Economic Model of UK Universities: Unsustainable?

If you live in one of most medium or large towns in the UK you will be aware of the return of university students to your neighbourhood. As I have noted previously, in the view of your average bigot, they are now often seen as only a little better than immigrants. People blame students for a whole host of problems, many of which are either the fault of landlords or other people. There are noisy students as there are noisy teenagers and middle-aged people, but if my district is anything to go by, noisy students make up less than one-in-thirty households and much of the noise seems to be generated now that they are compelled to go outside to smoke. Students are seen as a legitimate target for the disgruntled in a way that blaming immigrants is not. However, hearing about the recommendations from the CBI (Confederation of British Industry, the key employers' association in the UK) about fees for students; reports about how overloaded both the visa and the student loan system has been in dealing with students this year; reports about universities having to exceed the cap on UK student numbers ending up housing some new students in hotels and the news that many UK universities are having to lay off hundreds of staff suggests that there is a major crisis.

Since the 1990s we have seen a massive expansion in student numbers in line with the objective of having 50% of 18-year olds go to university. Though it was falling back in recent years, more older people were also going to university a trend which is reviving now people look for other options in the time of recession. In general most universities now have four times as many students as they did in the mid-1980s and in some towns as many as 1 in 10 people is a student; in Ormskirk, Lancashire, it is now in fact 1 in 2 during term time, though many of these commute from Liverpool. In fact despite students often being seen as 'other' and 'outsiders' on average universities are taking around a quarter and a third of their British students from the local area as it becomes increasingly difficult to afford to live away from home.

Ethically I feel it is vital that anyone with the ability and the desire to go to university has the opportunity to do so. I have no desire, as some commentators have advocated, that we return to an elitist system in which only 6% of 18-year olds attend university as was the case when I went in the late 1980s. We cannot turn back the clock anyway as these days a degree is entrance level requirement and many employers look for an MA or MSc from their prospective employers. This does not simply go for UK employers but globally so if British young people want to work here or abroad we cannot suddenly deny them the chance of getting a degree or we will find that the trend which has long been going on of well-qualified EU people especially from France, Germany, the Netherlands and Scandinavia will fill jobs in the UK. I am happy for them to do so if they are better, I am not anti-immigration, but I would at least like British young people to stand a chance in the competiton both here and overseas.

Those who want to return to the old days when universities were more categorised and polytechnics were clearly something else, forget that, in fact, it is often now the new universities, the former polytechnics, which are doing economically the best; the University of Southampton made a loss of £20 million this year whereas Edge Hill University (only became a university in 2005) has been turning a profit of £6.5 million each year. This is probably not surprising. Whilst new universities have sought to expand their curriculum they are still more likely to offer the vocationally-focused courses that attract the mass of people attending higher education, especially since the intake widened so much and which appeals to corporate sponsors, many of whom, even in the public sector, seem to remain ambivalent about employing graduates. Of course as London Metropolitan University shows not all new universities are thriving, but also note that University of Exeter shed over 300 staff and closed its chemistry department and another pre-1992 university in my region, the University of Southampton, has been making redundancies this year.

I think a rich culture needs a wide range of subjects taught, studied and researched and so am no advocate of Margaret Thatcher's principle of seeing humanities and social science subjects as 'a luxury' wanting everyone simply to be taught business or science. However, there is a clear demand for more vocational subjects which the older universities are not necessarily so good at. Above all, the economic model we have ended up with at the end of the 2000s is not sustainable. Students began having to pay fees in 1998 and at the time many went round asking what extra they were going to get for their money. What they did not realise was that universities needed that additional income simply to cover what they were already doing, not even to increase it.

Even with student numbers increasing, it has not stopped various institutions having to cut back. I have mentioned Exeter stopping chemistry and when I was in Milton Keynes the nearby University of Luton closed its entire Humanities Faculty in 2001 and I am sure there are many other cases I have not come across. As the redundancies make clear even with the current fee level of £3000 per year universities are not earning enough to keep on the staff they once employed. The CBI said that fees must rise to £5000 per year. This will be harsh on students, but, in fact, on simple economic grounds it is probably the minimum they need just to keep going as they are let alone expand or improve what they offer. The problems with visas which have meant around 20% of international students have been unable to take up the places they have been given at UK universities will bite hard on the universities as each international student (i.e. from outside the EU) pays fees three times the level of a UK student.

