Posted tagged ‘university bankruptcy’

A question of money

November 20, 2018

For a few years now there has been a steady stream of predictions that one or more English universities would face bankruptcy, or at any rate life-threatening financial difficulties. Most recently this month it was suggested that at least three universities are at risk. In what is an increasingly marketised system, the question this has thrown up is whether, in the event of such a crisis, the government or its agencies would throw a lifeline.

According to Sir Michael Barber, the chair of the Board of the new Office for Students (OfS), earlier this month, the answer is no:

‘The OfS will not bail out providers in financial difficulty. This kind of thinking – not unlike the ‘too big to fail’ idea among the banks – will lead to poor decision-making and a lack of financial discipline, is inconsistent with the principle of university autonomy and is not in students’ longer term interests.’

But then again, maybe it isn’t. Last Thursday the BBC reported that an unnamed university head received almost £1m in the summer ‘to stay afloat’ as it was ‘running out of cash’. The OfS, which provided the money, offered a complicated explanation of why this had been done, when Sir Michael had just emphasised that it wouldn’t be a good idea; apparently it was done under the framework previously applying to HEFCE, and so it was entirely different.

No matter. The question really is whether universities should always be protected by the state, or whether there are circumstances where it would be sensible to let a badly-managed institution close shop altogether. The issue is rapidly transitioning from being the sort of thing you might raise after you’ve indulged in food and drink excessively to one where the prospect of university bankruptcy does not seem beyond possibility. In the United States, a Harvard Business Scholl professor has even predicted that half of America’s universities are at risk.

Closing a university is no small thing. This is not about removing an excessively paid Vice-Chancellor from the payroll: it is about what happens to staff, students, suppliers and others who interact with it. It is about facing a big gap where the university previously provided a magnet for investment or regeneration.

Having a vague threat of liquidation hanging over institutions is not good. If universities are genuinely to face this risk, the rules in this context need to be clearly stated and understood,

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Higher education apocalypse or renewal?

July 29, 2014

As the years and months go by the voices become more insistent that universities across the developed world are in trouble and that many of them will collapse. The latest prophets of doom include a writer for Fortune magazine, Chris Matthews,  and a Harvard Business School professor, Clayton Christensen.

Such prophecies are not necessarily new. However, until relatively recently the predictions were based on doubts about whether universities were equipped to deal with a more challenging financial climate, particularly as governments came under pressure to reduce public expenditure during the recent recession. While money issues still get a mention in more recent warnings of pending catastrophe, they may not always be the primary source of concern. What is being highlighted now is the disruptive effect of phenomena such as changing demographics, new technologies, new entrants into the higher education market, corporate disenchantment with older university programmes such as the MBA, and the inability or unwillingness of faculty to adapt to changing conditions.

Notwithstanding all the warnings, it seems to me to be doubtful that many universities will close, though some may find mergers to be more comfortable than precarious survival. That does not mean, however, that there is no cause for concern. Higher education has grown massively globally, but largely on the back of a growth of universities that, with varying degrees of quality and success, all try to do more or less the same kind of thing. The evidence seems to me to suggest that the system needs much more diversity in order to meet social and economic needs. It is not that the old university model has become unserviceable, but rather that it does not meet absolutely everyone’s requirements.

Even if there are now, in most western developed countries, fewer school leavers entering higher education, there are far more wanting access to it at different stages of their lives and careers. There may be a case for some universities focusing less on traditional academic research, and more on research and development that is much closer to identified needs. Some universities may need to engage much more directly in economic, cultural and social regeneration.

Higher education needs to be renewed; but not so as to find a new – different – common identity for all institutions. It needs to recognise, celebrate, encourage and reward successful diversity. If it does that, I suspect the system will remain remarkably robust.