The next higher education superpowers?

If you were to consider the Times Higher Education global rankings and were to ask which countries are the higher education superpowers, there could only be one answer: the sole and dominant superpower is the United States of America, with its universities occupying 15 out of the world’s top 20 places. Next after the United States, though admittedly after quite a gap, is the United Kingdom, with three in the top 20. Even if you are highly sceptical of the rankings, they do tell a very consistent story. And what are the reasons for the supremacy of the United States? An understanding of the importance of higher education, very significant funding for both teaching and research, an ability of universities to diversify and tap into lucrative revenue streams, recognition of the impact of high value research, alumni giving of major proportions, and genuine institutional autonomy. These are all critical elements of the American success story.

However, while right now it seems difficult to imagine that anyone could displace the Americans, there appear to be a couple of countries determined to have a go: China and India. Through a mixture of structural reform and buoyant funding they have disclosed their ambition of leading the world. The Indian government wants to raise levels of participation in higher education from 12 to 30 per cent in just over ten years. Serious research money is also being made available.

However, the Indian government is finding that the universities simply do not have the capacity to spend the research money being made available, and that the teaching ambitions cannot be met unless more than 1,000 new universities are built over this period. Some of these will probably turn out to be foreign (e.g. American) universities setting up branch campuses in the country.

I suspect that the talk about new higher education superpowers is premature; both China and India have established some really impressive and well-funded universities, but there is also still a major shortage of university places and not all of the institutions are in modern, fit-for-purpose accommodation. But they will continue to push for growth.

Why does this matter? It is critical to national economic success, because investment and innovation seek out the location with the most high value and excellent universities. If your universities are topping the charts, certain companies (and actually, the ones most likely to make global investments) will want to trade near them. That is why the current British and American picture of cash-starved universities facing funding cuts and internal turmoil is so dangerous.

The United States (and Britain) can for the foreseeable future maintain their world leadership positions, but only if they provide the money necessary to sustain that. Giving outside observers the impression that the claim of universities for public money is not regarded as any more important than the claims made by anyone else leads to the conclusion that the system is in decline, and this will influence investment decisions.

Demographic and economic factors – as well as the fact that you cannot create large numbers of world class universities overnight – will for now, I believe, inhibit the Chinese and Indian quest for supremacy (though they will both advance significantly). But if the American and British governments continue to make universities absorb large cuts, then the game will change. Governments (and this includes Ireland as well) need to understand the extraordinary importance of higher education at this difficult time.

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A university president counting the pennies

There is an interesting report in the US media about the University of Illinois at Urbana-Champaign. Before I go into the details, let me just say that this is a well-known and highly respected American public university. It has over 40,000 students, and so by our standards on this side of the Atlantic we’d consider it pretty big. In global ranking terms, the Times Higher league table has it at number 33, which places it above any Irish or Scottish university.

So, what is the story? Well, its new president has been telling the media that for the first few months of his tenure he has only had time for one thing, ‘counting the pennies’. Just as he took up his post the state cut funding dramatically, and what is more, it has only managed so far to cough up around 3 per cent of what it had promised in the first place. The university is in crisis, and the president is cutting costs wherever he can and is contemplating a rise in tuition fees.

All that sounds very familiar, confirming again that our problems are not unique and are also being experienced in many different countries. But then again, look at this. The state funding of the University of Illinois only accounts for 17 per cent of its revenues, and yet the sum in question, at $390 million, is more than what any Irish university receives from the state. So what is the university’s total budget? It’s $4.7 billion, that’s what it is. That’s more than twice what the entire Irish university sector spends. I haven’t yet worked out the Scottish figures, but I expect there is also a mighty gap.

The two stories, read from over here, are about the insecurity of state funding during these turbulent times (and that’s the same over here), and the extraordinary resource gap between the universities with whom we want and need to compete and our own institutions. If anyone is serious about having a smart economy, we need to do things very differently indeed. And we don’t have much time.

Higher education’s strategic needs

According to today’s report in the Irish Times, the strategic review report group chaired by Dr Colin Hunt will suggest that Ireland’s higher education system needs another €500 million annually to cope with an increase in student numbers derived from increased demand and a government desire to raise higher education participation levels further. However, even if the government were to accept this and had the resources to pay it, that would merely fund additional numbers at the same rate as currently applies to the existing cohort. While such funding may seem the best that could be on offer given the current state of the public finances, we have to realise that it is completely inadequate as a basis for securing an internationally competitive university system; to achieve that we would need another 30 per cent or so more.

