Universities Will Need Extra Money To Make Efficiencies, Government To Be Told
The government has called for universities to make efficiencies and reform
5 min read
Some universities will need financial support to deliver the efficiencies that the government wants them to make, a report on higher education reform is expected to say.
The recommendations are expected in an upcoming report on major higher education reform, set up after the Education Secretary Bridget Phillipson called for “real change from the sector” last year, and that will be shared with the government once finished.
Sir Nigel Carrington, who was appointed to lead a task force focusing on university efficiency by Universities UK, told PoliticsHome that there would likely be proposals in the report around a “transformation fund or other financial assistance”.
Phillipson announced in November that tuition fees would rise to £9,535 per year in 2025 in a bid to tackle a worsening financial crisis in the sector that has seen universities shut down courses and make redundancies. There are also concerns that some universities may have to shut their doors completely if the situation continues to worsen.
Labour MP Helen Hayes, chair of the education select committee, warned that the higher education sector was approaching a "crunch point" in a recent interview with PoliticsHome.
Phillipson's announcement came with a demand for “real change from the sector as well”, with a sustained efficiency and reform system to play a key role.
As part of this, Universities UK, a body representing higher education institutions nationwide, formed an efficiencies taskforce with Carrington at the helm.
Speaking to PoliticsHome ahead of the publication of the report in a number of weeks, the former vice-chancellor of the University of the Arts London said the extra money could be helpful for those institutions where efficiency transformations may be more challenging.
"Probably there will be some proposals in our report around which some sort of Transformation Fund or other financial assistance in a very targeted way would be helpful," Carrington said.
He told PoliticsHome: “It’s pretty self-evident that if institutions are running deficits and have pretty much exhausted their borrowing lines, then significant structural change is not deliverable because they don’t have the resources to deliver it.”
However, Carrington stopped short of saying where this funding should come from.
He stressed that while it had become clear in conversations with institutions that finding efficiencies is "going to be absolutely key” for securing their futures, universities “clearly cannot continue to survive” without the increase to tuition fees.
Education Secretary Bridget Phillipson (Alamy)
While it was originally intended for tuition fees to rise each year in line with inflation, the former Conservative prime minister Theresa May froze fees at £9,250 in 2017.
If tuition fees had not been frozen they would now sit at over £12,000 per year, according to some estimates.
"When I started this process, I was focusing mainly on individual efficiencies and opportunities for collaboration without having frankly addressed some of the economic challenges of doing some of the more ambitious things that we've been looking at", Carrington told PoliticsHome.
Carrington added that there is now a stasis within the sector, because of the constraints imposed on universities with the freezing of the fee.
He warned that a lot of the efficiencies and means for transformation the task force has explored would take several years to generate their returns, but the funding challenge right now is not going away.
Carrington said another emerging issue was that the regime put in place for higher education nearly a decade ago was "built around a pillar of competition".
He added that the report will "definitely look" at the role of regulation in the sector, to see if changes can be made to allow universities to collaborate more.
However, Carrington said that there are currently "issues in the regulatory environment that will need to be discussed", adding there are concerns among some universities that "perceptions of the Competition and Markets Authority’s role are potentially making it more difficult for institutions freely to talk about collaboration".
"There's no doubt that the inevitable conflict between the red-blooded principles of competition and the sector... needs to be reconciled. So we will very definitely be addressing that issue."
Quite a lot of efficiencies will only be delivered by collaboration between institutions, he added, stressing the need to deal with the competition law issue.
Carrington added that movement on this issue will require more thought and work, ideally with the government.
Ultimately, Carrington said that to drive the efficiency agenda forward "aggressively", there will need to be a "different relationship between government and the sector".
Asked by PoliticsHome if any university efficiency efforts should be overseen by the university regulator, The Office for Students (OfS), Carrington said this is something the task force would look at further down the line.
"It's not about creating a rigid structure or a sort of control economy, it's about keeping some of the definite benefits of university autonomy, but softening the slightly Darwinian philosophy that underpinned the setting up of the OfS."
A Department for Education Spokesperson told PoliticsHome: "Due to the dire economic situation we inherited, this government has taken tough decisions to bolster universities’ financial sustainability and provide certainty.
“The Office for Students is rightly refocusing its efforts on monitoring financial sustainability, to help create a secure future for our world-leading sector.
“Institutions are autonomous, but we are committed to fixing the foundations of higher education to deliver change for students.”
