Open University’s numbers dive 28% as pool of part-timers dries up

University faces £17m deficit as enrolments fall while expenditures rise

February 19, 2015

The Open University has lost more than a quarter of its total student numbers over the past five years amid a national collapse in part-time study, leaving the institution wrestling with a £17 million deficit.

The drops in the OU’s recruitment and income, revealed in recently published accounts for 2013-14, came as the institution increased expenditure, notably on FutureLearn, its platform for massive open online courses.

The total number of students at the OU fell from more than 260,000 in 2009-10 to just over 187,000 in 2013-14. In terms of full-time equivalent enrolment, the decline was 10,000 over the five years to about 73,500 last year.

The number of FTE students fell by more than 6,000 in the 12 months to July 2014 alone – a year in which the institution also posted a deficit of £16.9 million, equating to 4.2 per cent of its £404.2 million income.

The figures continue a downward trend for the OU: in 2012-13, the institution returned a surplus of £18.8 million, while in 2011-12 it registered a £37.9 million surplus.

All the OU’s students study part-time, and the institution said that the “most significant driver” of the fall in income was the national reduction in student numbers.

“While it is true that the part-time sector faces a challenging time, our performance remains strong and we continue to perform better than the sector,” an OU spokesman said, adding that 60 per cent of part-time undergraduates taking their first degree in England do so with the OU.

In its 2012-13 annual report, the OU had predicted a “small deficit” for 2013-14. This, the spokesman said, was due to £28 million of additional expenditure on “a number of strategic projects” including FutureLearn, the UK Mooc platform that currently offers free courses from 44 universities and organisations.

The OU has invested £7.3 million in the company over the past two years, the accounts show, while an increase in the number of staff across both the university and FutureLearn as a whole resulted in a £2.8 million rise in personnel costs last year. Offering free courses on the platform is “expected to create interest” in the OU’s “core credit-bearing curriculum”, for which fees are charged.

A source at the university told Times Higher Education that there were questions about why the OU had led on the expensive development of a platform that is also used by 26 other UK universities.

The OU’s spokesman said: “The OU has received thousands of additional enquiries from students who have taken our courses on FutureLearn, with a proportion going on to register for formal qualifications.”

In May, the OU will welcome a new vice-chancellor when the current director of the BBC’s World Service, Peter Horrocks, takes over from former Microsoft executive Martin Bean, who left at the end of last year.

Several sources at the university told THE of concerns that the new vice-chancellor, like Mr Bean, has been recruited from outside the higher education sector.

“Peter brings with him significant experience of managing similarly sized organisations and demonstrates a real understanding of the academic life of the university,” said the OU’s spokesman.

After THE enquired about its finances, the OU circulated a letter to staff stating that although the institution “had planned to return to surplus” in 2014-15, it “will now remain in deficit” to the tune of up to £6 million. A higher-than predicted number of student withdrawals and a failure to hit the February student recruitment target are blamed.

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Reader's comments (5)

I think that the Open University's issues are both marketing and strategy related. The market is not shrinking. According to HESA, total postgrad and undergrad part-time enrolment in the UK has been relatively flat since 2012/13. However, OU generally does not open up its degree programs to students outside the EU. Enrolment at OU's principal competitor London International Programs has seen stable enrolment at 54,000 in the most recent year 2013/14. London International Programs enrols a large number of international students from Asia and elsewhere -- so that is OU's marketing problem. It's ignored a large growing market. The other issue is one of strategy. The BBC announced that OU's FutureLearn reached 1m students in February 2015. Setting up FutureLearn was probably the wrong strategy. In the digital age, the largest web-based providers are dominant because information exchange is free and consumers go where there is concentration of both product and service. At 1m students, FutureLearn cannot possibly compete with Coursera which is now approaching 12m students & 1,000 courses. Consider that London International Programs runs its MOOCs on Coursera. Where to from here? Consider revisiting both marketing and strategy.
I, too, am cutting back on my OU study. I already have a tenured teaching position at University and have truly enjoyed studying subjects outside of my own field but cannot justify the increase resulting from the funding changes. I can't blame the OU but I just can't afford to use them any more. OU on the way out, HE being smashed, HE stagnating because of the fixed 9k and toxic issues surrounding raising it. Horrible times for post-school education.
I have both BA and Masters with the OU. I think what has happened is rather sad. The OU of the 70s-90s has long gone. Things like tutor councillors, huge postal packs which arrived in February teeming with books, cassette tapes and video's were a delight. The books too were gloriously illustrated glossy tiomes. But these are moving increasingly online and the OU website is the most obfuscated piece of gobbledygook I have EVER seen. How people over 60 navigate blocks of dense terms and conditions I have no idea (dreadful, truly dreadful). But that really is the rub! In it's ever competitive urge to have parity with former Polytechnics and lesser Redbricks the OU lost the plot to an extent. It focused on the degree as a commodity. The Governements didn't help of course. But in this miasma they forgot the hobbyists, the bedroom autodidacts and grey haired recreational swots. The University was also a huge attraction to men and women in dead end jobs who simply could not afford University. A significant chunk of these people are now excluded on cost. You can acquire funding (if you don't already have a degree) but it is far from automatic. Not so very long ago the monthly fee was £80 a month. Today it will cost you £280 a month to study a 60 point module. The website has the verbosity of a life insurance policy and studying University level courses for pleasure is effectively over. It is a colossal shame and kills a huge percentage of returning custom.
PS-Sorry for the typos. Written in a swelter of passion only to discover no edit facility upon posting.