The BBC article this week captures the latest state of play in the financial crisis that universities are now in.
The initial response is not great. The new Education Secretary Bridget Phillipson has stated that universities should “manage their budgets” as independent institutions. Before universities can expect any government help, they may have to show that their institution is well managed and sustainable.
The challenge to rationalise
There is no shortage of academic voices raising concerns that universities have corporatised and then bureaucratised. The management overhead has increased but things are not in a better position for the investment. Add to this over borrowing for large projects that have further increased long term liabilities, and this all puts current university leaders under extreme pressure.
The government have accepted the resignation of the Chair of the Office for Students (OfS). Later this week they will set out their views on how the OfS should work in future. There is no immediate comfort from taxpayer bailout and longer-term structural changes are not coming imminently.
Overall, it would seem that the government is letting the pain levels increase in the sector (whilst risking that one may go bust in the meantime and all the national and international ramifications that may bring). It also seems likely that the government will ask the OfS to take a role in finding which universities are being run well and in a financially sustainable manner and those which are not. Universities will have their work cut out to secure any bail out. They could well end up in a merger, being bought or in worst case allowed to fail.
What can universities do?
It makes sense that universities must get rid of any waste. Academic staffing should be protected due to the long lead of generating future academic talent. The obvious next place to look at is the estate. Previously, AUDE have said
“After employees, a university’s estate is its second largest area of expenditure, accounting for on average 20% of its outlay.”
Whilst there are age old arguments about space in universities, these have been fundamentally challenged post COVID-19 with both staff and students using space differently than pre-pandemic. It is therefore logical to critically evaluate where this can be improved, released and possibly even become income generating by working with the development sector.
If the OfS come knocking universities will want to be able to show that they have left no financial stone unturned. Universities will not want the OfS finding that other universities have rationalised space and the estate and proven what can be achieved. It does mean some very difficult decisions, but there is also an opportunity to reshape the estate for the long-term reflecting post-pandemic and future ways of working and learning. The universities that imagine a different future for the estate may well fare better when dealing with the new government.
