Institutional Finance and Academic Freedom
An article in the Times Higher Education yesterday got me thinking about institutional stability, finance, and the ongoing "reforms" to UK higher education. For those who don't know the background: until recently, universities who wanted their students to be able to get the government-underwritten income-contingent repayment loans could only recruit a specific number of students. This is referred to as the "numbers cap" or "recruitment cap". In 2013, the government announced that it was to remove the cap, a move implemented in 2015. The government's thinking behind this is about marketisaton of the HE sector. As far as they are concerned, the numbers cap represented an artificial barrier on student choice/mobility and also gave too much financial stability to incumbent entities (thereby, in their logic, giving no incentive to "innovate").
Taking data from Ucas, the Times Higher printed a table that showed what's happening as a result to several universities. I here reproduce that table with the equivalent £9,000 income change to those institutions:
10 universities with largest recruiting falls
Institution Acceptances 2015 Acceptances 2014 % change 2014 to 2015 £ less income
Kingston University 4,810 5,465 −12.0 £5,895,000
London Metropolitan University 3,180 3,575 −11.0 £3,555,000
London South Bank University 3,240 3,605 −10.1 £3,285,000
York St John University 1,540 1,705 −9.7 £1,485,000
Southampton Solent University 2,860 3,160 −9.5 £2,700,000
Plymouth University 4,815 5,310 −9.3 £4,455,000
University of East London 3,655 4,030 −9.3 £3,375,000
University of Sunderland 2,245 2,470 −9.1 £2,025,000
University of Bedfordshire 2,770 3,005 −7.8 £2,115,000
University of Westminster 3,825 4,145 −7.7 £2,880,000
These figures, of course, represent the maximum fall, since I have assumed the highest level of fees and surely not all courses will be operating on these levels (although we also know that the famed market variability in rates suggested by the Browne Report has not come about). Nonetheless, what we see here must strike fear into the heart of any institutional accountant: a variability of between £1.5m-£5.9m per year. In order to cover this type of fluctuation, institutions must make considerable surpluses.
The problem is that as soon as universities begin to make surpluses, the vultures begin to circle. A recent Policy Exchange report, expertly critiqued by Andrew McGettigan and others, stated that universities have "substantial cash reserves which could be better utilised than sitting in banks". This is typical of such discourse (and, in this case, it's even more misplaced since Policy Exchange confused cash reserves with discretionary reserves). Universities have also seen near total cuts for capital expenditure and so have higher outgoing costs than ever before in this area.
So, under the government's new policies, universities have to maximize their financial security through a combination of tactics:
Building a surplus to mitigate future revenue fluctuations
Diverting expenditure to areas that will return maximum student recruitment benefits
Understanding and capping future expenditure
Planning for future flexibility on expenditure
The government's marketisation of UK higher education comes with many many perverse incentives. Since institutions can only fund themselves through sheer volume of student recruitment, in times of difficulty the easiest decision is to drop standards. If the option is to go bankrupt ("market exit") or to simply take more and more students who will not necessarily thrive and/or enjoy their degrees (even while those individuals accrue substantial personal debts), then the financial imperatives will, I don't doubt, win out. This is not a good situation for an educational institution.
It is on the last of these points – "planning for future flexibility on expenditure" –, though, that I want to dwell. Usually, staff costs are among the highest outgoings of any university. Qualified, competent, and expert academic staff who have themselves undertaken over a decade plus of training before an entry-level position are not the cheapest to employ.
But there is an ongoing trend in HE worldwide to employ precarious, zero-hours contract staff to undertake teaching duties. This is partially a mirror of the labour situation more broadly – the Uberization of everything – but in the UK is also a result of the government's policy. Staff who can be dropped at a moment's notice, year-on-year, provide for the type of flexibility in expenditure that institutions may feel that they need in the brave new world of the market.
There are major problems with this approach to labour. Firstly, it's not good for students or staff. Many (even if not all) staff on zero-hours contracts can feel anxious about their futures. This detracts from their ability to perform their teaching duties well. They also often find themselves taking multiple jobs at multiple institutions, detracting from proper preparation (for which they are also often not paid) and putting strain on their personal and professional lives.
The other problem, though, is with academic freedom. Because the words "academic freedom" are so frequently banded about and used as a catch-all excuse I feel that it's important to qualify what counts. I also feel that what we call "academic freedom" should be extended societally and not confined to academics. Many many corporate institutional cultures would be improved through allowing their staff to question received wisdom.
In any case, in the UK, via the Education Reform Act of 1988, academic freedom is legally enshrined "to ensure that academic staff have freedom within the law to question and test received wisdom, and to put forward new ideas and controversial or unpopular opinions, without placing themselves in jeopardy of losing their jobs or privileges they may have at their institutions". This is where we hit some problems.
While this sounds straightforward, if one is already "in jeopardy of losing [one's] job", because one is not on a permanent contract, then it is not possible to have academic freedom, since any link to dismissal or non-renewal of contract to the expression of an unpopular opinion cannot be proved. In all cases like this, the institution can simply claim a financial prerogative and is under no obligation to re-hire contingent faculty.
The more financial pressure that the government puts on institutions through their systemic marketisation of universities, the more that institutions will seek flexibility in their expenditure, and we will see ever-more faculty on non-permanent contracts. Strangely, the government recognises this as in its recent Green Paper it suggested that a measure of an institution's commitment to teaching in its awful TEF proposal "might include proportion of staff on permanent contracts". Yet, at the same time, it is the government's financial engineering of the sector that is leading to this very behavioural situation which they then seek to correct. It would be better to cure this ill at the cause, rather than to discipline the symptoms by beating with medicative sticks.
Institutional Finance and Academic Freedom was published on January 30, 2016 . You can annotate or comment upon this post.