Now is not the time to embrace the power of positive thinking

As the Office for Students warns against "optimism bias" in universities' annual financial returns, Debbie McVitty wonders if the HE sector can find hope in difficult times

When things get tough financially, the distance between the attitude of those at the top of an organisation, and the staff who work there, tends to grow.

Leaders feel pressure to keep up morale and offer reassurance and a promise of brighter times ahead. While staff, dealing with the hard realities and immediate consequences of cuts and limited resources on the ground, may retreat into survival mode, convinced that nothing can be done or changed until the money starts to flow again. Optimism bias confronts learned helplessness – and both are dangerous.

Be not of good cheer

Last week Susan Lapworth and Philippa Pickford, respectively chief executive and director of regulation at the Office for Students, warned the sector in England of the risk of “optimism bias” in submitting annual financial returns, which are due next month. Although whether something is realistic or overly optimistic is to some extent a subjective judgement, under the current financial conditions preparing for the worst case scenario is probably just good risk management. If things turn out better than expected it’s always possible to adjust course and loosen up the cashflow; if things turn out worse than expected the consequences are much more serious.

OfS has in the past noted that some universities’ projections on income streams such as international recruitment have tended towards the unrealistic – but typically these have been a post hoc judgement. For the regulator to be anticipating the possibility of poor risk management for some institutions, albeit in a light touch way, signals a meaningful concern. OfS is especially worried about institutions that might avoid acting to correct course early enough, and be at risk of having to adopt more radical action further down the line.

At the other end of the spectrum is the passivity that comes from feeling powerless to change one’s circumstances. To give an example of how financial precarity can engender a state of learned helplessness, I strongly recommend Rory Stewart’s recent political memoir Politics on the Edge and in particular his account of his time as prisons minister in the Ministry of Justice from 2018-19.

Stewart saw at first hand how the cuts to prisons funding under David Cameron and George Osborne’s regime of austerity led to the growth of drug use and violence in prisons, and the unsanitary and inhumane conditions in which many prisoners suffered – as well as the increasingly precarious conditions in which poorly-trained prison staff undertook their work.

By the time Stewart took office there was some modest new money available – but in his view, many working in the prisons service had become so disillusioned that they seemed to believe that change was impossible. The scale of the financial crisis created the conditions in which the path of least resistance was for staff to blame the government for all the issues the sector was facing rather than exploring what could be done even with the limited resource available.

The powerlessness of positive thinking

Optimism bias is a natural human response, particularly when a pessimistic outlook could mean having to make some difficult decisions about courses, staffing, and services. But staff can tell when things aren’t going well, and rather than looking to leaders for a lesson in positive thinking, or attempts to convince them that things aren’t as bad as they seem, they need to know that their leaders have a grip of the situation.

Likewise, learned helplessness is natural: it’s much easier, in a way, to believe that there is no way out than to put the effort into working out how to do things differently. Sometimes leaders join in or encourage their staff to adopt this mentality – it’s much nicer to be in cosy consensus than being out on a limb trying to convince unhappy people to adapt to adverse circumstances. But when determination from leaders to figure out a way to survive meets this kind of aggressive passivity, it makes the turnaround job twenty times harder – and the institution even less likely to pull through.

Fortunately, the higher education sector is not the prison service, and universities have a much greater degree of autonomy to chart their future course. At both our recent Festival of Higher Education and the annual GuildHE conference, despite the relatively downbeat nature of the kinds of conversations that were had about the policy environment, there was enormous energy around the idea of the higher education sector being much more assertive about the ways that higher education and research contribute to the common good and to national prosperity – and about what kind of country the sector wants to be part of building.

Because although higher education feels under siege right now, that’s only part of the story of what’s going on in the UK – a country that hasn’t yet found its place in the world post-Brexit, that is struggling with persistent issues of low productivity and regional inequality, whose public services are structurally unable to cope with the demands that are being placed on them, and whose politics is not up to the task of reconciling the competing pressures of voter beliefs, political party demands, and the public good.

Quite simply, whatever politicians might say or whatever policies might get announced, the country can’t afford for its higher education sector to either indulge in false hopes or give in to despair. Satisfying the regulator on the financial sustainability conditions in the current economic climate might feel like an almost impossible task for some institutions – but the much bigger job of tackling the country’s problems even though there’s not much money to do it is only just beginning.

3 responses to “Now is not the time to embrace the power of positive thinking

  1. This article highlights the reality and lived experience across the sector. The reality is our finances are under real pressure and Vice-Chancellors with their Executives and Boards are having to make difficult decisions that impact on staff and students. The pension changes will widen the financial gaps further with most post 92 universities paying up to 40% in TPS pension contributions from staff and employers against the USS 20%. This is simply not sustainable and will require significant action to be taken.

    1. Thanks to Sir Steve West’s comment. There is no doubt the section is under huge financial pressure. I am struck by the difference in the employer pension contributions between the TPS and the USS. According to the TPS website, the employer contribution rate remains 23.68%. So I am puzzled why most post 92 universities are paying up to 40% in TPS pension contributions.

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