While for all sorts of reasons it is clearly difficult for this to gain wide acceptance, for the sake of this country’s future we really do need to grasp the fact that there won’t be enough public money to support a high quality higher education system. This either means that we should now accept that Ireland will have a much lower quality system that will not really be able to support our ambitions to be a ‘smart’ knowledge economy, or we need to look again at how we fund it all. In that sense the Hunt report’s conclusion about student contributions must be right.

But there is a bigger issue here. All around us the traditional understanding, principles and assumptions of higher education are being taken apart, whether as a result of economic developments, changes in public attitudes, government policies or new knowledge insights. I doubt that in 10 years time the global higher education landscape will look exactly like it does today. In this setting a strategic review of higher education needs to ask some fundamental questions about the nature of education, methods of learning, the scope and nature of research, and the role of universities and colleges in society and in the economy. Funding is important, and structures are also in some way, but they should flow from our understanding of how higher education should change. It is this kind of analysis I would have wanted to see as the basis for recommendations for change, and at least based on what we have seen so far that seems to me to be missing. I hope there will be more of this in the report when eventually it is published.

Science and the humanities: an eternal battle?

Over recent years the debates on higher education funding have addressed not just whether that funding is sufficient, but also increasingly how it should be distributed. In this context the growing volume of science funding, often linked to economic development priorities, has sometimes raised the issue of whether science and engineering have got a better deal than the humanities, the arts and the social sciences. Sometimes this debate addresses issues of how the humanities can also stimulate the economy, and sometimes it has more generally raised the question of whether we are neglecting disciplines that have major pedagogical benefits and which moreover provide important social and cultural supports.

This issue was recently discussed in the Guardian newspaper by the columnist Simon Jenkins. He argues that an attack on the humanities, arts and social sciences set in under Margaret Thatcher, who considered these areas to be socialist breeding grounds, and that since then politicians have maintained a bias towards science funding, with Peter Mandelson in the UK completing this process. Jenkins argues that the universities need to re-assert their autonomy and their support for all disciplines on a fair basis.

It is hard to know what to do with this debate. Clearly universities, at least as a sector, need to maintain a balance between the disciplines, though this may still allow some individual universities to specialise. However, it is not helpful to suggest that there is some sort of academic class war between disciplines; in fact one of the more helpful recent developments has been the growth of interdisciplinary dialogue between the humanities and the sciences and the growth of joint projects between them in both teaching and research. It is also unavoidable that scientists will, in overall money terms, gain more funding than the humanities because their infrastructure and equipment is much more expensive. Nor is it entirely unreasonable to fund research that will secure major economic growth andf benefits.

However, it is also vital the universities develop a clear policy for the development of their disciplines, and that such a policy should leave no doubt about the equal value of the arts, humanities and social sciences, and their claim to be recognised as vital academic areas. It is in nobody’s interests that there should be hostility between different parts of the academy. To avoid this requires a better dialogue and more transparent decision-making.

So where is the Budget taking us?

The main emphasis in the early reporting on the government’s Budget for 2010 has been on social welfare benefits and public sector pay. Of course, these matters are significant both in terms of their impact on the exchequer and in terms of the element of controversy associated with them. The government has stayed largely true to its determination to tackle the current budget deficit through expenditure cuts rather than through fiscal adjustments. The impact of all this in both financial and political terms will become clearer shortly.

Other adjustments in public expenditure have so far received less immediate attention, and higher education funding is amongst those. It may be significant that the Minister for Finance, in his budget speech, only used the word ‘education’ twice, both in the same passage (concerning itself with measures to allow people to return to education at this time). Higher education, universities, institutes of technology and other colleges were not mentioned by him at all. Even the recently popular term ‘innovation’ doesn’t get much attention. All of this may be a little curious, because education and innovation (however the latter may be understood) are at the heart of the country’s economic recovery strategy.

It is all the more surprising because, when considered in detail, the Book of Estimates does not contain as much of an assault on higher education as some might have imagined it would. The allocation for third level institutions is down by 4 per cent compared with last year. In ordinary times this would have university leaders foaming at the mouth and talking about the imminent demise of civilisation we know it; not this time. Many may in fact have expected something worse and are quietly relieved. However, as student numbers have grown the impact may still be very significant, and how some of the institutions are able to manage this remains to be seen. Some higher education institutions in Ireland have been in very significant financial crisis already.

