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Competition or bust in Higher Education: a zero sum game

Universities, staff and students have set out their stalls in order to attract support from the government to offset the pandemic fallout. The sums of money involved are just as eye-watering as other predictions for the economy. Unfortunately, the various players are coming at this from very different perspectives and there are too many competing interests in what is becoming a zero-sum game. The government must demand cooperation and a consensus view of what is needed in a nonzero-sum game. A good start would be to focus on supporting students and maintaining the staff to teach them. Now is not the time to abandon students who have lost their part-time jobs or make redundant the staff that teach them. Especially those on short-term contracts. 

It is hard to believe that it is only seven days since TEFS posted ‘The loss of non-UK students leaves many universities out in the cold’. In the weeks leading up to last Friday, there was a rising tide of fear in our universities that a sudden decline in student numbers and income was going to cause bankruptcy in many cases. The precarious nature of universities as a business in a loosely regulated marketplace was becoming clearer. On the 10th of April, WONKE led with a sector-wide analysis of the extent of the financial hit likely to be caused by a loss of non-UK students with ‘Too big to fail? A request for government support for providers following Covid-19’. These observations were in response to Universities UK (UUK) setting out their stall for government support with ‘Package of measures proposed to enable universities to play a critical role in rebuilding the nation’ (the full report sent to the government is ‘Achieving stability in the higher education sector following COVID-19’). It was billed as “A proposal to the government for a balanced package of measures to maximise universities’ contribution to the economy, communities and the post virus recovery”. At under five pages of text, the paper was superficial and somewhat naïve in its demands. Other views followed fast and different perspectives and demands emerged. The challenge will be in reconciling the different interests to form a coherent strategy. We are a long way from that.

From a zero-sum game to a nonzero-sum game of trust.

This week we have seen essentially the same problem viewed from several different perspectives. The various views are from the government, university management, university staff and students. They bring to mind the ideas of Richard Dawkins in his oft-quoted text ‘The Selfish Gene’. He sees competition in nature as mostly a ‘zero-sum’ game, whereby one loss is another’s equal gain. But there can be exceptions. As an example, he cites the league football match between Coventry City and Bristol City on the evening of Thursday 19th May 1977 (not the 18th May as noted in the book). In some way, it is a metaphor for the current situation. This was a typical ‘zero-sum’ game; Coventry had to win, and Bristol had to at least draw to avoid relegation from the first division of the league. As was often the case at the Coventry ground, the match kicked off fifteen minutes later than all other games that evening. Elsewhere, if Sunderland lost, they would be relegated instead of Coventry, who could be saved by a draw. With Coventry and Bristol on two goals each, after a very hard-fought game and fifteen minutes to go, news came in that Sunderland had lost. Suddenly it was a nonzero-sum game. Both sides would gain from not competing further. The scoreboard flashed up the Sunderland loss and shouts were heard from coaches on the bench. Dawkins concludes in a somewhat patronising manner that cooperation prevailed with “Apparently all 22 players could read, and they all realized that they needn’t bother to play hard anymore.” he observed that “it is as if an external ‘banker’ had magically appeared”. He was correct, they could read and hear the calls. Also, they did cooperate; eventually. However, Dawkins was clearly not at the match. I was there supporting the home side Coventry City. The fact is that both teams did not cease competing when they saw and heard the news. They initially continued as before. Frantic calls from the crowd and the bench went unheeded for some time. Finally, the Bristol team held the ball in their half and chided the Coventry players for coming after the ball. You see, there was a lack of trust evident on both sides that had to be overcome first. This persisted for several minutes. 

We could see the COVID-19 crisis, and the government offers of support, playing the role of the ‘external banker’. The rules have suddenly changed and some cooperation between the various teams might replace the zero-sum game. The creation of a competitive market in university provision through the removal of student number caps in England and Wales has led to competition. But this is not the way to respond in a crisis coming from outside. The problem now seems to be in restoring trust between the teams.

The University management perspective.

