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Monday Morning HE Briefing from Wonkhe
Good morning. With so much going on, we have a bumper edition of the briefing today. For Wonkhe readers (and indeed most of the world), the US election is probably the most important thing happening this week and away from the obvious headlines, the election gives universities much food for thought. More parochially, it's a week for forecasting the financial health of UK HE, something increasingly tricky to do these days. Universities received their TEF data from HEFCE last week and Theresa May is in India where Indian ministers have not been shy in expressing their anger about her policies over international students. 

Have a great week.

Mark Leach, Editor

A sunny forecast?

On Thursday, HEFCE will release its annual forecast of the sector’s financial position for the coming three years. As in recent years’ forecasts and reports, the headline conclusion is expected to be broadly optimistic for the sector as a whole: overall income and operating surpluses have been growing steadily in recent years. However, there is significant variation in the performance of different institutions, and growing inequalities between different groups of universities; Grant Thornton’s 2016 financial health check found that only five institutions accounted for 27% of the sector’s recent income growth.

The forecast will also have to deal with the tricky matter of Brexit. Given that forecasting the economic consequences of leaving the EU (or more accurately, waiting to leave the EU) has proven to be beyond the capabilities of both the Bank of England and the Treasury, HEFCE’s data wonks have their work cut out for them. The recent uncertainty over continued non-EU student recruitment policy will add to the challenge. Last year’s report was based upon projected growth of non-EU student numbers by between 4.3% and 6.4% per year - these projections must surely be revised substantially with the government appearing to ready a further crackdown on international recruitment. 

Several institutions have borrowed to finance capital investments recently and may ultimately prove to be overleveraged, particularly those doing so to chase greater research prestige, where competition for ongoing funding is tightest (and looks even tighter post-Brexit).

Cash liquidity may also prove to be an issue. UCL Provost Michael Arthur made headlines in the summer when he told staff the institution had only 42 days of expenditure in the bank - the average for universities is 93 days. This is also the first year that pension liabilities will appear on each universities' balance sheet - something that will alter the overall picture for every institution. 

HEFCE’s release on financial forecasts is accompanied by the release of the Association of University Directors of Estate's annual report on estate statistics. Last year’s report showed a general trend towards more ‘squeezing’ of value out of the sector’s estates, with growing teaching income per square metre and a reduction in the amount of estates deemed to be in poor condition or unsuitable. This week’s report will likely show that trend continue.

The trend towards greater debt leveraging, capital investment in estates, continued surpluses to service the debt, and hopes for continued expansion of research and teaching income look increasingly perilous as the uncertainty caused by Brexit lingers. Eight universities had their credit rating downgraded after the referendum, demonstrating the sector's increasingly intertwining fate with the rest of the nation.

Many UK universities have stated their intention to expand student numbers either from home or abroad, but not all can be successful, particularly if the financial offer to EU students post-Brexit is comparatively poor and our border becomes increasingly impenetrable to those wanting to come to the UK to study. This week’s releases should indicate whether some parts of the sector are built on stable-enough financial foundations to weather the storm.

Universities and Schools:
Selection, Sponsorship and Social Mobility

Friday 25th November, Coventry University London
Join us for a one-day conference to explore the government's new agenda for education and the implications for universities. Speakers include Les Ebdon, Director of Fair Access; Nick Hillman, Director of HEPI; Chris Millward, Director (Policy), HEFCE and many more. Book now.

BrHExit Watch

Brexit took another dramatic twist last week after Thursday’s high court ruling in R (Miller) v Secretary of State for Exiting the European Union which ruled that Parliament would need to vote on triggering Article 50. The ruling has had the commentariat and wonk-industrial complex rushing around for meaning and predictions of what might happen next. Take all forecasts with a pinch of salt. However, an early general election - the traditional British way of solving such thorny political and constitutional issues (see 1910, 1923-4, 1931, 1974) - looks more likely now, but is by no means inevitable. An election or an Act of Parliament would both very likely delay the government’s current planned exit date of March 2019. The subsequent political, economic and policy implications of an even more prolonged Brexit are too extensive to catalogue. For one thing, the Treasury’s pledge to cover any losses in research income until 2020 may not be for long enough.