The overall budget for research and discovery, including R&D that may be closer to market, has also gone down, but again not by as much as some had feared. The Programme for Research in Third Level Institutions (PRTLI) is safe for now. Expenditure on SFI and related research programmes sponsored by the Department of Enterprise, Trade and Employment will be down by 7 per cent compared with the past year, and while that is serious it will allow the continued funding of high value research. Research programmes sponsored by the Higher Education Authority are down 5 per cent.

What is missing from all this is an overall vision for higher education, or a medium to long term view of what strategic objective are to be pursued by this country’s universities. Of course this may be more easily found in the report of the Higher Education Strategic Review group. In the meantime we may be able to handle this year’s reductions in grants, but we should remind ourselves that Irish higher education was already very seriously under-funded and is being increasingly crippled in attempting to tackle our position in global rankings.

And unpopular though it is in many circles, nothing in this Budget and Estimates persuades me that, in the medium term, Irish universities could survive without the reintroduction of student tuition fees or some other form of student contribution. It is time for us to decide what kind of university sector we want for Ireland, and how we can secure it financially.

Securing sustainable higher education

The global recession has, amongst others, one common element: cuts in state funding or support for higher education. In most countries over recent months governments have announced reductions in allocations to universities and colleges. There are very few exceptions to this – in fact the only one I have been able to find of any significance is Bavaria in Germany, where the centre-right state administration has told the higher education institutions that, notwithstanding problems with public finances, funding will be maintained.

In some public universities in the United States, funding cuts imposed by local administrations have been so severe that large-scale redundancies are now anticipated, with so far unpredictable results for the quality of teaching and for research. In France, as you would expect, there is a lecturers’ strike about this and other things, but in most countries the worsening financial setting is creating a general atmosphere of gloom and fears about the sustainability of the sector.

It is possible to make some quite contradictory observations about the current situation. The most obvious one is that public money as the sole source of funding for higher education is unsustainable; government decisions on funding, while perfectly rational in terms of the decisions they must take to balance the books for the exchequer, are often unpredictable for the universities, and sudden dramatic cuts can create crises that the institutions, without other available means, simply cannot manage. Public universities also have notoriously little flexibility in relation to the management of costs, which overwhelmingly consist of salaries and pay.

On the other hand, as governments cut budget allocations during a recession, they may also be reluctant to impose additional burdens on the population in the form of tuition fees, so that there is no alternative source of income for the cash-strapped institutions. In Ireland we we know, the Minister for Education and Science has been looking at the possibility of a return of fees, but there have been significant ongoing delays in coming to any final decision.

There are, I think, three important conclusions that need to be taken into account in this debate. First, higher education cannot be delivered with any kind of quality unless the resources for it are reasonably sustainable. In most countries universities operate on very tight margins, so that even in good times they will make extremely small surpluses, if any. Where they are resourced by public funding this is inevitable, as the taxpayer will not readily fund a service to a level higher than the apparent actual cost. A consequence of this is that institutions are almost totally unable, at short notice, to reduce their expenditure. Therefore a system of allocation of public money based on the possibility that funding will fluctuate significantly from one year to another destabilises the sector alarmingly.

Secondly, no organisation can succeed in the long term if it is unable to plan its financial performance. Where a university  draws its income from really only one source, and where it has no control over that source and cannot even influence it by, say, effective marketing; and where in any case it only gets advance notice of income for a single financial year (in our case in Ireland, when that ear is already well under way) – where all this is the case the university cannot undertake anything that could be described as medium to long term planning. It is living hand to mouth, and often it seems that its only mechanism for planning its medium term financial performance is prayer.

In these circumstances, and notwithstanding any ideals one might have about public education, it is impossible not to conclude, thirdly, that in order to secure higher education it cannot be built solely on public funding. There has to be a sensible diversification of sources of income, accompanied by a high degree of operational and planning autonomy.

In Ireland as in other countries, we are facing some very important decisions right now which will determine whether we can maintain a quality system of higher education.

The Labour view

As the discussion of tuition fees hots up, and in anticipation of the proposals which we understand the Minister for Education and Science is to put to the cabinet, the Labour Party’s spokesperson on education, Ruairi Quinn TD, was reported as saying the following:

‘I have no doubt that there is a funding crisis at third level, but slapping fees on families is not the way to address it. The resources for our education system, from junior infants to graduate school, should be sourced from the exchequer and should be funded by general taxation.’

