Everything going on in UK higher education
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Good morning. The sector is watching the Conservative Party's leadership election nervously. Meanwhile, we are starting to get our heads around the economic fallout from the Leave vote. Despite the chaos, the Higher Education and Research Bill is still clinging to life and this morning we discuss the future of measuring graduate outcomes. 

The game of thrones

After a week of extraordinary twists and turns, we now know the five candidates vying to be Prime Minister and leader of the Conservative Party.

The two highest-profile candidates are very familiar to higher education: Theresa May and Michael Gove. Both divide opinion and do not have many friends in the sector. Gove has revelled in his contempt for “experts” and “bad academics”, while May has boasted at her confrontation of university lobbyists over international student visas.

Despite that one similarity, the two are presenting themselves as quite different kinds of Prime Minister. May appears to have settled for being the ‘safety first’ candidate, and is seen as a potentially unifying figure in the party who can secure a good deal from Brexit and guide the country through uncertain times. Gove has ambitions to be a zealous social reformer - his campaign launch speech was over 4,000 words long and full of his thoughts on a wide range of policy areas. Gove is by far the more ideologically rigid, while May - despite her Home Office aggressively clamping down on international students - is seen as more of a pragmatist.

However at time of writing, it appears Michael Gove may struggle to make the final two candidates from which Conservative Party members will choose their leader. Andrea Leadsom could ultimately be the one to join Theresa May on the ballot. Little is known about Leadsom’s views on universities. An arch Brexiteer, her raised profile since the campaign might mean that she ends up with a significant job no matter who wins. Another possibility being discussed is Theresa May amassing such overwhelming support that no vote is held at all, and she assumes the leadership of the Conservative Party and the government - possibly very soon indeed. Read our profiles of the runners and riders and what we know about their views on higher education. 

HE Bill in limbo

Remember when the Higher Education and Research Bill was the biggest thing going on? As we move through different phases of political chaos, the government’s legislative agenda seems to move in and out of political limbo. At the start of last week, a snap general election in the Autumn looked highly likely which would have entirely killed the Bill and other live government legislation. Now all candidates for Tory leader have ruled out holding an early election which means the HE Bill may live to fight another day as a new government is likely to continue the business of the old.

There were rumours last week that its second reading (the next formal stage for the Bill) would take place this week, but it doesn’t appear to have materialised. Meanwhile, Jo Johnson told a conference that he’s determined to see it through, and we have no reason to doubt his intention. But as the second reading will not be held this week, there are only nine available days of Parliamentary time before the summer recess. It’s tight, but the government could progress it significantly through the House of Commons in that window in time for the House of Lords to pick up when Parliament comes back in the Autumn. Trouble on the Opposition benches surely won't have gone unnoticed in Whitehall: following the turmoil of the last week, there is no Shadow BIS Secretary of State in post at all. And Shadow HE Minister Gordon Marsden has told colleagues that he has only held off resigning along with most of the front bench so that there would be at least one shadow minister with some HE expertise (and a non-Corbynite) to lead an opposition to the proposed legislation. However, there appears to be firm support in the sector for pushing ahead, including from Gordon McKenzie of GuildHE, who made the case on Wonkhe last week.

Economic fallout widens

We have now had over a week to assess at least a small portion of the effect that Brexit will have on universities and the wider country. Past the initial market shock, the underlying economic impact is beginning to be projected. Brexiteers have pointed to the revival of the FTSE to pre-referendum levels as a sign that all will be well, but more thorough analyses suggest a less rosy picture.

The Economist Intelligence Unit projects that investment will decline by 8% and consumption by 3% in the next year, leading to an overall GDP contraction of 1% in 2017. More generous forecasters still believe that economic growth will stall at or around 0.2% in 2017. Either scenario will lead to a decline in tax revenues and an increase in government borrowing, torpedoing the government’s hopes to continue cutting the deficit and run a surplus by 2020/21. It was therefore not much of a surprise to see George Osborne and several Conservative leadership candidates announce that the UK’s previous fiscal targets will be abandoned. If the government continued at its present rate of spending cuts, it would fail to make a dent in overall borrowing.

Monetary policy will also have to adjust. The Economist forecasts the pound will continue to fall and level-off at $1.24, a 16% reduction from pre-referendum levels. Mark Carney announced on Thursday that the Bank of England’s response to all this would be a cut, rather than a hike, in interest rates. This will come as some relief to borrowers, including universities, but the Bank is fast running out of stimulus levers. Debt is about to become very cheap. Government bond yields are also falling sharply despite the UK’s downgraded credit rating as volatility and the likely rate cut make fixed-return assets appealing. The Bank and other forecasters appear confident that inflation will not spike despite the massive fall in the value of the pound.

All this will have a major impact on universities. A revision of fiscal policy by a new chancellor will spark a review of the size and shape of the student loan book, research grant funding, and staffing levels at BIS and its associated agencies. If the new Chancellor wishes to keep the promises made by the Vote Leave campaign, the SMF estimate they would need to find an extra £25.8 billion to cover commitments to the NHS, cutting VAT on fuel, and maintaining agricultural subsidies and research spending. Only £14 billion will be saved from the end of the UK’s EU contributions. It is more likely that some of these commitments will be rowed back, which should make research funding a top priority for sector lobbyists, who will have to argue why they should be seen as more important than motorists, farmers and the regions.

The government wasn’t alone in having its credit rating downgraded last week. The ratings agency Moody’s downgraded six universities’ status as a result of the “potential loss of EU funding for research as well as any immigration curbs affecting student demand and staffing” and said that the ratings followed that of the central government because of the close financial links between the government and universities. They are De Montfort, Cardiff, Keele, Leeds, Liverpool and Manchester. However, the University of Cambridge retained its Aaa rating for the time being as a result of its “extraordinarily strong market position, higher revenue diversification, significant liquid assets, strong governance structure and low debt levels.”

