Mergers and ‘FE future’ predicted for some English universities

English universities at risk of financial collapse will receive significant government assistance only if they agree to merge or to accept a “further education future”, vice-chancellors have predicted.

While some university leaders are optimistic that last week’s raft of measures, including the advance payment of £2.6 billion in tuition fees and £100 million of research funding, was an interim “stability package” ahead of a larger bailout for institutions, others are less confident.

Some fear that the reintroduction of student number controls − which allow universities to recruit 5 per cent more this autumn than they did last year − signals the Treasury’s intention to intervene far more in higher education, which might include denying some institutions access to research funding.

“It’s clear that some institutions will be moved to a further education future,” meaning that they become teaching and vocationally focused, with little or no time devoted to research, one vice-chancellor told Times Higher Education.

David Green, vice-chancellor of the University of Worcester, said the “big news” from the government’s 4 May announcement was its stated wish that any financial support would come with “attached conditions” and a “restructuring” assessment.

“It shows its intention to become much more directing in its engagement with universities,” said Professor Green, adding that the government had previously “steered away from this approach because it is not very good at it”.

While many universities would need “pretty big cuts in teaching and research staff” as a result of the coronavirus crisis, such action would not be enough to save some institutions, which would be forced to merge as a condition of receiving extra funding, said Professor Green.

“There will be a few mergers where there are good structural reasons, and some pre-1992 universities may even end up merging with post-92 universities,” he explained, adding that there were a “few obvious candidates”.

“It would depend on the appetite of the pre-92 university to get serious about widening participation,” continued Professor Green. “It could be a great opportunity to make a serious commitment to student access and providing vocational education with a research emphasis.”

Adam Tickell, vice-chancellor of the University of Sussex, also expected some smaller universities to merge because international student recruitment was likely to be “really, really down”. Overall, UK universities faced a total loss of between £3 billion and £5 billion next year, he estimated.

“That is a big chunk of money for universities to lose, and even those who are least exposed will feel the impact,” said Professor Tickell, who added that a recent London Economics report was “probably right” in its forecasts of 30,000 overall job losses in universities and a £2.6 billion income hit.

“If you are taking that amount off a sector, the consequence is likely to be the institutional failures that you see in the US, where it is routine for places to close each year.

“Mergers are a potential route [for survival], but they are not a get-out-of-jail-free card. Tough choices will still need to be made,” continued Professor Tickell, who stressed that Sussex was not considering a merger, although it has announced a voluntary severance scheme.

Some institutions might also lose access to research funding, Professor Tickell said. “There will be a much more managed research ecosystem, which I would regret because one of the reasons we are brilliant on research, in global terms, is that so many places are doing it,” he said.

However, Sir Steve Smith, vice-chancellor of the University of Exeter, said he believed that last week’s package was just the “first step”, having secured student number controls that brought some stability to institutions.

“Without it, institutions with weaker admissions could have been in serious trouble,” said Sir Steve, who viewed the creation of a task force to examine research funding as a sign that the government was still receptive to providing additional support for research.

“The future prosperity of the UK depends on having a strong university research base, which is subsidised by international student income,” explained Sir Steve, adding that “no one in government wants to jeopardise this”.

“But time is now of the essence,” he continued. “We need clarity in the next few weeks to avoid making decisions that no one wants to make.”

Graeme Reid, professor of science and research policy at UCL, agreed, saying that last week’s interventions were always likely to be a “stabilisation, rather than bailout”.

“It will only be the first step, and there will be more to come when the shape and scale of the financial problems facing the sector become clear,” said Professor Reid.

“The Treasury will, however, recognise that there are good reasons for stabilising the sector because universities will play such a key part in economic and social recovery,” explained Professor Reid. “We will be in one hell of a mess if we do not have universities in decent shape when we come out of this.”

jack.grove@timeshighereducation.com