It appears that many universities are reacting to the funding crisis and making redundancies and cuts. Scotland is leading the way with major cuts but many others will follow elsewhere. Christmas and the New Year are looking bleak.
Hiding in the Scottish budget for 2024/25 this week is a welcome increase in student support from £925m to £1,485m. However, the sting in the tail is that the Scottish Funding Council will see a cut in over £100m for universities and colleges. For some universities, this will be a major blow as they try to balance the books next year. The general media analysis in the Scotsman and the Guardian is anticipating course closures and redundancies as a result. Some universities may be able to plug the gap with foreign students (including from England) but Universities UK responded immediately with a warning,
“Universities are facing serious headwinds in international student recruitment, which means the assumed reliance on cross-subsidy from international fees to compensate for cuts to public funding is likely to leave universities exposed on multiple fronts.”
Elsewhere there are signs of creeping decline. Aberdeen University had already announced controversial cuts to its language provision. While in Scotland the cuts are government directed, elsewhere the cuts are driven by expected demand declines. This is of course the government’s aim. A good example is Coventry University, a large operation set to make nearly £100m in cuts over the next two years. Many others will follow as the Telegraph warns to ‘The ticking time bomb under university finances’. The choice available to students will start to fade away.
Despite an ongoing increase in the university age population, the decline will continue. There is a real danger that the provision will appear hollowed out to prospective foreign students and accelerate the decline. But in the end, it is the less well-off students who will bear the brunt as usual.
Original post.
The university offering in the UK is reaching a critical turning point as we see out 2023. Declining resources and unit costs are eating into degree courses. Student numbers are falling despite the population rising. Student hardship is widespread as accommodation costs exceed what they can borrow, or expect to from parents. The rise in student part-time jobs is forcing universities to trim their courses to accommodate less study time. Only the wealthy can proceed with confidence despite their numbers also falling. Government policies on international students will dent those numbers, further impacting cross subsidies, and only the most financially stable institutions can expect to ride the storm. The result is that there must be a radical shift in how university degrees are funded, shifting some of the burden off the backs of students and onto others who benefit. These are employers and society in general. Lowering the cost to students, improving the quality of degrees offered, and making access and participation totally equal and fair, is essential. This is patently not happening. We must strengthen what the UK has to offer, prepare for a technological and societal revolution, and move on from insipid aspiration to strong and solid action.
The title refence was coined originally by the First Lord of the Admiralty and Unionist election candidate Eric Geddes just begore the groundbreaking 1918 election when women voted and supported a coalition government. He promised to,
“squeeze the German lemon until the pips squeak”
He was soon also squeezing the British people as he led the ‘Committee on National Expenditure’ that brought about severe public spending cuts that became known as the ‘Geddes Axe’ (Report of Committee on National Expenditure [C.P. papers] | The National Archives). National debt was rising fast, and the future was bleak for people in the UK. It seems too familiar.
Ironically, the ‘lemon squeeze’ approach to Germany, arising from the Treaty of Versailles (see Footnote), led to the wide ranging reparations that precipitated severe adverse economic conditions and the rise of Nazi Germany and the Second World War. This may have been an ‘unintended consequence’ at the time, but it illustrates the social and political consequences of squeezing too hard.
There is little doubt the UK is now entering a tough period of further austerity. But squeezing Higher Education until the ‘pips squeak’ will have consequences in time. It’s a dangerous move that could easily hamstring an economy based upon expanding technology. Former Vice Chancellor of the University of Wolverhampton and London Metropolitan University, John Raftery, summarised the prevailing situation well in an article last month for the Higher Education Policy Institute (HEPI) asking, ‘Shifts, shocks, fragility: are English universities on a sustainable course?’
He saw this as possibly an “unintended consequence” but asks, “or could it be a policy intention?”. TEFS takes the view that it’s fully intentional and designed to widen the inequality gap as a ‘social engineering’ project. The impact on widening social divisions is a clear and present danger.
Squeezing universities.
The government’s tactic of deterring students from university education in the UK appears to be working well. Denigrating many degrees as worthless, and declining support for students, were bound to work eventually. The loss of maintenance grants was decisive. Students are turning away from the idea, especially those with less resource to back them. This is how social divisions will continue to widen over time. Rising accommodation costs, and lost study time to part-time jobs to survive, are powerful deterrents matched only by the hardy ones who struggle on with fewer resources.
The latest data from UCAS for 2023 last week shows the boom years are over. The situation this year is that the number applying, and the proportion being accepted to university, is dropping (Figure 1). Many of the ‘higher tariff’ universities will be buffered to some extent, but others will become exposed to increasing financial stress.
The horrible added effect is that spending on students has been declining as the unit costs fall. This impacts the quality of degrees and the so called ‘student experience’. The Institute for Fiscal Studies (IFS) ‘Annual report on education spending in England: 2023’ (pdf) out this week is a stark reminder of declining resources across all education in the UK in the last ten years.
“Up-front spending on teaching resources per higher education student has continued to decline steadily”
A declining university offering in the midst of falling student numbers will have social and political consequences that the current generation will not forgive or forget.
Population rising.