That of course is where we are right now. The current position, introduced at the initiative of the Labour Party when it was last in a coalition government, is that in Ireland we have ‘free fees’ which means that the state pays tuition fees on behalf of all Irish and EU students. The fee levels are set in theory by the universities, but in practice by a government unilateral decision each year (these days generally not even preceded by notional consultation), and the recurrent grant (which makes up the rest of the funding package) is also unilaterally determined. University studies are free at the point of use (unless you are studying part-time), and are paid for by taxpayers.

This universal benefit approach to higher education has a lot to commend it in terms of general theory. It presents education at all levels as a social benefit which should be provided as a right (to those appropriately qualified), and it means that all those wanting to proceed to higher education can do so on the same financial basis. 

The major, and ultimately fatal, drawback of this is that the taxpayer quite simply and visibly cannot afford it. With participation levels exceeding 50 per cent, and indeed with a target of over 70 per cent, the cost of higher education has reached levels that have created serious affordability problems. The result is that the amount of taxpayer support per student has had to decline in real terms, to the point where it no longer covers the cost of a reasonable quality education. This has left universities and other providers in the quagmire between financial deficits and quality problems, and a situation where some institutions have become technically insolvent.

If we take the Labour Party’s position on all this at face value, what they are suggesting is that taxes need to increase to fund higher education. However, Ruairi Quinn is a former Minister for Finance (with a record of distinguised competence and vision in that role), and he knows well enough that any increased taxation cannot be ringfenced for higher education (or anything else). The result is that it is a running certainty that at any moment of economic stress the funds raised will be diverted to other causes, as is happening right now. The truth is that the taxpayer has a demonstrable record of unreliability as a funder of higher education, raising levels of support in good times while expecting even higher levels of throughput, and then dramatically cutting them in bad times. There is no real reason to believe that this would be any different if taxes were raised. Indeed, it is most unlikely that any government could declare that it was raising taxes to fund universities, as this would be electorally just as unpopular as introducing fees, even more so possibly as it would hit all earners, even those without any family members in higher education. So we would probably end up with a tax increase not declared to be for any particular purpose, leading to the situation where university leaders could not even make a public claim for ‘their’ money.

I understand the position of the Labour Party as a matter of principle. But it is a policy that has not worked in the past, and won’t work in the future. And just so as to deal with the possible claim that a different government would be more consistent and financially supportive, I would have to point out that the 1980s coalition government of which the Labour Party was a member cut funding for higher education just as brutally as other governments have done.

Universities need to escape from the current situation in which they cannot plan financially and cannot secure quality. It is a position which places the whole future of this country at risk, even if those who advocate the ‘free fees’ scheme do so for honourable reasons.

Allocating research funds

During this past week universities in the United Kingdom discovered what their basic research funding was going to be, in the light of the recent Research Assessment Exercise. Until now, the assumption in the UK has been that, at least over a period of time, research money would increasingly be concentrated on a small number of research intensive institutions, each of which would then be able to compete in the global rankings. In the event the latest allocations by the funding council show a rather different trend – some of the biggest research universities lost out (including the University of Cambridge, Imperial College, and University College London), while some universities of high quality but not previously amongst the top winners received very significant funding increases.

There are major policy issues (as well as issues of judgement as to excellence) tied up in this question, and they are also of relevance to us in Ireland. A key objective of research funding must be to support and maintain world class research groupings that will be able to compete with the best globally and act as a magnet for economic, social and cultural development, including inward investment. Whether this can best be achieved by promoting a small number of extremely generously funded institutions or by funding and supporting national networks of research excellence is one of those questions that have become topical. Right now in Ireland, the basic assumption underpinning support by some for a UCD-TCD research alliance is that a single centre of excellence can be more easily supported, funded and made globally competitive. On the other hand, over recent years there has been a significant investment in creating world class research groupings across all the institutions in Ireland, working with each other, and this funding has followed excellence as determined by external reviewers; my own university has been one of the main winners in that process.

There is of course no single easy formula that determines such matters – the correct answer depends on a number of matters, including the location of key researchers, the distribution of industrial investment, social and economic development needs and so forth. There is no real evidence right now that excellence has been more readily found in one or two universities rather than all seven in Ireland – but there is a considerable need to ensure that resources are well directed and focused on building up the niche areas of excellence in which Ireland as a whole can lead globally. And there is, as ever, a need for an explicit and well understood strategy that will govern our national development in this regard.

