In Northern Ireland, public funding cuts to the higher education sector are jeopardising the economic future of a region that has been blighted by relatively high levels of unemployment and deprivation coupled with low levels of productivity and economic activity.
In real terms, funding from the Government to universities has been cut by 28% since 2010/11. Universities in Northern Ireland operate within a UK wide higher education market and are benchmarked against other universities using a wide range of performance indicators. It is, therefore, vital that they are adequately resourced to compete.
One of Northern Ireland’s greatest natural resources is its skilled, talented people but the region still has, relative to its population, the smallest higher education sector in the UK. Furthermore, it is the only region in the UK that is a net exporter of students.
Budget cuts are a reality for all sectors in austere times and the NI Executive has to make difficult choices, but the systematic devaluation of higher education through underfunding is both short-sighted and counter-intuitive.
The Minister in charge of higher education has warned that the funding model for higher education in Northern Ireland is no longer sustainable. Almost 40% of the income of the higher education institutions comes from public funding, the highest in the UK.
In 2015/16, tuition fees were capped at £3,805. The NI Executive has not invested sufficient resources to top up universities’ income per place to the English level of £9,000. It is estimated that there are shortfalls of £1,000 to £2,500 per place, with further cuts likely.
Both universities in the region, Ulster University and Queen’s University Belfast have been forced to downsize, cutting staff and student numbers. In 2015 approximately 2,000 student places were axed, thereby increasing the number of young people forced to leave to continue their studies. Existing research reveals that the majority of those who leave never return.
This acceleration of the brain drain will be a major impediment to economic growth.
One of the central tenants of the November 2015 deal to save the power-sharing Executive in Northern Ireland – the ‘Fresh Start Agreement’ – was a decision on the date and rate for the devolution of Corporation Tax. There is cross-party support for this initiative, as it is widely believed that it will lead to the creation of 1,000s of new jobs through attracting substantial volumes of fresh Foreign Direct Investment.
While a lower rate of corporation tax remains Northern Ireland’s best prospect of securing a transformation of its economy, an attractive tax regime cannot achieve these outcomes in isolation. It must be part of a wider plan for investment in other key economic drivers including most crucially skills.
A Universities UK report found that in 2012/13 Universities in NI contributed £1.6 billion of spend, directly created 6,000 jobs and indirectly supported almost 12,000 jobs. Higher education contributes £1.5 billion annually to the local economy and is a key economic driver providing 8,000 high-quality graduates each year who are sought after by investors and indigenous businesses. Relevant, accessible skills, innovation, new technology and productivity; these are factors that underpin long-term economic growth and where higher education is uniquely placed to influence Northern Ireland’s investment narrative.
The NI Skills Barometer published in 2015 identified a significant undersupply of some 1600 individuals per annum with degree level skills in subjects such as Mathematics, Computing, Engineering, Technology and Finance.
Everyone who is involved in selling Northern Ireland abroad and trying to attract inward investment agrees that the international standing of its universities and the quality of its graduates are key selling points. Reducing the number of graduates will affect the skills base and ultimately could have a devastating impact on the region’s investment proposition.
The irony is that if students travel to England or Scotland, the Northern Ireland government will still have to cover a significant part of the cost of educating these students. Currently, £60m is paid annually in student support for students educated elsewhere. In effect, the government will be encouraging local talent to leave Northern Ireland whilst subsidising universities in England and Scotland.
Almost uniquely in the developed world, Northern Ireland is disinvesting in higher education, while other countries such as Germany, US, France, China and India are investing in the skills, research and innovation incubated in higher education institutions.
Northern Ireland now stands at a crossroads, without substantial investment in its universities it risks jeopardising any competitive advantage that a lower rate of corporation tax might bring. This fiscal decision has brought an added urgency to the need to ensure that a strong pipeline of skills to meet the needs of a growing economy.
In February 2016, the Welsh government announced it would reverse its planned cuts to higher education. This change was largely in recognition of the fact that universities are driving the Welsh economy. Investment in research and development has a significant multiplier effect and provides the catalyst for future prosperity.
Even in challenging times, investment in higher education is a passport to future prosperity. Politicians in Northern Ireland must not underestimate the wider strategic importance of higher education. There is an urgent imperative to invest in higher education and thereby lay strong foundations to support economic recovery.