Universities have competed against each other for many years. Both in terms of student numbers and research rankings that translate into income. This breeds suspicion and wariness. Universities UK has tried to bring them together in a consensus about the support needed now. But not every university agrees with the submission by Universities UK to the government. There is some general idea that government ‘bridging loans’ in the shorter term, to offset the loss of income from fewer students enrolling, would ensure continuing access for students. The inherent assumption is that many students will defer for a year so universities need more support. The result is a somewhat naïve request for additional funding too narrowly focussed on the university needs. This naivety is exemplified by a call for doubling of the QR grant, based on REF this year and ahead of the next REF round in 2021 but postponed for now. This appears to be the top priority and involves doubling the current allocation of £1,909,826,271 across the sector. However, this is certainly by no means evenly distributed. Instead, it is divided according to the REF 2014 ranking. Figure 1 shows the

current distribution amongst universities in England that indicates the lions share is taken by Russell Group universities (see note below* data sources). It also shows the outcome of doubling QR income. But REF and income from QR are separate from the effects of the pandemic crisis. QR is still guaranteed for now despite being lower than would be optimal for research support. The naivety lies in bringing it onto the agenda at this point when the greater emphasis should be placed on student support.

The staff perspective.

There already exists a deep mistrust of university management by many staff. The main union, UCU, has been countering management excess for many years and there is a high degree of suspicion and lack of trust. Any university that carries out a survey finds out the hard way that there is no love lost. A report from 2017 is one of many that records this lack of trust (Times Higher Education 5th October 2017 ‘Survey results confirm UK university staff's deep dissatisfaction’). This situation is probably getting much worse as industrial action was precipitated by threats to the USS pension, too many casualised staff and low pay offers. Although UCU decided in March (‘Reballots postponed due to Covid-19; pickets cancelled but action continues’) not to continue with a ballot for further action it still persisted with ‘working to contract’ in its COVID19 plan. This will be hard to understand for the many people losing their employment now. However, they are not alone and universities have started to lay off staff in response. The first wave is the many precarious staff on insecure short-term contracts (Guardian 2nd April 2020 ‘Hundreds of university staff to be made redundant due to coronavirus’). Employment law offers then little protection and they are the easiest to target at this point. The next wave will come soon as longer-term established staff are targeted under the employment laws that mean they have to be given 90 days advance notice of redundancy. This week, Times Higher Education with ‘Covid-19: universities treating staff in ‘vastly different ways’ showed that a second wave was well underway. However, if the government offers support, all of this is unnecessary and open to the age-old suspicion that they are taking advantage to clear out some staff who they no longer want in the new academic year.

Unlike UUK, UCU has countered the situation and produced a much more detailed and professional assessment of the financial situation amongst universities. This was done in collaboration with the well-respected London Economics consultancy. The 35-page report ‘Impact of the Covid-19 pandemic on university finances’ emerged yesterday and shows a fuller assessment of the financial impact across the regions and institutions Different universities are defined in four clusters in a similar manner to the TEFS categorisation. However, Oxford and Cambridge are set apart from the pre-92 universities combined and the larger post-92 universities are set apart from smaller newcomers. Yet the conclusions are similar in how resources are distributed. In a series of detailed tables, spattered with minus signs and red ink, the horror of the situation emerges. The need for regulation and possible capping of student numbers is laid bare as those universities that would be likely to poach students form elsewhere are revealed.

The student perspective.

One thing missing from both the UUK and UCU analyses is the plight of students and how they might be financially supported. The cost of supporting students is surely a central consideration that must link to the overall finances of universities. Simply put, fewer students means less income. Therefore, support students and they will turn up this year. This is especially the case for those with jobs, low incomes and from less well-off families. It should be obvious that more students will find themselves in hardship as unemployment soars amongst their families. 

