Are we gambling with students’ futures?

Bunting out! English higher education is in “reasonable financial health” and all registered providers “have demonstrated… that they are financially viable and sustainable”.

Regular readers will recall that we’ve spent a good deal of time complaining that sector-level assessments of financial health and sustainability were a regular feature of the benign HEFCE days, but have been notable by their absence ever since we actually needed them. In the wake of our own assessment of the sector’s financial health the Office for Students has now corrected all of that, by combining two of the old publications into one – an assessment both of the current health of provider finances, and of their future projections.

Onwards and downwards

It’s on that look forward where things are problematic. Collectively, English providers are expecting a 10% growth in student numbers over the next four years, with 122 (out of 183) projecting student numbers increases of more than 5 per cent over the next three years. This is despite a projected decline in the UK population of 18-year-olds of 5 per cent over that period.

Similarly, providers are collectively forecasting the number of international students to increase by approximately 20 per cent, with fee income from them projected to rise by almost 40 per cent. Perhaps that extra six months to find a job after graduation in the international education “strategy” is more attractive than almost everyone thought.

OfS rather politely calls this “over-ambition”, but another way to describe it would be deep collective delusion. Meanwhile, surpluses fell again, and borrowing hit £12 billion – now 36.8 per cent of income. And all of this is against the grim backdrops of Brexit, pensions and the Augar review.

Ambition

How did we get here? You would think that the massive expansion of business schools in recent years would mean that vice chancellors and finance directors would know the difference between a forecast, a target and an aspiration, or that the (sometimes literal) wealth of male, pale and stale finance expertise on the average university council would have spotted a problem. Alternatively, they may genuinely believe that their institution can cheat the averages, like a deluded gambler hunched over the roulette wheel at 3am, begging for one last spin so they can win it all back. The trouble is, it is students’ education they are gambling with.

There is at least a significant nuancing of the OfS position on institutional failure. Chair Michael Barber maintains that OfS will not bail out universities, but adds that it is

ready to work creatively with any provider facing challenges… we would seek to intervene to protect the interests of students.”

Brokering mergers is what springs to most minds, but that language notably doesn’t rule out more bridging loans. OfS will also be writing to governing bodies with their broad concerns about forecasts – but given we’ve heard tales of chairs of providers under enhanced OfS monitoring deciding not to tell their wider governing body about it, this theory of change may need some nuancing too.

Collective morality

Even if you do beat the odds and expand this year, how do you sleep at night? One of the more dispiriting Twitter spats I found myself involved in a while ago involved someone suggesting to me that the complete removal of recruitment controls meant that redundancy programmes outside the Russell Group was a benefit to:

…applicants who got into their first-choice university so they didn’t have to go to [mid ranking HEI]. Why should we prefer the interests of their current staff to those applicants who didn’t really want to be taught by them?”

Really? What about the students packed into the cheap to teach Russell Group courses having lectures at 7am? What about those who had the mid-ranker as their first choice who may now be facing heavily rationalised programmes and the threat of programme/module closure? It’s one thing when it’s ticking up, but when the birth rate is falling, recruitment above last year’s result literally steals learners from other providers – and causes others harm. Have the winners in this game no collective sense of solidarity or concern for the health of the sector overall?

The ethical dimension

There are some, of course, that would argue that we shouldn’t blame universities – that it’s rampant marketisation and the accelerated competition from the lack of a cap that makes everyone behave the way they do. There’s something in this, but here’s the thing. It is true that if you ply 30 young males with alcohol during a sporting event they are more likely to become aggressive, copy each other and punch people. Taking away the alcohol and the competitive sporting event helps. But it doesn’t make punching each other morally right. And they will always argue that “banning alcohol” is an attack on autonomy. Consider this a bystander intervention, lads.

This problem of individual behaviour of actors within a competitive market, is at least a concern of Michael Barber. In “How to run a Government…” he takes aim at staff who stop admitting patients because an NHS waiting times target was only judged once people were through the hospital doors.

One wonders at the professional ethics of the staff involved

…he said, arguing that codes of professional ethics are required in these types of systems. The question here is whether they will be imposed by the regulator or generated by the sector, and in either scenario, whether they’ll be generated in time, or begrudgingly late in the aftermath of another press scandal.

Overall, you get the sense that the era of planning allowed for managed growth and decline, but that the era of controls coming off generates rapid risk and reputation-damaging behaviour that the new regulatory regime just isn’t set up to manage and that governors won’t challenge. Perhaps our only option would be an outright ban on any provider growing their home numbers this September, to at least slow down the chaos. At this point, I’m really struggling to see any downsides.

One response to “Are we gambling with students’ futures?

  1. Good review – thanks.

    You say that there are ‘rumours’ of GB chairs not telling the rest of GB that the OfS has imposed conditions on the HEP’s registration.

    All members of a GB are charity trustees and all such trustees are personally financially liable, joint and several – as tediously explained at an OxCHEPS Occasional Paper on the OxCHEPS website. If the reckless and/or negligent behaviour of trustees causes financial loss to the entity they govern/direct, they can be required by the Charity Commission or the High Court personally to recompense the entity.

    And that personal liability applies even if the Executive & Chair (supposedly) keep the generality of governor/trustees under-informed since charity law imposes a basic obligation upon all trustees to ensure that know what is going on with regard to key dimensions of the business they direct – and knowing the exact and detailed response of the OfS to the registration application is a key aspect of good governance.

    Nor are trustees able to escape liability by resigning when insolvency looms – they are liable for any malgovernance during their term of office, even if absent at key votes or if blissfully unaware of what they should have been diligently informing themselves about.

    HERA17 allows the Minister to direct the OfS to assist a financially failing HEC-U (see another OxCHEPS Paper) where the he/she declares there
    has been mismanagement. And the OfS can step in under HERA17 if (IF) the GB of a HEC-U calls for help: but this latter route assumes the GB is informed, alert, and not in denial (as also covered in that same Paper).

    Rescuing a pre-92 chartered U is more difficult since no such powers are given in HERA17; and in any insolvency process for any kind of HEP it remains a known unknown as to how the funding of the HEP’s SSP can be adequately protected…

    I write as the co-author of ‘The Law of Higher Education’ (third edition due 2020, OUP; with an extended section on HEI insolvency!) and NOT as a Board Member of the OfS.

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