Finance And Foresight In UK University Funding

With universities in England about to see tuition fees rise to a maximum of £9000 per year from 2012, with most institutions planning to set their fees at or near this limit, it seems undeniable that the financial climate is set, for some higher education providers at least, to become an issue of increasing concern. This concern is likely to be echoed in the minds of many university students, whose average debt upon graduation is set perhaps to top £40 000, according to some estimates.

In a speech given in February, 2011 Sir Drummond Bone, a former university vice chancellor, commented that financial divisions within UK higher education, driven by government cuts, changes to allocations in research funding and the increasing shift of the financial cost of higher education from the state directly onto students, will impact on institutions in different ways. The impact of these changes, Bone suggests, might be most severe for institutions that ‘recruit’ rather than ‘select’ their student intake, and which have a predominance of arts-based subjects which will see the complete removal of the state-provided teaching grant (THE, 10.2.2011, p.8). Sir Drummond adds that such a differentiation will be a new experience for UK higher education, entailing consequences such as perhaps a reduction and restriction on postgraduate numbers, as the debts accrued by undergraduate students act against the possibility of postgraduate study or push students towards more ‘utilitarian’ options at postgraduate level (ibid.). These and other consequences also indeed seem likely.

However, Sir Drummond’s remarks concerning the extent to which many in UK universities are unprepared for the consequences of economic recession seem perhaps to ignore what may be viewed as a lack of foresight on the part of some of those in senior positions in such institutions, who might reasonably have been expected to see at least some of this coming. For example, it is clear that during several years following the collapse of the ‘dot com bubble’ at the turn of the millennium to the financial crash of 2008, the UK and many other economies experienced a very pronounced period of economic growth coupled with a corresponding asset price bubble, both driven largely by loose monetary policy and correspondingly loose lending. Such patterns are almost inevitably followed by perhaps extremely sharp economic corrections, the consequences of which are felt often for a number of years and often involve periods of perhaps steep retrenchment in areas of government spending. Furthermore, in England, all this took place in the context of a steady political drift towards the introduction and increase of university tuition fees and a progressively more ‘marketized’ higher education sector, mirroring a general trend in this direction across much of the UK public services sector since the 1980s. Notable landmarks were reached with the introduction of university tuition fees for the first time in 1998 and their subsequent trebling in 2006.

For the most part, UK universities are largely insulated from the day-to-day exigencies of the real economy, thus having a degree of time to reflect and to plan. Given also the time spans during which all this unfolded, including the progressive move towards tuition fees and the introduction of greater competition into the sector, it comes as perhaps something of a surprise that many of those leading the UK’s universities seemingly did not have as a major and clear strategic priority the adjustment to what has long seemed likely to be a medium-term scenario, namely something akin to what is now being experienced. Sir Drummond notes that some UK universities might have to undergo adjustments in the next few years that may be ‘extremely fraught’ (ibid.), but with a modicum of foresight did this really need to be so much the case?