So, you say, 'alright, we raise student fees to £5000 per year', but that might be fine for the universities but in fact could backfire sharply by reducing student numbers. Back in 2001 students generally finished university with debts of £12,000, now the figure is around £25,000. Student loans are at a good rate and with the fall in the cost of living some former students even have negative interest (the sum they owe declines even if they make no repayment). However, very few students can sustain themselves on just the official student loans and incur large debts with banks and even harsher lenders. Partly this is because food is expensive in the UK and landlords/ladies charge high rents and rip students off for thousands of pounds; new trendy private student accommodation is appearing in many towns with even higher rents and fixed contracts worse than what is already in the private sector.

The debt hampers graduates right through their lives and actually discourages them from taking further qualifications or retraining later. In addition, it has helped make university a place for women rather than men. Since 2001 the number of women at university has exceeded the number of men and now the ratio is about 6 women for 4 men, with variations between subjects. Men are more debt averse and can often find low paid full-time work more immediately than women, but of course by not going to university they are ruling themselves from ever improving themselves from that kind of work.

Since 2002 the number of people from working class backgrounds going to university has not increased. The rise in student numbers since then has been among the middle class, so even with the bursaries available for people from low income families, the widening of university intake has frozen. When people argue for the return to an elitist system they seem oblivious to the fact that in large part it is still here, the elite is the first born of middle class families with their younger siblings and working class friends left out.

So what do we have? A system which is straining between being torn in two directions. Universities cannot continue with the insufficient income they are currently receiving but to raise fees further to bring in enough cash will mean discouraging many people who need a degree and further distort the intake to middle class women, the eldest daughters of families. Some might say that is not a bad thing but it is certainly not a situation of opportunity for all who are capable of taking it. We seem to be reaching the limit of what universities can charge and with increased restrictions on students coming into the country they are increasingly limited from making up this shortfall by bringing in a few hundred more Chinese or Indian students.

I believe the current economic model for universities in unsustainable and the solutions on offer, change nothing or raise fees will not allow universities to grow. What will happen? My prediction is that we will see more closures, not necessarily of whole universities (though if that was the case my bet would be on London Metropolitan going first) but of departments and faculties as we have been seeing through the 2000s on a small scale. Universities will narrow down their curriculum to courses in which they have particular strengths or which attract premium fees (for that read business masters courses). We will see a specialisation of universities. Not necessarily a bad thing but it will chafe against the fact that increasingly students only go to their local university, so you may end up with regional clusters of specialised students.

Another likelihood are mergers. This has been happening for many years. The University of Southampton which I used to drive past quite regularly bought up Winchester School of Art as far back as 1996. The University of Exeter has an outpost in Falmouth; the University of Luton became the University of Bedfordshire with campuses at the two towns in the county: Luton and Bedford; the University of Hull is also at Scarborough. Typically they have taken over a local college. However, I can envisage the merger of whole universities, perhaps on the model of the University of the Creative Arts (not to be confused with University of the Arts London which merged six colleges in central and south London) which merged five colleges as far apart as Canterbury in Kent and Farnham in Hampshire, which are 148km (92 miles) from each other (Epsom in Surrey and Maidstone and Rochester in Kent are the other locations).

Perhaps Exeter and Plymouth will become University South West or some such. Perhaps it will become like the Reading and Leeds festival with universities at either end of the country merging because they have the same specialisms. What will the British government do when rather than setting up campuses in the Middle East, Malaysia or China now a British university is bought out by a French or German or American or a Chinese institution. What do they do when a religious organisation wants to take over one and replace a liberal approach with a more narrow one like religious universities in continental Europe and the USA? We have seen the difficulty with schools and the curriculum, notably on creationism, when church-focused individuals become involved in sponsoring them.

