UK higher education faces financial ‘avalanche’

Austerity a greater threat than Moocs and private providers, writes John Morgan

March 21, 2013

A paper warning that UK higher education faces an “avalanche” caused by online learning and private providers “overstates the likely impact of Moocs” and ignores a “much more significant financial avalanche”: austerity.

That was the argument set out by Sir Steve Smith, vice-chancellor of the University of Exeter, at the launch event in London on 5 March for An avalanche is coming: higher education and the revolution ahead.

The paper was published by the Institute for Public Policy Research thinktank but written by three Pearson employees, including Sir Michael Barber, a member of the Browne Review panel and former chief adviser on delivery to Tony Blair.

Sir Steve, a former president of Universities UK, argued that the authors “overstate the likely impact” of massive open online courses. Moocs cannot “replace both the education offered by, and the brand value associated with, traditional universities”, he said.

He also questioned the authors’ conclusions on the declining value of degrees in the job market and the notion that significant numbers of universities could close, highlighting recent successful bond issuances by universities as evidence that they are seen as “forever institutions”.

On future cuts in the Department for Business, Innovation and Skills, driven by the government’s austerity programme, Sir Steve said that “a much more significant financial avalanche is on its way”.

Using figures from the Institute for Fiscal Studies’ “Green Budget”, he said that in the two years after the period covered by the next spending review, 2015-16, BIS would have to find savings of 12.7 per cent. He suggested that such cuts “have to come” from sources other than student grants and ring-fenced science funding, in areas including budgets for widening participation and infrastructure.

Sir Steve said he also expected “any incoming government in 2015 to look again at the student finance system and try to reduce its costs”.

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