- Conference
- 2023 National Higher Education Conference
- Date
- 13 October 2022
- Decision
- Carried
Universities are autonomous organisations, delivering higher education and research, with the freedom to manage their own finances, subject to regulation. Each institution is different, with a complex mix of income streams depending on the nature of the students it teaches, the quantity and perceived quality of research it conducts to drive research income, and the way in which each of the UK nations manages fees and funding grants.
The methodology by which universities are funded has evolved over the last few decades. The introduction of tuition fees, and the political desire to turn institutions into businesses, has had a profound effect on the financial stability of many institutions. This has been especially the case with the Covid pandemic and the current cost of living crisis, where inflation threatens to make university income worth a fraction of what it was pre-Covid. All universities are also affected by rapidly increasing prices, in particular, spiralling energy costs.
This has implications for jobs, pay, pensions and working conditions of our members, as well as threatening the academic future of a whole generation of students and potential students.
England
Tuition fees for UK students studying at English universities have been frozen at £9,250. This means that since the introduction of the £9,000 fee in 2012, fees have risen by a mere 2.8% over ten years, whilst the cost of living has risen by at least that every year (except 2020) and the current inflation rate is around 12%, with no real likelihood of coming down in the near future.
Whilst some universities have reacted by ambitious expansion plans and actively recruiting international students, now typically charged fees in excess of £20,000, this strategy is limited and only realistically available to a handful of institutions.
Many universities rely on full time undergraduate fees as their core funding and the failure of fees to keep up with inflation has steadily and now rapidly, meant that real-terms income has plummeted.
Scotland
Scottish universities charge tuition fees to students from outside Scotland, so are affected to some extent by the lack of an inflationary increase in regulated fee levels. However, universities in Scotland are heavily dependent on the funding provided by the Scottish Funding Council (SFC), which in turn is largely provided by the Scottish Government.
Whist SFC grants have increased in recent years, real-terms funding has not kept up with inflation, and with funding announced for higher and further education as remaining flat in cash terms until 2026-27, estimated to be a real-terms cut of 8% over the period, Scottish universities will need to grow student numbers and rely on reserves to be able to come close to current spending. In reality, Principals will try to hold back spending where possible.
Wales
Welsh universities are funded through a tertiary commission which channels funding mainly from the Welsh Government. As with English institutions, tuition fees now make up with largest source of income.
For 2022-23, Welsh universities face a £60 million drop in funding, at a time when it is crucial for income to rise, and Welsh universities face a significant drop in the real value of fee income.
Northern Ireland
The Northern Ireland Executive’s Department for the Economy is responsible for funding universities in Northern Ireland. The system allocates grants to universities, which are partially to offset smaller fees changed to Northern Ireland domiciled students, in a similar system to that of Wales.
However, fee income and education contracts now make up the major source of funding and again, without a significant rise in the value of the fees charged, universities in Northern Ireland face funding issues similar to those across the rest of the UK.
Conference Further Notes:
The cumulative effects of decades of tuition fees and marketisation has reinforced divisions between institutions, which we can see right across the UK sector. Larger, traditional universities in the top quarter or third of the league tables are able to grow international student numbers and benefit from lucrative research contracts, charitable donations and business interests. These institutions are clearly guilty of hoarding cash despite their workforces suffering real terms pay cuts for many years.
The other end of the scale sees newer universities which are struggling to maintain expenditure and seeking to make significant cuts to courses, buildings and services as a way of managing the financial pressures under which they find themselves. With no easy way to increase student numbers, in spite of massively expanded marketing costs and clearing operations, and unable to compete with those institutions which appear to offer better educational prospects and “experiences”, as judged by league tables and surveys, these institutions are genuinely concerned about the future, without being able to publicly say so.
The June 2022 Office for Students (OfS) report on financial sustainability (for English institutions only) reports that “the aggregate financial position…remains sound, at this time”, but forecasts sourced from institutions will always be optimistic, with plans to grow numbers and income well in excess of the available prospective students. The report recognises, however, that this does not “reflect the picture for individual providers where financial performance and strength vary significantly.”
It is true, as all trade unions have pointed out, that the sector as a whole is sitting on significant sums of money, and some universities have been pressured, with or without strike action, to pay non-consolidated bonuses to partially offset the 2021-22 pay freeze. Where this has been achieved through pressure and campaigning by UNISON branches, we congratulate those wins for our members.
All Vice-Chancellors and Principals will aim to get the most labour from their workforce at the smallest possible cost, but some are holding back real wages so as to be able to invest elsewhere, whilst others are looking to their finance directors, who are telling them that they just can’t afford it without making compensating cuts. Financial planners, like trade unions, recognise that genuine increases to wages are won for current and future years. For the vast majority of universities, a 12.3% (RPI at the time of writing) pay increase for university staff, just to keep up with rising prices, will not be matched with similar income growth based on current expectations. Without fighting for it, unions will see university income fall significantly.
A struggling university facing year-on-year financial deficits will face breaching loan covenants and eventually, the real prospect of insolvency.
With the cost-of-living crisis affecting every individual, business and institution, many universities are going to struggle to avoid significant financial issues during 2023 and beyond. A government obsessed with further enriching the wealthy to “drive growth”, at the expense of the poor and public services is unlikely to step in to save struggling universities without massive pressure from those who depend on those services.
In all likelihood, any university close to insolvency would face forced merger or closure as managed by the OfS or devolved national government department. University trade unions have a duty to prevent this happening if we can. This means campaigning for decent wages for all university workers but linking that campaign to the need for all universities to be properly funded, ideally through taxation rather than tuition fees, and ideally managed by accountable and elected governing bodies.
Where university leaders claim that perfectly reasonable pay rises are unaffordable, that is that they have to impose massive real terms pay cuts on our members, we should demand significantly revised and agreed budgets and genuine action to campaign alongside trade unions, involving students and the wider community, for appropriate government funding.
Conference calls on the Higher Education Service Group Executive to:
1)Continue to campaign for all universities across the UK to pay their workforces properly and to be properly funded to do so.
2)Highlight the massive funds available to some institutions and excessive pay of Vice Chancellors and Principals, whilst also recognising that not all universities are in a strong financial position.
3)Oppose the marketisation of universities and the inevitable winners and losers it creates, and campaign for an integrated, cooperative higher education service with no wasteful and destructive competition for students.
4)Campaign for struggling universities to receive the funding required to stay afloat, to avoid the terrible effects of an institution failing, on jobs, students and the wider community.
5)Continue to campaign for free education and an end to all tuition fees for UK domiciled students, with universities funded from general taxation, as a public service.
6)Draw up a campaigning plan to assist branches which face the prospect of institutional collapse.