The declining number of students is more astounding when the population trends are considered. The government is deliberately retrenching in the face of a population expansion. The projections from the Office for National Statistics (ONS) indicate that the UK should be planning to expand its higher education offering, not contracting. Taken from the latest data in 2022, ‘Principal projection – UK population in age groups’, Figure 2 shows the reality. The next data release is due later this month but is unlikely to change much.
The rise in the numbers of people from age sixteen through university age to twenty-four is substantial and will only subside after 2035. There is no excuse for failing to plan for this as the births data from around twenty years ago surely offered a clue.
Widening access stalls again.
The UCAS data also shows that the widening access gap is solidly embedded in our society and has been for many years. Figure 3 shows this in relation to the Polar measure based upon the postcodes from which students come.
The higher Quintile 5 covers the areas of greater participation and affluence while Quintile 1 covers areas of least participation. The current gap between Q1 and Q5 of around 26.5% remains as in the past, but this time with fewer students going to university across the board. A similar gap is seen using indices of multiple deprivation across the UK, a multiple equality measure, and those who needed free school meals. The conclusion is that all recent government policies have comprehensively failed in widening access.
Who pays.
The government has set up a perverse system in which only the student pays for university. This is mostly through loans for both fees and living costs. The failure to acknowledge that others benefit from university-educated graduates lies at the core of mounting dissatisfaction. The repayment penalty on earnings is particularly acute in England, less so in the rest of the UK. This includes rising interest payments (currently the retail price index (RPI) measure of inflation capped at 7.3%) and a lower repayment earnings threshold this year. Increasing the payment term from 30 years to 40 years in England means it ‘walks, looks and quacks’ like an escalating graduate tax but is not as progressive.
Then there is the stark fact that the government cannot expect to get all the loans back. The latest forecast for Resource Accounting and Budgeting (RAB) charge is around 28%. This is the difference between the amount lent and the present value of their repayments as graduates. The result is a determination to cut the number of university students to lower the cost. This is becoming evident in the latest figures from the Student Loans Company illustrated in Figure 4 for England.
But by also restricting the number of students coming from overseas, through changes in migrant rules, the cross subsidy they bring looks even less stable. It is not sustainable for universities, and some may fail despite rounds of course closures and redundancies coming soon.
Alternatives.
The mess of the student support and fees system has spawned many alternative proposals. The latest comes from the highly respected and credible Mark Corver of Data HE. In an article for HEPI last month he set out radical changes in ‘Funding undergraduate higher education’. The idea that students might pay back faster “An advance of higher pay to invest in yourself” might help universities. However, it doesn’t account for the others who benefit for graduates in society.
Who should pay.
TEFS takes the view that those who benefit should pay for higher education equally across the UK. It should also be fair and equitable, offering equal access and time to study for all students. High quality must be maintained and the trend towards eating out the curriculum, to allow more time for students to accommodate longer hours in part-time jobs, does nothing to ensure this (see TEFS 29th June 2023 ‘More students in jobs as fewer travel first class on the university experience train’). Ensuring equal time to study for all students, who are expected to do more, and a restructuring of courses needed to match societal need would seem reasonable. But this will mean greater investment and resources that must be planned, and not cast out into a cold ‘marketplace’ that offers false hope. That has been the construct of the past thirteen years.
With students and their families bearing all the costs, it appears to be unfair from the outset. Those less well off take a much greater leap of faith in success. However, they are also likely to benefit. But employers too benefit as does wider society. Those graduates who earn more pay more tax in a very progressive tax system, so this should contribute toward the societal benefit. It is also fair that graduates also contribute alongside their employers contribution. But this must also be highly progressive. The loan system in play now is complex and is already looking like a highly unfair graduate tax burden. Moving to a real graduate tax would not seem a great jump at this point. But it doesn’t link to employers’ contributions.
Repayments must be more progresssve.
The simplest solution would be to accept that general taxation pays for part of the cost. But graduates also pay some contribution through a graduate addition to national insurance. Employers of graduates would also contribute to a national insurance levy. Thus, all those who benefit also contribute. The funding must however be well balanced and reserved for higher education as an earmarked and protected levy clearly identified in pay packets.
The problem of those who leave the UK would have to be resolved by reverting to payments to cover a balance similar to the current loan scheme until they return to the UK. Employers who recruit graduates from outside the UK might expect to declare this and still pay a graduate levy to even up the playing surface for UK graduates.
The sticky problem of doing this in retrospect would remain. Graduates under the proposed national insurance plan are likely to pay less over time, so those paying more under the current regime would be disadvantaged. The system would have to be rolled out to all current graduates in employment who are paying back loans but take account of the repayments already made. Going further back in time to seek a contribution from those who benefited from a free university education might be seen by some of more progressive and address the generational inequalities. But remember most of our politicians would also take a hit so it could be popular.
The conclusion is that the current system of funding universities and students is unsustainable and unfair. It is driving a wedge through our society that can only end badly. Without a stable funding regime that offers better quality and support, and brings back maintenance grants for those in need, there will be growing discontent. The architects of the current regime might expect the ‘hand of history’ on their shoulders soon, showing them to the exit door.
The author, Mike Larkin, retired from Queen’s University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics.
Footnote.
The ‘Treaty of Versailles’ , and the resulting impact of reparations, led to World War II.
Its General Provisions ARTICLE 231 went too far with,
“The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.”