With the start of term fast approaching for our universities and students, there was a flurry of activity this week. Universities UK (UUK) met for its annual conference against a backdrop of increasing concerns and fears for the future . The speakers largely tried to promote a positive attitude as a counter measure to the mounting pressures. The meeting was in its hundredth year – in one guise or another – and is a forum for the leaders of UK universities to gather to worry about the problems of the day. Looming over the proceedings were the threats of Brexit, declining international student numbers, fee income and, not least, student welfare.
Dame Janet Beer, UUK President, kicked off proceedings on Tuesday with a positive address . The first meeting was in 1918 and she noted that: “In 1918, amidst the devastation heaped upon Europe by the Great War, it is not an overstatement to say that universities shone as beacons of hope”. Undeterred by the passage of time, on finance she quoted from the 1923 meeting that: “Education benefits, one, the state, two, the individual, and three, the locality or neighbourhood in which the university is situated… the presumption, which I see no reason to challenge, is that the three beneficiaries should contribute to the support of the university in approximately equal proportions.” No doubt Philip Auger was taking notes.
Keynote addresses: Good Cop and Bad Cop.
The two addresses keenly awaited were those of the Minister of State for Universities, Science, Research and Innovation, Sam Gyimah and the Chair of the Post-18 review Philip Auger. It seemed to be a case of ‘good cop’ bad cop’. The audience had been suitably anaesthetised the previous evening by after dinner speaker Damian Hinds, former minister and chair of the Resolution Foundation that advocated abolishing inheritance tax; good news for the highly paid Vice Chancellors (see TEFS Blog Friday 10th May 2018 ‘£10,000 for all 25 year olds: A redistribution of wealth: Who really benefits?’ ).
Sam Gyimah played the good cop and was upbeat and positive in general . He supported the Universities UK call for international graduates to be allowed to stay after graduating for a period. But then again this is a small concession on an obvious strategy that is essential to bolster the competitiveness of the UK. The universities offer no mean contribution to the economy as he reminded the audience that: “The higher education sector accounts for £21.5bn or 1.2% of the UK’s national output. That’s more than our automotive sector, the advertising industry, or our defence industry” and that: “International students account for £11.5bn of exports each year – a bigger contribution to our balance of trade than a host of more familiar exports, including natural gas, Scotch whisky, or car components.”
This seems to be fine grandstand material but we might all ponder these facts for a moment and consider where we are going as a nation state riding on the back of our universities. If the ‘bubble’ bursts then we might end up in the ditch.
The minister also played the usual % game with: “Young people from the most disadvantaged areas were 43 per cent more likely to go to university in 2016 than they were in 2009 and 52 per cent more likely to attend highly selective universities.” In her address, Janet Beer boasted that: “Disadvantaged 18-year-olds in England were 82% more likely to enter university in 2017 than in 2006”. But regardless of which may be correct, they are percentages of what? It all sounds positive but it is a not so slick way of hiding the real picture. That student numbers have risen is not in doubt. But most of this expansion has been driven by those that are more advantaged. The proportion of students from disadvantaged areas has risen only slightly and still is nowhere near representative across the population.
Sam Gyimah added a few lesser warnings about: “urgent issues from Grade Inflation to Essay Mills” and the “false dichotomy between Higher Education and Further Education”. Apparently our universities should not be “ideological echo chambers”. However, he did concede that universities were not “left-wing madrassas”, as one controversialist chose to describe them”.
One small blot on his speech was his not so clever use of a quotation from George Orwell: “The restatement of the obvious is the first duty of intelligent men”. An object lesson in how to annoy the women in the room for sure. Not seeing the need to state the obvious might be the first duty of intelligent women perhaps. In the end the obvious was that there had been plenty of rhetoric but no policy announcements.
In contrast, the bad cop role was played by Philip Augar, the chair of the much publicised Post-18 Education Review. This is due to report later this year and the possible financial consequence strikes fear into the hearts of university managements. Rumours of a sharp lowering of fees and a complete overhaul of the system abound. His reputation as a radical thinking banking and finance expert precedes him and does little to calm nerves (see TEFS Blog Friday 19th February 2018. ‘The review of post-18 education and funding: Who is Philip Augar?’ ). He gave little away with an indication that they were “not yet at the stage where we will make conclusions”. This was further reinforced by indications that the review report may emerge later than November this year. The causes of this slippage are explored below. Whilst supporting the “principle of sharing the burden of the cost of education between the state and the learner” he noted that: “The taxpayer’s contribution to higher education is largely concealed from the public eye. It’s largely concealed by the current method of accounting for student loans”. He also highlighted that many students including those disadvantaged were getting a “poor deal” and that there were some “low-value degrees”. A flavour of what is to come.
Follow the money.
