Eighteen asks from the sector’s SMEs

Independent HE has called for a distinctive set of mitigations to issues that Covid-19 presents its members. David Kernohan takes a walk on the SME side.

A large and growing number of higher education providers are very small and very new – eighty-nine percent of them fall into the formal classification of a “small-to-medium enterprise” (SME), having less than 250 employees and turnover under €50 million.

These compare to the FTSE 200 of the larger universities, which also benefit from diversified income streams and more assets than their smaller competitors. Just as it would be difficult to imagine a Covid-19 support scheme for retail that would benefit Tesco and a specialised local delicatessen – a scheme that supports the more traditional end of the HE sector would do very little for independent providers.

They’ve got a little list

It’s difficult to argue with that. Smaller, more agile, providers – often working very closely with industry and professions and delivering learning in non-traditional ways to non-traditional students – are a little understood world, despite being an important and innovative part of higher education. A significant amount of snobbery, similar to the way older universities used to sneer at polytechnics, does exist. Bad apples are quickly and publicly called out from the independent basket. Similar sized pockets of poor practice exist everywhere, but we don’t get to hear about them unless we dive deep into sector data.

The independent sector is expected to fit around the needs of traditional universities – Student Loans Company payments, for instance, are profiled to fit the standard three-term year. Validation arrangements, where these are regulated, consider primarily the interests of the provider doing the validating and of the students, not the teaching provider.

It is on this basis that Independent HE (IHE) has published its own support request in light of Covid-19, a list that highlights many of these important differences. Many of the wider provisions aimed at small business of all sorts apply much more clearly to independent providers – the Coronavirus Business Interruption Loan Scheme (CBILS) and the Business Rates holiday have an impact here that is not felt as strongly elsewhere in HE. IHE are seeking a 100 per cent guarantee for CBILS (up to the lower of £500,000 or 25 per cent of turnover) and the extension of the current 12-month time limit for the rates holiday.

A permanent reprofiling of SLC payments is both sensible and revenue neutral (recent HESA data highlights the fact that the year ending in August is no longer the default( – the extension of the micro-provider subsidy on OfS fees to all SMEs highlight the disproportionate impact that subscribing to the regulator has for smaller providers.

Student numbers

IHE stops short of calls for full on number controls. A “responsible admissions framework”, with providers committing to control their growth for the good of the sector – is posited in place of a blanket cap. You see far more volatility in numbers in smaller and newer providers – to my shame I usually filter these out when I examine changes in recruitment for Wonkhe – with growth and shrinkage of more than 50 per cent over a year both common and likely in future. Limiting the upside to forecast plus 5 per cent without protecting against the downside is the worst of all worlds for an SME. The more nuanced controls come alongside a request to alter forecasts over the summer to reflect the “new normal”.

Another issue here is protection from the sudden cessation of validation or franchise agreements. A larger provider could quite legitimately yank franchise students from an independent provider or FEC to top up core numbers – unsurprisingly IHE calls for these arranged to be ring fenced – citing financial stability and student continuity.

There are some areas of concord with UUK. IHE looks for a continuation of current funding and visa arrangements of EU students for 2020-21, and targeted OfS support for specialist institutions (I would imagine the latter more widely defined than the current OfS list). Of course, not all independent providers have even been able to register with OfS – and with registration in furlough for the duration this situation may last for a while. IHE calls for a “properly resourced and available registration service” from OfS – which surely should have been what was there all along.

With a disproportionate intake of international students, there are also calls for visas that support shifts between online, blended, and on-campus provision. Providers with a track record should be allowed to assess English language competence themselves rather than rely on a largely shuttered in-country testing service. For existing students they ask for a waiving of time limits for study and waiving fees for students retaking modules.

Finally there’s calls for a national skills fund, a blended learning transformation fund, and for the presumably ongoing dual reviews of admissions to take account of different approaches in the independent sector.

What chance fairness?

Though a long list, to me this is a principled one. It seeks to mitigate the ways in which Covid-19 and associated economic and social changes particularly affect smaller independent providers. It sticks largely to lower cost targeted interventions, and modifications to schemes aimed at businesses more generally.

In 2017 independent HE was seen as a disruptive (in the Christensenian sense) entrant to the sector – offering new courses addressing student demand and commercial needs in a variety of new configurations (short courses, multiple start dates…). The fact it has done so – and this despite a distinctly frosty welcome from the regulator – makes it harder to conceive of a single sector with a single set of Covid-19 related needs. Any HE-specific bailout should work in such a way as to address this reality.

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