Looking into the abyss…

It would be hard to exaggerate the potential catastrophe now facing the university sector in Ireland. Last week the Irish Independent reported that one university had a ‘shortfall’ – presumably a deficit – of €16m in its current spending. In the case of another university, it is claimed (unconfirmed by the university) that it has issued a redundancy notice to a member of the academic staff. When the university heads recently were questioned by the Oireachtas (Irish Parliament) Joint Committee on Education and Science, most indicated that in the current year they would be recording a deficit, in some cases a substantial one.

This situation has arisen because, over recent years, public funding per student has not kept pace with the growth in numbers in the university sector, In real terms, there has been a very substantial decline in funding per student, which for a while the institutions were able to absorb, though in part this was possible because some key expenditure on maintenance, equipment and services was cut or stopped altogether. Then came the Budget and Book of Estimates announced in December 2008; and while the allocation to third level was not reduced as dramatically as some had feared, nonetheless there was a further significant cutback. And now we are all waiting for the further bad news as the government struggles to control public expenditure in the current credit crisis and recession. The likelihood is that we will be cut further, and even if pay is reduced (and that would not be an easy thing to bring about) we will almost certainly not benefit as institutions, as we would expect the savings to be clawed back by Government.

I am a realist, and I know the economic picture is the way it is. The steps being taken, or being predicted, are unavoidable as we try to regain control over the national economy in its global setting. But I also know that our current position – never mind one following a further cut – is untenable, and that some universities will face issues never experienced before; some are already technically insolvent, or would be so judged if they were businesses. My own university, DCU, has avoided deficits so far, but that position is becoming increasingly hard to sustain.

Unless something happens very quickly to alleviate this situation, some universities – and soon maybe the whole sector – will be crippled in such a way that a recovery will take years, during which our ability to provide quality education and research will have been seriously compromised. and during which institutions and their staff will live in constant crisis with dramatic consequences.

I do not believe that it will be possible to remedy this through public funding, in the sense that the money for such funding simply isn’t there. We have to face up to the fact that our sources of income need to be more varied. In 2007 across the sector as a whole, only 14 per cent of income came from sources other than the taxpayer; in some universities it was as low as 5 per cent. In my own university it was 24 per cent, but that is out of line with the sector as a whole. That creates a reliance on a single source of funding which is quite simply unhealthy, and throws the system into panic when that particular source is in trouble, as is the case now.

Amongst many other reasons, to which I shall return, this makes the case for tuition fees for those who can afford them an unanswerable one. Staying as we are, while hoping for more abundant taxpayer money that never materialises, will create a disaster from which it will be hard to recover. The time to act is now.

Meeting the Minister

Today the seven Irish university heads (accompanied by the CEO of the Irish Universities Association) met the Minister for Education and Science, Batt O’Keeffe TD. To get the substance of the meeting out of the way, it was made clear by the Minister that the growing crisis in public finances would make it very difficult to provide resources for the higher education sector that would compensate for inflation and any accumulated under-funding. We did talk about possible ways of alleviating the problems we faced, and some longer term strategic options (one of which is, of course, the return of tuition fees). It wasn’t a cheerful meeting – there was nothing cheery that anyone could really say. But at any rate it was a constructive engagement between the Minister and the presidents, and that’s a good thing. He means to do the right thing for the sector, I believe, but doesn’t have any discretionary resources, and probably won’t have for some time. We all emerged from the meeting feeling grim. I suspect the Minister did, too. It is, I think, now time for us as a country to face the inevitability of a new understanding as to how higher education is resourced, if we are serious about wanting a quality system.

As for the universities, we are now working together well. We don’t all have exactly the same views on all tactical matters, but we are all agreed on the strategy needed for the sector. If there isn’t much else to celebrate, the strengthening partnership between the seven universities is a good thing.

So what else was there to be observed? The meeting took place in Leinster House. At least, we entered by the front door of Leinster House (the location of the Irish Parliament, the Oireachtas, for those reading this who are not from Ireland), but after that we seemed to be taken on a mile-long hike through the building, or maybe it was eventually another building, to be taken outside for a photograph in what seemed to be at first a completely different part of Dublin. Tea and coffee was on offer at the meeting, and some dodgy looking biscuits, but perhaps in the interests of cost saving nobody dared touch it (and who knows what cut price blends are now being used?). As we sat there, somebody from government said that we were now probably in the worst year, financially, since 1979.

Well, there are interesting times ahead.