The backlash against three top judges and a hedge-fund manager being seen to “block” the exit from the EU has done no favours for those hoping the anti-expert rhetoric would begin to calm down. Yet expert academics and wonks are needed more than ever, as demonstrated in an influential report [pdf] released last week by academics from The UK in a Changing Europe and the Political Studies Association on exactly how we might leave the UK. The report ultimately concludes that “the British people have unleashed a process potentially as complex as it is unpredictable” and that “the Brexit process will test the UK’s constitutional and legal frameworks and bureaucratic capacities to their limits - and possibly beyond”. Thursday’s high court judgement will not be the last test of such capabilities.

Elsewhere in HE-related Brexit news, Brexiteer and founder of JD Weatherspoon told the Guardian that the “EU became a quasi-religion…. And universities are the modern day seminaries.” Do we say Amen to that?

The Wonkhe Daily:
stay ahead of the HE agenda

Written by our team of HE wonks, the Wonkhe Daily is an email briefing sent every morning before work to thousands of HE professionals. The Daily sets the sector's agenda for the day ahead, analyses the latest policy developments, what's in the news, and everything going on in UK HE that you need to know about. 

Find out more here.

Inflating the TEF

Brexit may have had another unexpected but significant effect on universities last week, thanks to the new link between inflationary fee rises and TEF. The Bank of England’s forecasts for inflation in 2017 and beyond were announced on Thursday - and CPI is forecast to rise to 2.75% in 2018. 

We will have to wait until the Autumn Statement on November 23rd for the new projections for RPI-X (the measure to be used to calculate tuition fee increases) to see if it will match the CPI hike. The Office for Budgetary Responsibility’s projection in March for 2018 RPI-X was 3.1%, but if their forecast matches the Bank’s revisions, then this may mean that tuition fees in 2018-19 could rise by somewhere around 4-4.5%.

This would be a substantial increase, and failure to attain at Gold or Silver rating in the TEF from year 3 could cost universities a much larger amount of money than originally anticipated. This could also make it more likely that TEF scores would see little movement over the coming years, as Bronze-rated institutions will struggle to compete financially and invest in teaching to catch up with those receiving Gold and Silver awards.

Making American higher ed great again

The US Presidential Election is, of course, the major story this week and away from the headlines, there's much to interest universities. If you are perhaps nervous about waking up to President-elect Donald Trump on Wednesday morning, at time of sending this email, statistical super-wonk Nate Silver gives this a 33% chance of happening (probably too high a number for those of a nervous disposition). 

The Trump phenomenon has many interesting parallels with the rise of UKIP and the Brexit vote in the UK. Trump’s support, as he proudly boasts, is amongst the “uneducated”: more specifically, non-college educated white voters. The turn towards an electorate broadly divided along education lines mirrors the UK in June and Trump hopes to pull off what he recently called "Brexit times five". An important part of Trump’s support comes in opposition to “political correctness”, as debates over race, gender and identity regularly dominate stories about American college campuses and public life.

As well as levels of education being a core characteristic of the two sides, higher education policy itself has been a relatively high profile issue. It's a residual effect of Bernie Sanders’ campaign for the Democratic nomination, which drew a lot of support from young college graduates angry about spiralling tuition fees, long-term debt, and poor prospects for good jobs (sound familiar?). There is no doubt that there is a problem. Student debt now totals $1.2 trillion and is the second largest form of consumer debt in the United States. In-state tuition and fees at national public universities have grown by a staggering 296% in 20 years, and universities’ spending has got out of control in a bid to compete on amenities and estates. The Obama administration tried to take steps to intervene in 2013, but political gridlock prohibited a comprehensive solution being found.

Sanders’ campaign against Clinton made substantial capital out of promising ‘debt free education’, so much so that the Democrats had to make it part of their policy platform, promising to abolish fees for families with an income of less than $125,000. Interestingly, the Trump campaign’s response promised to reduce the debt burden by making repayments income-contingent and introducing a write-off date, similar to the current UK system.

