Putting profit above staff and students

Pity the poor universities. Life is a perpetual challenge, and they say they are so strapped for cash that their own academic staff have seen the value of their pay plummet, according to the University and College Union (UCU). Surveys by the union suggest that the average working week in higher education is now over 50 hours.

University staff across the UK are currently fighting on two fronts: pay and conditions, and pensions. On pay they are arguing for the Retail Price Increase plus 3 per cent – a small step on the way to restoring the real-terms cut in pay of 20.8 per cent that they have had since 2009. They are also looking to establish a 35-hour working week across the country, and an end to precarious casualisation.

At the same time, the universities are demanding a huge hike in pensions contributions – up from an already extortionate 8 per cent of salary to 9.6 per cent of salary – more than wiping out the pay offer of 1.3 per cent this year (see Box).

You’d think that the universities were in dire financial straits to have to enforce such pay and conditions on their staff. But you would be wrong. According to an analysis by the UCU of the academic year 2016/17, universities made a collective surplus of £2.3 billion while raking in an increase of £931 million in student fees. 

Squeezed

Staff are being squeezed while expenditure goes elsewhere. Compared with seven years ago, expenditure on staff had fallen by more than 3 per cent, while capital expenditure had rocketed, up by over a third.

But it’s not all belt-tightening in academia. As a report from the Taxpayers’ Alliance revealed, the number of university staff earning more than £100,000 a year rose by 10 per cent in the year 2017–2018. Almost half of vice chancellors and principals earn more than £300,000. There’s clearly money around.

And while university staff are having to strike and work to rule in their fight for decent pay and conditions, universities are spending hundreds of millions (collectively, billions) of pounds in what is effectively property speculation.

Tired of their historic (and highly successful) history of being dedicated primarily to the education of young British people, many universities see their future as “global” institutions raking in vast fees from overseas students.

To see what’s going on, take a trip down to west London – to the old BBC Wood Lane site in White City, Acton. Imperial College London is building on a massive scale. Much of it is good, in particular the new Molecular Sciences Research Hub at a cost in the region of £150 million. 

But that’s just the tip of the iceberg. Alongside the research facilities it is building student accommodation. In 2015 it built Woodward Tower, to house 690 students. Now it’s going bigger. It has bought a 1.8 acre site nearby and is building accommodation for a 700-bed development.

Huge rents

Who’s paying for this? Well, students last year were paying Imperial an average of £175 a week for accommodation, up from £150 a week in 2015.

And there’s enormous investment in Imperial’s postgraduate accommodation, GradPad, in two buildings in Battersea and Wood Lane. With prices ranging from around £270 a week to upwards of £400 a week for a 51-week contract, GradPad is aimed at the lucrative East Asian student market, because the college knows that these students want a ready package of education and accommodation.

According to Felix, the Imperial College student newspaper – drawing on information derived from Freedom of Information requests – if all its GradPad accommodation is let, that would amount to nearly £300,000 a week, more than 40 per cent of the college’s potential income from student rents.

Imperial is far from the only university to be playing property developer. Also in the capital, University College London (UCL) took out a £280 million loan from the EU’s European Investment Bank (at undisclosed rates of interest) to finance its expansion into the Olympic site in Stratford, east London.

Uneasy at the pace of expansion, a meeting of academics at UCL passed a vote of no confidence in the college’s management last year. One senior researcher at the meeting noted that as student numbers had risen, UCL’s position in global university rankings had started to slide.

The university, meanwhile, says it has “no choice” but to expand student numbers – even though it has already swollen numbers from 17,000 in 2005 to 40,000 in 2018.

‘So why all the wailing and gnashing of teeth from the university fat cats?’

Across Britain there has been a rise in postgraduate students (particularly on taught courses rather than pure research degrees). Figures released by the Higher Education Statistics Agency in January last year show a leap in the number of postgraduate students on taught courses from 234,780 in 2015–2016 to 255,135 in 2017–2018. (The figures are released annually. The next set is due in January 2020.)

The main reason for last year’s 4 per cent rise year-on-year in postgrads, says the agency, was “an increase in enrolments from Non-European (Non-EU) students”.