It seems likely that in the next five years we will see a decline in the number of people going to university simply because of the economic burden of doing so. The 'golden age' of mass higher education will not come to an end but may be less mass than it has been in the 2000s. I think also the number of universities in the UK will be smaller by 2015 than they are now whether through mergers and even closures. Is the UK workforce any better qualified than before the expansion of higher education? I would say yes. I would also say that many people from across the world have benefited and that is no bad thing whether you hope for development in African states or the emergence of democracy in China and the Gulf States. However, the high flying, quick expanding economy of higher education is fragile and was weak even before the expansion took off. Solutions are few and the ones introduced so far are really only makeshift and also have had deep consequences for those who would be/have been students, the outcome of which we may not see for decades. A serious rethink of the whole sector is needed but as with so much in Britain we will limp along with no major change watching as bits fall off and thousands of bitter experiences for individuals occur.

P.P. 09/12/2010: With all the current debate around the rise in university fees and the impact on student numbers and university finance I was interested to read what the university union UCU said to the BBC about the universities which would most likely close down.  The UCU feels that a third of universities are at risk: http://www.bbc.co.uk/news/education-11940832  Interestingly, one of those they highlight is Edge Hill University which I had commented on here.  As you look down the list you see, that, in fact the bulk of the ones they see at risk are post-1992 universities, even though many of these have worked on a very commercially focused basis right from the start.  The BBC noted an off-the-record quote from a government minister saying that 'basket case' universities would go.  It is interesting that two things I have commented on, the snobbery against certain institutions and the financial pressures of the higher education sector are combining. 

I noted back in February 2009 how so many commentators felt that universities offering vocational qualifications or that did not have a history stretching back at least 50 years needed to be suppressed or at least flagged as being inadequate: http://rooksmoor.blogspot.com/2009/02/uk-universities-snobbery-and-decay.html  It is apparent that such people, including members of the current government, hope that the financial pressures on newer universities will do the job of 'weeding' them out.  This is a mistaken view, as anyone who ever goes to Southampton will know.  One of the universities there has been in existence since the 1950s, but financially it has been in debt and laying off staff constantly for the past two years.  Down the road, the newer university, it appears, is doing a lot better.  Having an established university does not mean it has a good economic model, in fact unlike those who battled in the 1990s to be recognised as proper universities, many of these older ones seem terribly complacent.

Of course, any reduction in universities will further drive down the opportunities for ordinary people to get on and reduce the skills and knowledge levels of the UK as a whole.  However, even when the UK is facing such challenges too many influential people seem unable to understand that the country might be better off losing some of those institutions teaching Classics and Music, rather than trying to use the situation to drive out of business those who run Engineering and Social Work courses.

I am the Final Person in My Family Ever to Go to University

I was trying to think of a clear title, what this is about is not the unlikelihood that I would have ever gone to university but the fact that no-one after me will ever get the chance to do so. These thoughts came about from two sources. First I was sitting in a waiting room yesterday waiting for the people I was supposed to be working with and picked up a leaflet for a university close to where I was sitting. It was aimed at parents of students rather than students themselves and clearly aimed to reassure parents about what they were going to be sending their children into. This in itself, I feel highlights how concerned parents are about letting their children out of their sight even when they reach the age of 18. The second thing relates back to my post yesterday that I had found due to the stupid residence laws that some time last August I acquired a common-law wife and common-law stepson of my housekeeper and her son, without me having done anything. This boy is 6 years old, and he says he wants to be a scientist, but reading this leaflet yesterday it was clear he stands no chance of that even now.

