Ministers are anything but relaxed about university closures

Perilous drops in student recruitment at UK universities during A-level clearing raise the likelihood of institutional failures, a prospect that remains as politically unpalatable as ever, says Nick Hillman

August 16, 2018
Source: Jon Krause

For as long as I can remember, people have been claiming that some UK universities are on the brink of financial catastrophe. Changes such as the collapse in part-time students, the removal of student number controls and Home Office crackdowns on international students have all, at one time or another, been seen as game changers that would cause the end of a handful of institutions.

Ministers have tried to appear relaxed about this. When I worked in Whitehall as a political adviser, my minister would get a huge briefing pack before each big interview. It would include a long “hostile Q&A” section, suggesting effective answers to hard questions. It always included one question that asked “Will you protect universities from bankruptcy?” The suggested answer was along the lines of “no government has ever given universities a guarantee of survival”.

Yet not one UK university has ever gone bust in practice. Indeed, there have even been instances of universities having a better credit rating than the Bank of England and the government. The closest that any major higher education institution has come to financial collapse was University College Cardiff in the 1980s. A merger was arranged because, even at the height of Thatcherism, institutions did not go under. Today, in a riposte to Thatcherite free marketeers opposed to all state support, Cardiff University thrives and is a member of the prestigious Russell Group.

Given that past predictions of widespread institutional collapse have not come to pass, the higher education sector could be accused of shroud-waving or crying wolf. Yet, this time around, the existential threats to higher education institutions might well be real. There isn’t one single cause. The reasons include the fall in the number of 18-year-olds, the removal of student number controls and the fiercely competitive international market for foreign students.

For an institution in the eye of the storm, any further problems could tip them over the edge. If, for example, a university were to recruit far fewer students in this year’s clearing round than hoped, or if their banks were to change the terms on which they are prepared to lend, then it really could be the end. It is well to remember that, in Aesop’s fable, the boy who repeatedly cries wolf when there isn’t one does eventually have his sheep gobbled up.

These days, ministers’ briefing notes doubtless combine the old line about letting institutions fail with a reference to the new “student protection plans”, which are mandated by the Office for Students. These are meant to explain what is to happen when a course, campus or institution closes – for example, they may explain when students will be transferred to another institution or receive compensation. The existence of these plans suggests that there is a neat path to follow when institutional failure beckons.

But they are unlikely to make much difference in practice. First, they seem to be more light touch than people originally envisaged. In her role as president of the Association of University Administrators, Mary Curnock Cook, the former Ucas chief executive, has said that “a student protection plan will do little to offer additional assurance to students”.

Second, when big crises happen, even the best-laid plans go awry. Urgent crisis management inside a large, collapsing organisation rarely entails following tidy pre-ordered paths. Third, when any major institution serves a public service and has been built up with considerable public funding, its sustainability will be a major political issue – and rightly so. Any MP worth their salt representing an area with a failing university would fight exceptionally hard to limit the fallout.

So the idea that student protection plans will change everything is a myth. Indeed, it is one of many myths concerning institutional failure. Another is the idea that, because there are so many higher education institutions in London, it would not matter if one fell over. A right-wing thinktank close to the government, Policy Exchange, once published a paper rejecting the general idea of universities being allowed to fail but that also suggested “within the capital, where there are an astonishing 42 higher education institutions, there should be a realisation that a university could close”. Yet, while any one university in one bit of London might not matter too much to the whole of London, they are all critically important to the specific area of London in which they reside. So London is unlikely to be so special after all.

Another myth is that failing institutions cannot be turned around. Cardiff is not the only example of a successful transformation. Just a few years ago, London Metropolitan University was written off; today, all its key metrics are going in the right direction, it has money in the bank and it is about to enter a different phase under a new vice-chancellor.

Turnarounds can happen in higher education just as they can happen in business, but only where institutions have the freedom to change tack, a clear strategy and effective leadership and governance. For some universities, survival in their current form – literally – depends on it.

Nick Hillman is director of the Higher Education Policy Institute. He was a former special adviser to Lord Willetts, who was minister for universities and science from 2010 to 2014.

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Reader's comments (2)

I'm hearing of Universities making unconditional offers on the BBC, when their VC's interviewed for the same report are claiming they don't, seems the whole thing is a mess. Then when you hear the money making humanities courses are severely under-subscribed, so much so some expensive to run STEM courses are looking extremely vulnerable in Russell group Universities, most of which are also pouring huge amounts into new building projects (though not before time with some of the old 60's buildings now falling down) , one can only wonder how many VC's (227% pay rise since 2010 apparently) and their so disconnected from reality senior management teams will fall on their swords or even take a pay cut, rather than reduce staffing further (the staff who have suffered a 21% pay cut in real terms since 2010). The next round of screw the pensions will be 'interesting'...
Never mind the learning, so long as the metrics are heading in the right direction. Academia, like the judiciary, needs to be independent of government. The more politicians fiddle, the worse it gets.

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