No one knows what the impact of Brexit might be on the numbers of students coming from the EU to British universities. Publicly, the universities are predicting disaster. Privately, they are less worried. 

At least one top university that has done the maths reckons that the decline in EU student numbers will be more than compensated for by being able to charge full overseas student rates to those who do come. These range from £12,000 a year to around £19,000 a year, depending on the university.

In addition, more places will open up for students from outside the EU. In August 2019 the Higher Education Policy Institute calculated that the combination of higher fees from EU students and more students from outside the EU would lead to a net gain in income.

Intriguingly, the institute pointed to historical experience. In 1980 the Thatcher government abolished the existing subsidy for international students. Despite dire predictions, the number of international students has increased.

In the 1960s they accounted for around 10 per cent of the UK student population: 7 per cent of undergraduates and 32 per cent of postgraduates. Now it has doubled to around 20 per cent of the student population, with a big increase in undergraduates.

So why all the wailing and gnashing of teeth from the university fat cats? Could it have nothing to do with the recruitment of students from the EU, but rather to do with lecturer recruitment? 

Indeed, in January 2019 The Independent reported an “exodus” of EU academics from Britain. But buried in the story was the admission from Oxford, the university with the largest number of EU academics leaving, that it had also recruited “a large number of EU staff so the overall numbers were largely similar”.

Currently, about 16 per cent of academic staff in British universities come from the EU, many of them from countries where average salaries are well below those in Britain. 

The number has surged in recent years, and of the 64,880 international academic staff in UK higher education institutions, 37,255 (57 per cent) come from the EU, according to Universities UK. Employment of Italians in UK higher education has risen by 50 per cent in the past five years.

Paradox

This is the likeliest explanation for the great (apparent) paradox: while university salaries for lecturers have slumped by a fifth in real terms in ten years and morale is universally said to be low (whatever that means), universities seem to have no difficulty in recruiting staff.

But it has become harder and harder for British postgraduates to gain full-time positions at universities, particularly in disciplines with a ready supply of appropriate EU graduates (in classics and languages, for example) and from countries where job opportunities are scarce. Even for academics, free movement comes at a price.

One thing is certain: without rising student numbers and big property deals, top university administrators – their ranks swollen by the rising tide of speculation – will find it more difficult to justify their huge pay increases while holding down the pay of teaching staff.

Oxford and Cambridge are also getting into the speculation game. Earlier this year Oxford signed a £4 billion deal with Legal and General to build thousands of homes and two science parks.

‘Universities dedicated to the balance sheet, not to knowledge…’

In 2012, Cambridge issued a £350 million bond to enable it to build 5,000 homes in the city. Stage one of the project was two years late and £100 million over budget. Last year it went further, with a £600 million bond issue to help it finance “revenue-generating projects and other facilities”, including retail developments and a hotel refurbishment.

Universities like to justify high salaries for top administrators on the basis that they should be compared with businesses. But if so, who do they think their clients are? Not the students, certainly, from the way they treat them.

While the universities have been pumping vast sums of money into property speculation and landlordism, students have been reporting levels of dissatisfaction never seen before. A survey for the Higher Education Academy and the Higher Education Policy Institute has found that in 2018 just 38 per cent of students think their course is value for money. That’s slightly up the previous year, but well down on the 53 per cent in 2012 who thought their course was worth the cost.

Borrowing

Where is this all leading? Downhill all the way, to universities as businesses dedicated to the balance sheet, not to knowledge. Some have issued bonds to raise money for risky housebuilding developments, significantly raising their level of debt.

Varsity magazine quoted Clément Mouhot, a mathematician and fellow at King’s College, Cambridge: “Behind the bonds of almost £400m in 2012 and now £600m in Cambridge, and even more in Oxford, and behind the rise of tuition fees, lies one and the same logic. That of financialisation and privatisation of universities.”

The opportunity is there, with Brexit in the offing, to return higher education to its true aims of education and research, with decently paid staff working reasonable hours while delivering a quality service to students. 

But as long as those who govern the universities are allowed to see their future as global businesses linked umbilically to the EU, that’s not going to happen. And if staff are to move from perpetual defence to playing an active role in resetting the intellectual and moral compass of the institutions in which they work, they are going to have to break those links too.

• Related article: The dark hand of the EU