An excuse for a potential slippage in the Post-18 education review is made because the Office for National Statistics is concurrently looking at how the student loans are recorded in the public accounts. Indeed, Augar’s task seems to be to wait for the ruling on how student loans are to be recorded in the public accounts. This is long overdue and should not be a surprise for any member of the current government. As far back as 2013, Andrew McGettigan drew attention to the issue that a recent House of Lords Economic Affairs Committee report dubbed a “fiscal illusion” . The crux of the matter is that students were, and still are, loaned money to pay fees, and later for their maintenance costs, by a government that itself was borrowing money. It was expected from the outset that the loans would escalate as student numbers rose. The removal of a cap on student numbers assisted this enormous expansion and the ‘bubble’ grew. The simple fact that not all of the loans could be recovered was also clear at the outset. Selling the loans book to private enterprise at a loss seals this conclusion. The loan book now has a face value of £102bn but is only worth £61bn at the moment . Heads were buried in the sand with regard to the abyss opening up and it took until February of this year for the alarm bells to ring – in public at least. The House of Commons Treasury Select Committee inquiry into student loans recommended that the Office for National Statistics (ONS) re-examine the classification of student loans as financial assets and consider whether there is a basis to treat them differently from other loans in the national accounts and public sector finances . Basically the money lent to students does not show up as government debt in the accounts. Indeed, it appears that they are viewed a potential asset. Thus the cost is hidden from the public. The BBC this week was brutally eloquent in its reporting with: “How can you lend someone almost £120bn and not have a hole in your budget? Or how can you give out £17bn, only receive back £3bn and not be any worse off? When you're the government and it's the student loans system” .
But why should Philip Augar wait to address the impending crisis in university and student finances? He must surely report urgently and well before the next spending review and the impending Brexit date. However, he hinted that there might be an interim report in November. There appears to be at least some recognition that he need not wait for the outcome of the ONS review. After all, waiting will not change things in terms of money flow. Instead, it will change how it is reported and embarrass the government that surely has one eye on Brexit and the other on a possible early election. It seems we can all smell the fudge cooking from a long way off.
Where does the money go?
A clue with regard to where the maintenance loans go lies in the latest report of the Student Living Index 2018 also out this week . This is the result of a survey of 3,419 students across 35 university cities in the UK. Although a relatively small number of students are in the survey, it does give a valuable insight into the financial pressures that they are under. A simple conclusion is that the money acquired from maintenance loans goes mostly towards rent payments for the increasingly costly accommodation. Developers profit from government handing out money as loans and they squeeze as much from it as possible from the student go-betweens; often in partnership with the universities. It would be easier if the government gave the money directly to the developers that are profiting from the burgeoning student accommodation. It seems to go to them almost in its entirety in the end. Families then have to chip in for other living costs for most students. Those with little or no family support resort to part-time jobs to survive and, if they are lucky, bursaries. Indeed, many universities are under increasing pressure to provide more financial support.
However, the Student Living Index is failing to show the true picture. In noting that students on average work 15.3 hours a month in a part-time job, they fail to report how many students have to do this. It is hard to imagine any employers employing someone for under five hours per week. Instead it should be noted that over 60% of students do not have jobs (see TEFS Blog 27thJuly 2018. ‘The vast majority - one million - of students have no employment when in full-time studies’ ). Adjusting for this across the UK indicates that between 10 and 15 hours per week are worked on average by the substantial minority that need the money. Many students work much longer hours and this is a more realistic figure that highlights the inequalities that exist.
Mike Larkin, retired from Queen's University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics
 President’s address – Universities UK Annual Conference 2018. Check Against Delivery https://www.universitiesuk.ac.uk/news/Documents/president-annual-conference-speech2018.pdf#search=janet%20beer%20speech%202018
 TEFS Blog Friday 10th May 2018. £10,000 for all 25 year olds: A redistribution of wealth: Who really benefits? https://studentequality.tefs.info/2018/05/a-redistribution-of-wealth-who-really.html
 Universities Minister speaks at UUK annual conference. 5 September 2018
 TEFS Blog Friday 19th February 2018. The review of post-18 education and funding: Who is Philip Augar? https://studentequality.tefs.info/2018/02/the-review-of-post-18-education-and.html
 The Great University Gamble: Money, Markets and the Future of Higher Education. By Andrew McGettigan, Pluto Press. 2013.
See also and more recently: May’s largesse costed & the end of RAB? Critical Education Blog July 30, 2018. https://andrewmcgettigan.org/2018/07/30/mays-largesse-costed-the-end-of-rab/#more-5744
 BBC News 7 September 2018. Is the tuition fees 'illusion' about to unravel? https://www.bbc.co.uk/news/education-45421621
 Student Living Index 2018. The cost of living at UK universities.
 TEFS Blog 27th July 2018. ‘The vast majority - one million - of students have no employment when in full-time studies’. https://studentequality.tefs.info/2018/07/the-vast-majority-of-students-have-no.html