Trump has also been hit hard by opponents for his Trump University venture, and win or lose; a jury trial will begin on November 28th in a California federal court for one of the three pending class-action lawsuits against him by former students. Trump’s dabbling in higher education was one example of the expansion of for-profit universities in the 90s and 00s, similar to that envisioned to shortly take place in the UK. In 2012 a Senate report on private HE found that “the companies examined spent $4.2 billion on marketing and recruiting, or 22.7 percent of all revenue. Publicly traded companies operating for-profit colleges had an average profit margin of 19.7 percent, generated a total of $3.2 billion in pre-tax profit and paid an average of $7.3 million to their chief executive officers in 2009”, and that the sector “turn[s] out hundreds of thousands of students with debt but no degree”. Come Wednesday morning, we could be living in Trump's world in more ways than one. 

Read more on Wonkhe:

Analysis: Catherine Boyd runs down the different HE policies of Trump and Clinton and explores how education has loomed large over the campaign for better and for worse: Through the perilous fight: the US election and higher education

You might also have missed on Wonkhe

The debate over external examiners on Wonkhe continues, today Jim Dickinson argues that academic judgement should no longer be used as a 'get out of jail free' card to avoid proper scrutiny. In Degrees of choice: credit transfer and university autonomy, Mark Atlay discusses the long-running issue of credit transfer which the current government is bringing back up the agenda. Alistair Fitt, Oxford Brookes' vice chancellor gives Five reasons to back UK Research & Innovation. For Policy Watch, Wonkhe's David Morris sets out the recent learning gain and student engagement initiatives and what they have in store for the TEF: Nothing either good or bad, but TEF can make it so. Sally Holt, a student at the UCL Institute of Education writes about unpaid internships, arguing that it’s still not what you know

What else is going on?

May in India

Theresa May is in India on a trip that has been somewhat overshadowed by concerns over her policy of restricting international students coming to the UK. Indian officials have briefed the media that they plan to raise concerns with the PM and her team after numbers of Indian students coming to the UK continue to fall over widespread concerns about post-study arrangements. The Indian government has even suggested that the issue could scupper a new trade deal with the UK. May will sit down this afternoon with Indian PM Narendra Modi where the issue is expected to be discussed.

TEF's first contact

Last week, universities received their all-important TEF data from HEFCE which shows how each has done in the first iteration of the exercise. If you're struggling to get hold of your planning department this week, that may be why. From those we've spoken to so far, the data has not fallen outside expectations - but we wait for the results to be publicly released next year to see the full picture. 

James Dyson to set up a "new university"

Jo Johnson was quick on Friday to praise the announcement that the Dyson Foundation would be investing £15 million over five years into a new Institute of Technology to double Dyson's engineering workforce to 6,000 by 2020. The minister hailed the initiative as an example of the 'challenger institutions' he's keen to promote as part of his HE reforms, but several critics were quick to point out that the new institute is validated by Warwick University and has been created under the current regulatory framework. On Wonkhe, Mike Ratcliffe continues his series on the emerging HE provider lexicon: From burgers to bouncers.

Loans for part-time and PGR students

The Department for Education has launched consultations on introducing loans for doctorial students and maintenance loans for part-time undergraduates in England.

As initially announced in the last Budget, it is proposed that doctoral students not receiving a research council studentship will be allowed to borrow up to £25,000 total towards the cost of their studies over six years. Repayment terms would be similar to taught postgraduate loans.

The government is also making another attempt at solving the issues with the financing of part-time study, as it announces plans to provide part-time maintenance loans capped at 75% of the equivalent full-time loans. The loans, along with tuition fee loans for part-time study, would be available to those studying for their first level 6 course, and the only equivalent level qualification (ELQ) exemptions would be for certain STEM subjects.