Now let us track back a bit. When Tony Blair came to power in 1997 he said his slogan was 'education, education, education' and in contrast to the proceeding Conservative governments rather than trying to make the UK into a low-wage manufacturing base, like the 'Taiwan of Europe' to paraphrase a Conservative MP of the time, rather a better educated, skilled country like our European neighbours. The aim was for 50% of 18-year olds and many others to go to University. Well it started reasonably well. The University sector had been rationalised since my days there in the 1980s when there had been universities and polytechnics, the latter giving more technically-focused degrees and of course with typical British snobbery they had been looked down upon as second class. From 1992 they were allowed to become universities and some have been very successful. Anyway, the idea was to get more people to university especially from socio-economic and ethnic groups that were under-represented in universities. When I went to University in 1987 6% of the UK population turning 18 that year went, now it is 40% but the level of working class people attending levelled off in 2002 so further increases have just been mopping up more of the middle classes. In 1987 you could get a very good job with 2 'A' levels, now with 'qualification inflation' you need at least a BA/BSc or even an MA/MSc. I found when I graduated that having a degree actually made me unemployable in many jobs and it was not until 2000, 13 years after I had graduated that I broke through the £10,000 (€12,600; US$19,200) per year salary level and then that was because I had 4 part-time jobs. Anyway, things have changed a lot since then. Most universities have four times the number of students they had in the late 1980s, in many cases crammed into the same number of buildings as they had back then and class sizes are far bigger. In my day you had 10-14 people in a seminar now apparently it is something like 40-50 people, so the quality of teaching or at least the amount of attention each student gets from a tutor must have fallen or substituted by online stuff. Of course the increase in student numbers have not been made up just by more UK students. All universities have increased the students they take from abroad, who pay three times the fees UK students pay. They are wonderful moneyspinners for the universities and it is unsurprising they bring in more and more. Apparently China is the golden goose for such students at the moment, but is likely to fade and be replaced by India in the next decade.

Now one thing I have always admired about the USA (and there are very few things) is that they have always valued education and seen it as a way for people to improve themselves. Given how beholden the UK has been to the USA (note current plans for an Armed Forces Day just like the USA) especially Tony Blair, it is unsurprising that the UK moved in that direction and it seems to have worked, though to a lesser extent than had been hoped for, at least more people can go to university than when I did. However, reading this leaflet yesterday it seems that period, of, say, a decade is at an end or perhaps it was shorter lived than that, beginning to come to an end in 2002. Now, it is not that universities have made it harder to get in, it comes down to money and this brings me back to the leaflet.

The leaflet outlined what students have to pay in fees. Fees were introduced for English students in 2006. Scotland and Wales decided that local students going to universities in those countries would not have to pay fees. However a Scot or Welsh person coming to an English university has to pay as does an English person going to Scotland and Wales. Students from abroad have always had to pay. Though non-repayable grants had been phased out in the 1980s and replaced by loans from 1991 onwards, up until 2006 UK students did not have to pay fees to study at university (except at the private University of Buckingham). Now, they have to pay £3,070 (€3868; US$5894) per year. Students from those odd bits of the UK, the Isle of Man and the Channel Islands, all of which have their own governments have to pay £4,817-£19,267 as if they were foreign students. So, the cost of a 3-year course is now £9,210 (€11,604; US$17,683). Students can take out a loan to pay this and then begin paying it back once they earn more than £15,000 (€18,900; US$28,800) per year, which of course may not be the case for many of them given the average salary in the UK is £24,000 per year and in some regions like East Anglia only £19,000 per year, and 80% of the population earns this or less (which if 40% of 18-year olds are going to university, quite a few must fall into this category).

Of course the £9,210 only covers the fees. The fact that struck me in the leaflet was the living expenses. Now I know the university in question in in the expensive South-East of England, but they reckoned living expenses cost £5,500 for the first year and that is when the students are living in student halls with meals thrown in, let alone when they have to move out into rented accommodation (and all the scams landlords try with taking deposits, etc.). So let us say £5,500 for first year + £7,500 for second year + £7,500 for third year = £20,500 for living. Now, I know students work a lot more these days (when I was at university you were restricted to 6 hours per week, I have heard that limit has been raised to 20 hours per week), but let us say they do 20 hours per week at minimum wage (the kind of service sector jobs they can get in call centres, bars and shops) which is set to rise to £5.73 per hour (€7.22; US$11 - the minimum wage in USA rises to US$6.55 per hour this July; the price of fuel, food and clothing in the USA is far cheaper though, in 2007 the average price of petrol rose to US$3 per gallon [US$0.66 per litre] = £0.34 per litre, whilst by the in the UK you were paying £1 per litre), so paying £114 per week before tax and £5959 per year, before tax. Of course they can probably go up to 40 hours per week over the vacations and may be able to get pay above minimum wage, but this would probably at most add £600-£1000 to the income over the year, and all of this is before tax. With the loss of the 10p tax band it is those people earning around the £4000-£7000 per year mark and unable to claim tax credits (as most young students cannot because they do not have children) who are deemed to be worse off.

