Provost Tim Dunne addresses the difficulties which face the higher education sector and says a clear and focussed approach to achieving financial resilience is paramount in 2024.
Alongside new year’s resolutions – mine are close to being forfeited already – it is commonplace at this time of year to pretend we can gaze into a crystal ball to see traces of our fate. Will 2024 resemble 2023, or is it more likely that we’ll see new and distinct patterns associated with economic well-being, cultural conflicts, or wider geopolitical conflagrations?
Here is my ‘Futurology 101’. Predictably the focus is mainly on the world of universities; at the same time, no institution is an island. In a globalized world, decisions taken in Washington, Beijing, New Delhi, and of course London, have a significant bearing on the fate of British universities.
A final caveat before I get going; while I’d much rather talk about a buoyant sector in which universities are cherished by the public and our own government, where investors are queuing up to create ‘unicorns’ out of our research, and where the balance of domestic and international students is struck on the basis of educational enrichment rather than budgetary advantage – one would have to be more optimistic than Dr Pangloss, Voltaire’s unworldly tutor in Candide, to believe this will be the reality of higher education in 2024.
Fixing a broken business model? The chilling description of a ‘broken business model’ for UK HE institutions is now widely in use. It refers to the combined effect of the sudden rise in inflation, uncertainty around the international student market, rapidly falling real income per domestic students, and the fact that the sector had – in the words of Alison Wolf in the Financial Times – ‘lost the confidence’ of the political class.
The rapid rise in international student fees (averaging £22,000) across the sector enabled research intensive universities to cross-subsidise the real cost of research. However, international fee income is not able to compensate for both the gap in the cost of research and the growing shortfall in the cost of teaching UK students. Noteworthy here is the claim made by the Russell Group that every domestic student loses them £1,750.
We ought not to make the mistake of thinking that the Russell Group experience resonates throughout the sector. Many large post-1992 universities, such as Manchester Met, Liverpool Hope, and Leeds Beckett, have less than around 5% of their students paying overseas fees. Logic would suggest that these universities are making a financial margin even at the standard UK fee. Either way, in 2024 the sector will not be able to avoid addressing the question how the cost of teaching can better reflect the reality of the declining ‘real’ value of UK fees.
End of optimism-bias. Optimism-bias is a well-known syndrome in government departments, especially those associated with large-scale infrastructure projects. The phrase came into higher education in 2023 when the new Director of Office for Students (OfS), Philippa Pickford, warned of the tendency across the sector to best-case financial scenarios rather than worst-casing. Interestingly the OfS was itself accused of over-optimism when it argued, in mid-2023, that universities’ finances were in ‘good shape’ overall. A House of Lords committee on higher education responded to this claim with the rebuke ‘[t]his is not our assessment… this remark is indicative of the insufficient attention that OfS has paid to the financial risks facing the sector’.
There are many specific meanings within this over-arching trend: expectations of international student growth that have been dashed by disruptive forces beyond our control, or financial planning that did not anticipate – or could not meet – the rapidly rising costs of running a university at a time when fee income for domestic students, set at £9,000 in 2012, has been eroded to its current value of around £6,000. Weighing up all the financial factors, 2024 is going to be a year for a clear and focused approach to achieving financial resilience – the importance of positive thinking that underpins optimism-bias remains relevant but it must not get ahead of reality.
Diversifying income streams. If we go back far enough in history, we find that there was a massive crisis in the HE sector in the 1970s and 1980s when the ‘unit of resource’ for each UK student halved. This was at a time when British universities were truly public institutions with a near complete dependence on government funding. A half century later, that dependence has been lessened in part by the inflow of international students which has made our campuses more culturally diverse and brought incalculable soft power benefits to the country. Yet it has also brought a new level of financial precarity, as international markets rise and fall.
There is no simple solution here other than to achieve greater financial resilience through multiple income streams – healthy recruitment and retention of domestic and international students bolstered by resources generated through philanthropy, industry, and the entrepreneurial management of capital and estates. On-line education has become an opportunity for diversification since enrolments on these programmes are unlikely to compete with face-to-face offerings. At the end of 2023, Surrey took the bold step to sign a collaborative agreement with a global online learning provider to co-design and deliver 15 masters degrees which we expect will attract enrolments from around the world – students who would not be in a position to study on campus. Given that the global online education market is worth around US$400-500bn, it is critical that Surrey takes advantage of the opportunity to become an online ‘ivory power’.
Mergers and Acquisitions. M&A, more commonplace in the corporate world, could become a trend in future years. Why? Institutions that find themselves financially insolvent, will likely be required to merge with neighbouring universities assuming they are given sufficient inducements to take on a financial liability. Other reasons, driven by a more positive logic, include full-scale mergers to better compete in the higher education marketplace. The main driver behind the Adelaide-UniSA merger is scale: the two universities are co-located and a merger will bring significant returns to scale – it will make the new Adelaide University the largest educator of domestic students in Australia. The last time a merger of this size was undertaken in the UK was 20 years ago when the Victoria University of Manchester and the University of Manchester Institute of Science and Technology amalgamated.
If we are considering decadal transformations then the full merger of neighbouring institutions is highly likely to occur; but for now, a more likely scenario is for closer regional collaboration whereby two or more universities establish a genuine joint venture in specific areas of research and teaching. An example close to home is the recently established Kent and Medway Medical School which is a collaboration between the University of Kent and Canterbury Christ Church.
