Leader: Amid the gloom, a little cheer

For a change, the sector escapes ministerial brickbats over social mobility and can enjoy the small comfort of a tidy surplus

April 7, 2011

Universities minister David Willetts had his very own Larry Summers moment last week, when he was accused (unfairly) of being anti-women. Whereas for Mr Summers it was a foray into biology that ensnared him, for Mr Willetts it was sociology. He observed that women who would have been housewives before the changes of the 1960s and 1970s had snapped up the university places and well-paid jobs that would otherwise have gone to ambitious working-class men. "Feminism", he told journalists, "trumped egalitarianism" and was "the single biggest factor" responsible for the lack of social mobility in the UK. What a change - usually it's the fault of universities.

Of course, universities are all for social mobility, but on their own terms. Vice-chancellors have thumbed their noses at the government and its crude attempts to promote this agenda by making universities in England that wish to charge annual tuition fees of more than £6,000 submit access agreements. So far, almost all those declaring their fees have gone straight to £9,000, causing a huge headache for the three-men-and-a-dog team at the Office for Fair Access that must vet the plans of those wanting to charge full whack.

It may look as though institutions have made a joke of the government's desire to see a sector average of £7,500 for fees, but we will have to wait to see who has the last laugh as almost every other major income stream for universities threatens to become a trickle.

Last year, higher education institutions produced a surplus of £810.7 million, according to a forthcoming report from the accountancy firm Grant Thornton. This cash pile may have been more than twice as big as it was the year before and 3.1 per cent of total income, but it won't be enough to ensure plain sailing in the turbulent and uncertain times ahead, especially if universities must invest heavily in campus services, which Andrew McConnell, chair of the British Universities Finance Directors Group, says in our cover feature, will be essential to enticing newly empowered student consumers.

At present there is a huge reliance on public money that has a less-than-certain future - from funding councils, research councils, the teacher training budget and the NHS. To replace this cash, universities will need to recruit their way out of trouble in 2012-13.

Unfortunately for them, the government is capping (in fact reducing) numbers, and 19 universities have been fined a total of £8.1 million for over-recruiting this year. It's a funny free market in which the state stops popular institutions from expanding. The government must find a way out of this dilemma if it wants universities to succeed under the new system.

And there are new perils for universities in the traditional financial cure-all, the overseas student. As revenue from this source rises as a proportion of income (9 per cent in 2009-10, up 18.1 per cent on the previous year), institutions are left horribly exposed when there are sudden shifts in demand. This happened in Australia when visa rules were tightened, and it is why universities here have been furiously lobbying ministers over student-visa reforms.

But in reflecting on their position, universities have one consolation. Although their surpluses cannot guarantee an easy ride, at least, unlike the government, they do not have to contend with the prospect of a £1 billion black hole in their finances. And even the feminists can't be blamed for that.


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