There are loans upons loan available and student can apply for a loan of £1,230-£4,510 for the total three years of their study to pay all these living expenses, but as even the university shows that that is not enough to live a boring life for one year at university let alone that this is yet more debt.

So, if students are lucky they can work enough to cover their living expenses, but never go on holiday or buy a laptop or a car or even drink beer as the leaflet's costs left nothing for socialising. Of course if they live like that they will probably do well on their course (though having a laptop seems compulsory for study these days). My bosses' son who went to university in the North-West of England so a cheap area, came away with debts of £10,000, which apparently is seen as two-thirds of what he should have expected. I do not know if that includes the fees debt as well, but I expect not. Once over £15,000 they have to pay back 9% of their income per year, so £1,350 per year on £15,000, meaning 7 years to clear that debt, let alone whatever they owe to the bank.

This is fine for well off families like that of my boss, but coming back to the 6-year old who wants to be a scientist (and science courses can be more expensive, costing a third as much again as a humanities course), where is his mother on £10,000 per year plus tax credits going to find the money? In fact he is better off than if he was my son, because bursaries kick in for families earning less than £38,000 per year, but even this pays only £2,765. So local authorities give loans for families earning less than £30,000 per year and universities are supposed to pay bursaries of £1000 for those on less than £21,000, but how long is this going to last when you have to find housing deposits of £2000?

So, someone from a working class or even a middle class background is going to find themselves with potentially £19,720 of debt when they leave university, and that does not include overdrafts and credit cards and all other kinds of debt that they are facing. Now, they will then be under pressure to get a mortgage and to pay living expenses, all these high rents and utility bills. I earn £34,000 per year and I am having trouble paying this. How can a recent graduate with this much debt even earning the top of the average salary of £24,000 immediately after graduating, afford to pay back all of this money. What do they get in return? They have spent this money for something that now 4 out of 10, 21-year olds will have. It hardly marks them out in the labour market.

The other thing is that loans are fine, paid work is fine, but so much money is needed upfront and even my whole household would lack the money if the 6-year old was now 18, we could not afford to pay his deposits or help him feed himself through the weeks while he sought work. He could not even give up his job when the exams came up for fear of being evicted. So, it might be about education for all, but it soon becomes clear than unless your parents are earning double the national average salary each year, going to university is nearly impossible and even if you risk it, you could be burdening yourself with debt well into your 30s. No wonder so many people are going bankrupt and those turning up for university study is falling.

Of course my brother has no children and lives in Belgium anyway where things are very different. I have lost contact with my three cousins, but they all have 2-3 children each and it is unlikely given that they are predominantly farmers and gamekeepers than any of their children will ever be able to afford to attend university. Even my pseudo-son, it is clear, 12 years before he could even go, will never be able to fulfil his dream of being a scientist and probably will not even be able to afford a course to become a plumber or an electrician. The rhetoric has been about widening access, but when you begin to dig, you find in fact it is just about the same control of society as always. The rich can still study, the poor are increasingly kept out, not by visible barriers but by less visible economic ones. Of course that is just the way the super-rich of the UK want it. They do not want an educated population that may question their grip on power. They want people to be excluded from education so they can remain the cheap, flexible labour force dreamt of by the Thatcherites in the 1980s. Even those they let into universities will be so shackled by debt that they have to buckle down and accept the work they can get rather than trying to shake up the system. Unsurprising for Blair, under his populist rhetoric he has actually engineered another tool of societal control, an additional element in his desire for an authoritarian UK. No wonder people from the North of England are buying houses in Scotland. What we have seen with higher education is an expansion but so that more wealthy middle class people can go and Britain can draw the most intelligent and rich from across the world to come to the UK, rather than what Blair seemed to promise in 1997 which was an education system which provided a decent chance for anyone with the intelligence. In the 1970s with grants and no fees, there was actually a better chance for people from poorer backgrounds and certainly average middle class ones than there is now, even with limited numbers of places. Nowadays intelligence does not come into it, it is all about money.