A HEPI pamphlet a year ago argued that the continued decline in part-time student numbers in England (and across the UK) in recent years has many causes including, but not exclusive to, the lack of maintenance support. This may not be the final government attempt to arrest the decline. The Diamond Review in Wales and the upcoming review of student finance in Scotland have also set out to tackle the issue.

The government hopes to launch both new loan schemes in the 2018-19 academic year. Both consultations run until 16th December - the consultation on doctoral loans can be found here and part time here.

Political affairs in higher education forum

29th November, London

Wonkhe is pleased to be supporting this one-day conference hosted by Universities UK and CASE. The event brings speaks from across the worlds of politics, policy and media together with the growing body of public affairs professionals in UK HE. Find out more.

Also on this week's higher education agenda

Monday 7th November

EVENT: Westminster Higher Education Forum is holding an event in London on ‘Improving student well-being: behavioural risks, active lifestyles and addressing mental health’.

Tuesday 8th November

EVENT: HEPI is hosting a roundtable Dinner on the future for research, with guest speaker Gareth Davies, Director General of Business and Science at the Department for Business, Energy and Industrial Strategy.
EVENT: The Leadership Foundation is holding its Aurora London event.
GuildHE has its CREST Research Leads meeting.
MEETING: The Russell Group is having a roundtable discussion with Labour MPs to discuss Brexit.
PARLIAMENTARY: The Commons Business, Energy and Industrial Strategy Select Committee is having an oral evidence session on industrial strategy at 9:30am. Celia Caulcott, Vice-Provost (Enterprise), University College London and John Latham, Chair of University Alliance & Vice Chancellor of Coventry University are both giving evidence.
PARLIAMENTARY: The Commons Education Select Committee is holding an oral evidence session on selective education at 9.45am.
PARLIAMENTARY: The Commons Exiting the European Union Select Committee is holding an oral evidence session on the UK’s negotiating objectives for our withdrawal from the EU at 9.45am.
PARLIAMENTARY: A session on backbench business will discuss the role of grammar and faith schools from 11.30am
PARLIAMENTARY: The Department for Business, Energy and Industrial Strategy is having its ‘question time’ at 11:30am.

Wednesday 9th November

EVENT: HEA is hosting a Principal Fellows writing retreat in Birmingham.
EVENT: The Leadership Foundation is holding an event on ‘Prevent: The Board's Role in Providing Assurance.
EVENT: Universities UK is holding its 6th Annual Access to Higher Education and Student Success Summit.
PARLIAMENTARY: The Welsh Assembly’s Economy, Infrastructure and Skills Committee is meeting.

Thursday 10th November

EVENT: CGHE is holding a seminar on ‘How English domiciled graduate earnings vary with gender, institution attended, subject and socio-economic background’.
EVENT: HEFCE is hosting a national conference on learning gain.
EVENT: OIA is holding an event on ‘Managing organisational change - a practical guide to managing redundancy, contractual variation, and structural change in HEIs’.
EVENT: SRHE is hosting an event in its Southwest Regional Network on ‘The Question of Purpose: Higher Education, Marketisation and Teaching Excellence in the United Kingdom’.
EVENT: UCEA is holding an event on ‘Managing organisational change - a practical guide to managing redundancy, contractual variation, and structural change in HEIs’.
PARLIAMENTARY: The Welsh Assembly’s Children, Young People and Education Committee is meeting.
REPORT: HEFCE is releasing a report on the financial health of the higher education sector.
PARLIAMENTARY: The Scottish Government will debate the Scottish Government's Consultation on a Strategy for STEM education and training.

Friday 11th November

EVENT: ECU is holding a workshop on ‘Dignity and respect on campus’.
EVENT: HEFCE is hosting an event on the ‘Register of Apprenticeship Training Providers (RoATP) or the Invitation to tender (ITT)’ in London.
EVENT: SRHE is hosting a network event on ‘Employability, Enterprise and Work-based Learning - The Subject Dimension: Embedding Work Based Learning, Placements and Enterprise in Subjects and Disciplines’.
MEETING: UCU’s Education Committee is meeting.

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