Rapid expansion of some universities ‘over-optimistic’ – Stern

Some UK universities were “over-optimistic” and expanded too quickly during the recent boom in international student numbers, according to the chief executive of Universities UK, who said that “massive reliance” on the cross-subsidy model was leaving institutions exposed.

In conversation with journalist Amol Rajan at the Bett conference, Vivienne Stern said overseas fee income was now critical to sustaining core provision for UK students, after public funding failed to keep pace with rising costs.

This “unwise” dependence has left universities particularly vulnerable to political and economic shocks, Stern said, as international students have become increasingly entangled in immigration debates and global competition for mobile learners.

Pressures created by the funding model are contributing to course closures, including in subjects central to national skills needs, she added. “We’ve seen contraction in subjects which to me seems kind of counter-intuitive like chemistry, English literature,” she said, adding that modern foreign languages are also disappearing as demand falls.

Stern described the current climate as “a pretty difficult environment” across all four UK nations. “I’ve never seen anything like it in my career,” she said.

“It doesn’t mean that every university is on the edge of financial disaster,” Stern stressed. “They’re all having to paddle very, very hard underneath the surface to make sure that they’re able to discharge their kind of fundamental job.”

She acknowledged that some institutions had worsened their position by expanding too quickly. Universities were “over-optimistic” about overseas demand and “the investments they made”, Stern said, adding that some were now failing to respond quickly enough as conditions change.

“The biggest thing you can charge universities that find themselves in real trouble with right now is not moving fast enough,” Stern said, stressing the need for greater agility as demographics and policy priorities shift.

From 2030 onwards, she warned, universities will face a fall in the 18-year-old population because of declining birth rates.

Against this backdrop, Stern questioned the feasibility of Labour’s new participation ambition, which replaces the former 50 per cent target with a goal that two-thirds of the population should hold a qualification at level 4 and above.

Although the change has been presented as a cut in numbers, Stern said it was actually a “massive expansion” and an “ambitious” aim.

Stern also said it was notable how little public backlash there had been to the government’s decision to raise tuition fees in line with inflation. “It is surprising,” she said, adding that she believed “the government was a bit surprised too, that’s why they were careful”.

“But it’s not done yet,” she added. “The government has to legislate to make the inflationary uplift automatic, and I suspect there will be more scrutiny then.

She said universities should argue that the fee wasn’t going up, it was keeping pace with inflation and cautioned against larger increases.

“I don’t think that the government should put the fee up by more than inflation, because we’ve pretty much reached the limit of what graduates – thinking about future earnings – see as a reasonable deal. It’s a big investment. You pay a 9 per cent contribution through tax above the threshold, and that affects the money you have to live your life.

“If we’re not careful, we put off students who should and would benefit from going to university because they’re worried about the deal.”

tash.mosheim@timeshighereducation.com