However, the student's voice is not a silent one. The National Union of Students released on Wednesday a report on the concerns of students, ‘NUS sets out safety net needs for students’. This offers the best perspective of a new reality for those for whom the universities exist in the first place. Their survey approach revealed that 33% of students are at “critical risk of being unable to access their education” and 74% are “worried about the risk to their final qualifications”. It also comes as little surprise to TEFS that 85% of working students “may need additional financial support as incomes drop”. It must also be acknowledged that without part-time jobs available, fewer students will take up offers. Thus, it is a priority that adequate support for students should trump all other needs. NUS rightly see this as the priority with a call for at least a “£60 million national hardship fund”. However, this is probably far too little and TEFS would go much further. Earlier studies have shown that, although many students do not have to fall back on term-time jobs, a significant number do and find they work more hours than is recommended. Last year TEFS estimated that it would cost £1.18 billion per year to offset the number of hours worked above ten hours per week in ‘ The cost of equalising the HE experience’. Many of the jobs are in the service sector and hospitality industry that is taking the largest hit, and this will continue for many months to come. The overall cost of supporting students so that they can enter universities this year will no doubt escalate as the core income of more and more families is affected.

Coronavirus and the government as ‘external bankers’.

Despite the apparent autonomy of universities, it seems that the government has called the shots most of the time. Universities have been bending to the wind of change for decades. After all, fee levels are set by government and number controls, or not, are determined by the government. There are no number controls in England and Wales – but strictly capped numbers in Scotland and Northern Ireland. But there has been no restriction on the numbers of non-UK students in all jurisdictions and their numbers have been taken for granted until now. Leaving the HE sector to competition in a market is based upon an ideology that will not survive a crisis. Sure enough, the government is stepping in to tighten up the system and hold back the excesses of some institutions. In doing so, they must balance the needs of students with the liquidity of the universities that must be saved. Reports this week that ‘Coronavirus: UK universities ‘face £2.6bn hit with 30k jobs at risk’ will only add to the alarm. In 2014/5, UUK observed with ‘University Funding Explained’ that net liquidity was around four months for universities in England. With the cost of USS pension contributions rising, it would be safe to assume that this time is narrowing in many cases. Others may have more cash reserves than they would admit to.

The government is left with the challenge of bridging the gap to prevent a total meltdown on the one hand and trying to find out the extent of cash reserves in the elite universities on the other. The idea of doubling QR for mostly the elite universities will no doubt be viewed with some scepticism, simply because it is another unrelated issue. It, therefore, came as no surprise that there were reports of the government being singularly unimpressed with the UUK proposals (see Financial Times 23rd April 2020 ‘Universities’ plea for £2bn bailout falls on deaf ears in Treasury’). Putting so much emphasis on research and QR funding was surely a big mistake that overshadowed other pressing concerns.

It is now time to revisit Augar and analysis of the potential fallout from the proposed fee reduction. Last August the House of Lords Science and Technology Select Committee looked at ‘Science research funding in universities’ in detail. The conclusions were similar to an earlier TEFS conclusion from June with ‘Augar Under the Microscope: STEMing the Tide’. The issue of cross-subsidy of research from student fees emerges every time someone lifts the rock to see what is underneath. The fact that the UUK proposal openly admits that fees from non-UK students subsidise research with “Some research activities and high-cost STEM provision will stop as income from international students is used to cross-subsidise these areas” shows how deep the problem has become. There should be more openness and a clearer picture of genuine need before the government can step in on behalf of the taxpayer.

However, setting the QR debate to one side, some interim support for researchers on contracts will be needed and the research councils are now offering six-month extensions for PhD students. This approach will definitely need to be widened to support all researchers. The focus must, therefore, be on maintaining the capacity of people as much as possible and QR is not designed to do that per se.

The best way to support universities now would be to ensure that as many students as possible can enrol later this year. This will also negate the need to send out redundancy notices to staff that will be needed later. But it will require a support package that might be close to matching the cost of the UUK requested QR sum of nearly £2 billion. This is essentially still a zero-sum game whereby university research gains and many students lose out. To achieve such a momentous transition from the free market zero-sum game to government-backed control will require cooperation by all parties in a new nonzero-sum game. This must be built upon a platform of absolute trust. There may be no outright winners, but everyone gains in the process. 

Mike Larkin, retired from Queen's University Belfast after 37 years teaching Microbiology, Biochemistry and Genetics. He has served on the Senate and Finance and planning committee of a Russell Group University

*Note – Data sources
Research England
Higher Education Statistics Agency HESA.
Times Higher Education. REF 2014 results:


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