Worsening finances push English HE into ‘future nobody planned’

Financial pressures on English higher education are advancing far quicker than predicted, with the current system “unsustainable in any plausible funding model”, according to a report that urges the sector to prioritise differentiation to secure a viable future.

Cost inflation, shifting demand and volatility in international student numbers have combined to heap pressure on institutions, with tuition fee increases only raising a net £18 million as most of the gain has been wiped out by higher national insurance contributions.

This financial threat has combined with “fundamental questions” being posed by artificial intelligence (AI), shifting student expectations and a “legitimacy crisis” facing the sector at a time of “deep social division” to pose an existential threat to institutions, argues former Sheffield Hallam University vice-chancellor Chris Husbands in a paper published by the Higher Education Policy Institute (Hepi) on 23 July.

Moreover, “the government is unlikely to come to the rescue” when it comes to investment in the system, with universities needing to ask “hard questions” about their operating models, he writes.

The New Choices report updates modelling that Husbands carried out two years ago for an earlier Hepi paper that outlined four potential scenarios facing the sector.

The speed at which circumstances have changed necessitates another look into the future, Husbands argues. English universities currently face a situation that involves an unplanned mix of decline, quiet research concentration and stalled regional reform, he says, “and none of it is being managed as deliberate policy”.

University financial plans continue to “assume income growth and expansion”, but the range of challenges mean even this route can no longer assure stability.

“Although higher education may indeed grow, it takes some heroic assumptions to imagine that in 10 years it will look much as it does now, but bigger,” Husbands states.

He proposes a “differentiated” system, with a few “global player” universities who boast worldwide renown for research and innovation; large, regional universities and university groupings focusing on areas like science and health; local universities; and small, specialist institutions.

To facilitate this, Husbands says universities need to ask hard questions about their operating models, relationships with other institutions and their place in their communities.

For government, now under the leadership of Andy Burnham, there needs to be a better articulation of a vision for the sector, he says, with ministers providing more clarity on policy areas such as funding for teaching, the lifelong learning entitlement, international students, the future shape of research funding, regulation and university mergers and “market exits”.

The paper reiterates proposals for a sector-wide approach to AI, suggesting that early responses to the technology “focused almost entirely on assessment integrity”.

“More recently there have been attempts to plot institutional AI maturity to underpin phased adaptation, but the pace of technological change and the constraints of institutional decision-making make coherent strategy difficult,” it states.

Husbands said: “Four Futures argued there were painful choices in every direction. Two years on, the cost of not choosing is demonstrably higher.

“Simply increasing income is no longer a viable strategy for institutions and simply hoping the market sorts itself out is no longer a viable strategy for government. What the sector needs now is a combination of government activism and institutional courage.”

georgia.luckhurst@timeshighereducation.com