Geopolitics. The future isn’t looking bright in many parts of the world. There are no good reasons to be confident that the terrible conflicts involving Israel/Gaza and Russia/Ukraine will be brought to an end, while the rivalry between American and China is increasingly being characterised as a ‘new Cold War’ (by many esteemed US-based historians and practitioners such as Niall Ferguson, John Lewis Gaddis, Condoleezza Rice, and Elliott Abrams).
Geopolitical conflict negatively impacts trade, investment, and erodes trust between peoples and cultures. Such sentiments feed into deeply personal decisions about whether to study abroad or to stay ‘at home’. They also feed suspicion on the part of governments – as is evident when international students in the UK are seen as immigrants rather than global citizens and investors in UK PLC (every 10 international students are estimated to generate £1m of net economic impact, according to a 2021 HEPI/UUK report). Universities will continue to take a different view because an internationalist outlook is part of their institutional fabric. Science knows no borders and the values of open learning and trust will wither if they are enclosed.
Culture Wars. 2023 saw the introduction of the new legislation on ‘higher education’, which focused solely on free speech and academic freedom. While it is true that we have to protect these values and freedoms, for the health of our democracy and for the unfettered pursuit of knowledge, the character of the legislation very much reflected a particular view that universities could not be trusted to protect these values without the OfS regulation. Surrey is seen as an exemplar in the measures already taken to protect lawful free speech and academic freedom – this work will continue in 2024.
The high-profile resignation of the Harvard President Claudine Gay reminds us that the culture wars are alive and well even in the first week of the new year. At a congressional hearing on antisemitism, Professor Gay and two other university leaders struggled to respond when asked whether statements calling for the genocide of Jews violated campus codes of conduct. The absence of a categorical ‘yes’ in their responses was surprising and, in my view, mistaken. Given their credentials as academics, one might postulate that leaders have become fearful of making categorical statements knowing that it would likely trigger a social media ‘pile on’. A second factor which should not be overlooked is gender and race. Professor Gay was the first black president of Harvard and only the second woman to lead the University; they had been in the role for only half a year. Work by social psychologists tells us that those who manage to break through the ‘glass ceiling’ often then have to lead their organisations through periods of crisis; that means a precarious leadership position in which they are prone, metaphorically, to fall off a ‘glass cliff’.
Will there be a repeat, in 2024, of calls for universities to take positions on what the philosopher Michael Walzer called ‘just and unjust wars’? Or for universities to take a moral position on various social questions. On such occasions, we would do well to remember the pioneering work undertaken at the University of Chicago in the late 1960s which maintained that the agency of criticism in the University is the individual faculty member or the individual student. ‘The university is the home and sponsor of critics; it is not itself the critic’.
Rankings. Want a safe prediction for 2024? Rankings talk will be with us every step of the way! The Times Higher Education which has transformed itself from a fortnightly print-only ‘who’s who in HE’ to an indispensable global rankings generator. The THE will roll-out two new rankings in 2024: one for interdisciplinary science and one for online learning.
A recent trend has been for UK universities to drop slowly down the world rankings. This again may reflect the precarity of the funding model where there is neither full cost recovery for research nor for teaching domestic students. This point was neatly summed up by King’s Vice-Chancellor Shitij Kapur: ‘The government’, he argues, ‘should fund the complete cost of research it sponsors, and ensure that whatever domestic fee is agreed is not eroded by inflation’.
AI. The Vice-Chancellor of Leicester, Nishan Canagarajah, made the bold prediction that it will be an outstanding year for their university, evident from the fact they will ‘secure promotion to the top league’. Does this foretell a widening of the membership of the Russell Group? If it does, will it follow the logic of the Premier League with promotion accompanied by relegation so the size of the cohort remains the same? Certainly one to watch! More substantively, Professor Canagarajah signaled that, in 2024, colleagues across the sector would develop ‘new approaches to harnessing the power of AI’.
Surrey was one of the first institutions to make a public statement about how AI should be integrated into learning and teaching not shunned from it. In December of last year, the House of Lords hosted an event for a Surrey spin-out called KEATH.ai which automates the evaluation process. The opportunities for this tool to influence the assessment industry are massive: for students in high schools and universities, KEATH can give them immediate feedback on early drafts; for teachers of junior school children, KEATH could be used to actually do the evaluations such that they have more time for higher value activity. Let’s hope that this research ‘unicorn’ becomes embedded as a learning tool for Surrey students – and that we don’t get left behind when it comes to its adoption.
REF 2029. No crystal ball gazing would be complete without peering into the REF future. In 2023 we learned that REF 2028 was going to be in 2029. In the spring of 2024, we have been promised final details about the exercise, noting that the element of ‘people, culture, and environment’ could be significantly revised – including the weighting of 25% – as this part of the ‘new’ REF has been the most contested.
By 2029, there might be a variant of KEATH that can assess research outputs and impact case studies, thereby diminishing the estimated REF cost of panel member effort from £17m to almost nothing!
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If at any moment we think we know what lies round the corner, we should remind ourselves that future is sometimes very unlike the present. Doors can slide, contagions can spread, walls can come tumbling down. In such circumstances, the best we can do is to approach the future with an open mind, and recall the irony of Oscar Wilde’s quip that he could predict anything ‘except the future’.