In Whitehall, BIS has had one of the worst deals of any department from previous rounds of cuts but will now become a key player in Brexit negotiations. Were spending on the NHS and schools to continue to be protected, BIS and the Treasury might find themselves with some very difficult budget decisions indeed. The UK currently has only 40 trade negotiators compared to the EU’s 550. Employing more will eat into resources required for other government business, perhaps including higher education reform.

Philanthropy may also be negatively affected although fundraising from overseas donors could see a boost as their money will go further due to the weak pound. The further volatility in the equity markets and low gilt returns may also negatively impact on the sector's pension schemes.

We are about to undergo a comprehensive economic and fiscal realignment, and it’s difficult to predict how the pieces could settle. Old rules may not apply.

Beyond the economy, universities are beginning to get a sense of the real impact of Brexit for research, collaboration and student recruitment. Jo Johnson attempted to calm nerves with a speech to the Wellcome Trust on Thursday, arguing that “it is business as usual for Horizon 2020” and that he is “in close touch with Commissioner [Carlos] Moedas on these issues”. But leading sector figures are far less optimistic. Sir Paul Nurse has pleaded with the government to preserve free movement of labour to maintain research collaboration. As with so many things, doing so will depend on the terms of negotiation with the EU, which might not even start for months or years. In the meantime, uncertainty reigns. 

Wonkhe is hosting the first event in the sector exploring Brexit and what it means for UK HE. We are gathering wonks, politicians, policymakers and academics to learn from the campaign, plan for the future and discuss practical steps to ensure that UK universities continue to thrive. Sessions include:

  • Why did people vote Leave?
  • Lessons from the campaign: The new politics and the role of universities in putting our fractured society back together.
  • Building towards Brexit: the politics, negotiation and influence of HE
  • Rebuilding post-Brexit: making universities stronger than ever
  • Is it time for a new internationalism in UK higher education?
Confirmed speakers:
  • Mark Leach, Editor, Wonkhe
  • Matthew Goodwin, author, expert on the rise of UKIP and Professor of Politics at the University of Kent
  • Alistair Jarvis, Deputy CEO, Universities UK
  • Jonathan Simons, Head of Education, Policy Exchange
  • Smita Jamdar, Partner, Shakespeare Martineau
  • Joy Carter, Vice Chancellor, University of Winchester
  • Graeme Wise, Head of Policy, University Alliance

Information and booking

David Banks for Wonkhe


Amidst the political chaos last Thursday, it was easy to miss the release of the 2015 Destination of Leavers from Higher Education data. This is the first DLHE release to be primarily graduates who have paid £9000 fees. At a headline level, there was very little change in from the previous two years, and the sector might well feel that no news is good news at this uncertain time. Interestingly there has been no drop in the proportion of graduates in further study that some were expecting to see with the first generation of £9000 fee-paying leavers.

This iteration of the DLHE has been released as HESA is consulting on reforms to the way that graduate outcomes are measured. Wonkhe and HESA have teamed up to run a conference on this issue which is taking place this morning. You can follow discussions on our live blog and on Twitter with the hashtag #NewDLHE. David Morris has also written a summary of the consultation and the key issues that the sector need to discuss and debate; this can be read here.  

You might have missed on Wonkhe

Martin McQuillan speculates that after the coming political battles, we will, in fact, not leave the European Union.

Smita Jamdar of Shakespeare Martineau has written an overview of the legal implications of Brexit for higher education, and particularly for EU students.

Colette Cherry from the University of Winchester gives a personal account of the grieving process following Brexit for higher education workers.  

Edward Peck, Vice Chancellor of Nottingham Trent, has presented the findings of research showing how work-placements help disadvantaged students secure better employment on graduation.

Registrarism had another edition of True Crime on Campus. The goose may or may not have returned.

Also on the week’s higher education agenda

Monday 4th July 

EVENT: HEFCE - The future of funding for teaching, London

Tuesday 5th July

EVENT: NUS - Students' Unions 2016 day 1, Liverpool
EVENT: UCAS - 'Competitive Admissions' conference for teachers and advisers, Sheffield
EVENT: QAA - Quality Assurance and the Regulatory Landscape, London
PARLIAMENTARY: House of Lords - EU referendum debate, 11.30am
PARLIAMENTARY: House of Lords - Economic Affairs Committee inquiry on student loans, 3.15pm, witnesses include Andrew McGettigan, Nick Hillman and Steve Lamey

Wednesday 6th July

EVENT: GuildHE - Joint Admissions & Marketing Network event, London
EVENT: MillionPlus - Parliamentary Roundtable: The Future of Teacher Education, London
EVENT: NUS - Students' Unions 2016 day 2, Liverpool
EVENT: HEFCE - New Forms of Funding: Making a success of bonds, Leeds
EVENT: JISC and CNI - Conference 2016, Oxford
EVENT: Westminster HE Forum - Priorities for part-time and mature students, London
PARLIAMENTARY: House of Commons - Science and Technology Committee inquiry on forensic science strategy, 10am

Thursday 7th July

PARLIAMENTARY: House of Commons - Backbench debate on contribution of the creative industries to the economy, supported by Million Plus
REPORT: SMF - Passports to Progress: How do vocational qualifications help young people in building their careers?
STATS: HESA Performance Indicators (PIs) - third tranche 2014/15

Friday 8th July

EVENT: HEFCE annual briefing for alternative providers, London
EVENT: London Student Housing Conference, London

Have a great week,

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