UK universities ‘bleeding their business schools dry’

Subsidising the parent university accounts for more than half of total expenditure at most UK business schools, according to a survey that backs up the image of the lucrative departments as a “cash cow” for vice-chancellors.

A survey of 114 senior staff at 77 business schools, conducted by the Chartered Association of Business Schools, found that contributions to the parent institution accounted for the majority of spending at 61 per cent of business schools.

At nearly four in 10 schools (39 per cent), the contribution accounted for between 51 per cent and 60 per cent of expenditure. At nearly one in five (18 per cent), it accounted for between 61 per cent and 70 per cent. And at about one in 20 (4 per cent), it accounted for between 81 per cent and 90 per cent of spending.

Simon Collinson, chair of Cabs, which was holding its annual conference this week, said that some universities “bleed the business school dry”, making little reinvestment in staffing or research.

“That’s a terribly short-term strategy,” said Professor Collinson, deputy pro vice-chancellor for regional economic engagement at the University of Birmingham.

Not every university was short-sighted, he said, noting that elite institutions such as the universities of Cambridge and Oxford allowed significant investment in their business schools.

But he warned that universities that over-relied on business schools as a revenue stream were placing themselves in a vulnerable position because the schools’ student populations drew heavily on the Chinese sector and were prey to the uncertainties posed by Brexit.

For example, 47 per cent of business schools reported a drop in the number of domestic undergraduate applications this year, and only 27 per cent reported a rise. As for European Union postgraduate applications, 35 per cent of business schools reported a decrease, and only 15 per cent reported an increase.

“People thought the Brexit vote would stop foreign students coming to the UK to study, but the currency dive made the cost-benefit trump the political uncertainties,” Professor Collinson said. “However, the minute the currency shifts, on top of Brexit and the crazy visa regulations, I think business schools – and universities because of their reliance on business school funding – will be pretty vulnerable to a decline in that number.”

Business schools have also become increasingly reliant on EU research funding, which could be jeopardised by Brexit, the survey showed. Funding from UK central government bodies decreased by 17 per cent – or 26 per cent, if adjusted for inflation in real terms – from 2012 to 2017, while funding from EU government bodies increased by 38 per cent and represented nearly a quarter of business school research funding in 2017, according to Cabs.

Julie Davies, an academic at the University of Huddersfield’s business school, agreed that institutions should not rely on their business schools too heavily.

“If a business school fails to recruit enough undergraduates and overseas students in a university where it is disproportionately larger than the other schools, then it could bring the whole institution – and in some cases a university town – to its knees,” she said.

Dr Davies argued that business schools must be resourced sufficiently to work with colleagues in other disciplines to demonstrate their value in social science research, societal impact, corporate engagement and international networks, as well as job creation.

anna.mckie@timeshighereducation.com