a likely prospect following the precedent of the further education sector) and the attacks on “low value” courses, student choice will suffer. That choice should not be just about who gets into the “prestigious” institutions, but about offering people across the country a good selection of local courses that suit their lives and learning style. Higher education is a public good: it would be a deep shame to approach this crisis with a focus on its price, rather than understanding its value.

Catherine Fletcher is professor of history at Manchester Metropolitan University