Problems ahead if tuition fees remain capped, warns v-c

Spiralling costs and frozen domestic income mean that some universities will be ‘completely stuffed’ within three years, claims Anglia Ruskin leader

June 26, 2014

Source: Anglia Ruskin University

Some universities will be “completely stuffed” in just three years if fees remain frozen at £9,000, a vice-chancellor has warned.

Michael Thorne, who leads Anglia Ruskin University, also said that his finance director had joked about the income from the introduction of £9,000 fees being spent on “effing survival”.

Professor Thorne warned that universities’ costs were rapidly rising while their home-fee income was frozen when he spoke at a round-table event on university finances on 17 June, hosted by Times Higher Education and sponsored by RBS.

He told the event that although Anglia Ruskin had record numbers of home and overseas students, “the books still don’t look terribly clever”.

Professor Thorne said there had been a discussion among his staff about how to respond to a letter to institutions from Universities UK, “which said government had asked the question, ‘what are you spending the extra money [from £9,000 fees] on?’”

Anglia Ruskin’s finance director, who the vice-chancellor said is “prone to outbursts of Anglo-Saxon”, had given a succinct response. “He sent an email that said ‘Tell them, effing survival’,” Professor Thorne recalled.

Anglia Ruskin, which has campuses in Cambridge, Peterborough and Chelmsford, has seen inflation in its costs of 10 to 12 per cent a year, he said. This included factors such as pay increments for staff, pensions and the recent rise in employers’ National Insurance contributions. The NI rise landed the university with a “bill from nowhere” for about £3 million and made a significant dent in its surplus level of around £8 million, Professor Thorne said.

He suggested it was likely that “both potential governments would want to keep fees at £9,000 and not take the cap off” after 2015.

Professor Thorne continued: “If fees were frozen…our calculation is it will take three years for even a humble institution like my own to be completely stuffed. We would run out of cash. Or we would have to get into a battle and say ‘we’re not going to give people increments any more, the pension scheme is totally unsustainable, we’re not going to do that any more’. And this is going to undermine the system, because you’re not going to have a wonderful system if we’re at loggerheads with our workforce for about three or four years, absolutely not.”

He added: “We’ve just been through some modelling and by 2017, the chickens come home to roost.” Professor Thorne said one solution to frozen domestic income was to recruit more overseas students, but warned that current government immigration policy meant even existing recruitment was “under threat at the moment”.

He said: “The obvious response historically has always been: government cash is fixed, you grow your overseas business. That’s been the university survival strategy in this country since the 1970s…If that isn’t available as a card, we’re in serious difficulty.”

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