The emerging crisis in Scottish higher education

Given the demands of the current crisis and response to COVID-19, and the need for governments to prioritise expenditure on healthcare and income support, higher education has been nowhere near any government’s priority list. 

But a crisis in higher education is emerging, particularly in English-speaking countries. For decades now, demand for tertiary education from rapidly developing countries – most notably China – has fuelled an enormous growth in the sector. It is well-recorded that the UK has done exceedingly well in this market. Many universities now rely on this income to fund a large part of their activities. In the space of three months, this income has all but entirely dried-up. Higher education is counter-cyclical, so there may be some uptick in domestic students to make-up a small proportion of the income from international students. The impacts on universities will be highly differentiated as well – some have fostered strong local, domestic student markets so may be more resilient; others, particularly some of our most prestigious institutions, are probably looking at not being a going concern in a matter of months as their cash-flow dries up and they’re left with only enough to pay three months redundancy.

The HE sector in the UK itself is highly differentiated as well, and this often gets hidden in debates (including with ongoing industrial disputes in the sector). Indeed, higher education policy is probably one of the areas where there is the starkest difference between the four nations and regions of the UK. Therefore there is a need for analysis to be differentiated and reflect the different decisions by the devolved administrations.

It is easy to blame the current situation on my mate Neil Librul. The hens of market logics have come home to roost. If a company’s market vanishes it goes bust. This is capitalism in action. However, because I’ve used discourse analysis in my research to critique neo-liberalism, I do not like using it as a catch-all thing to blame as that disguises who is implementing neo-liberal policy decisions, why and how. So that is what I want to do in the blog post. 

One of the things that sets Scottish higher education policy apart is that, seemingly, the government explicitly rejects neo-liberal logics that higher education is an individual asset that can be purchased as an investment through a loan. Through its flagship policy of “free” higher education it publicly proclaims higher education is a public good. A former First Minister put a stone in the grounds of one of our HEIs to proclaim this very point.

However, I want to suggest that there is an emerging crisis in Scottish higher education because the Scottish Government has never fully funded its commitment to a public education. Indeed, in the operation of its policies it has pushed HEIs towards a market logic. To do this argument justice, I would need a barrage of links to old newspaper articles; SFC reports and university accounts. Frankly, I don’t have the time to do this as in my job I’m trying to stop the crisis in a Scottish university having a massive detrimental impact on the institution. If you want something like that, get a copy of Andrew McGettigan’s The Great University Gamble. Although it focuses on England, most of it also applies to Scotland; the only difference in Scotland is that we still have money coming into universities from the Scottish Funding Council paying for some tuition.

Of course, hair-splitters will point out that higher education was only not “free” in Scotland in a brief period between 1997 and 2001. After that, the up-front fees of just over £1000 were replaced by the “Graduate Endownment” that was tacked onto your student loan when you graduated. When the SNP won the 2007 Scottish elections and formed their first minority government they vowed to make higher education free and even abolish this fee. So, we have the totemic social democratic policy of “free higher education” in Scotland.

As many analysts and organisations such as the NUS in Scotland have pointed out though, this has led to particular quirks in the system. To fund the fees, student grants have steadily been eroded and replaced by loans to pay for maintenance, so that we end up with the odd situation that students in Scotland who come from homes with the lowest household incomes end up with the highest levels of graduate debt.

However, to go back to my core point, the fees policy itself has never been properly fully-funded. I first became aware of this when I was a PhD researcher in 2009 and the Scottish Government first started shuffling the cards to deliver the student numbers they wanted without the bill becoming out-of-hand – they shifted what subjects were in what funding bands, and reduced funding for degrees in the lowest bands (art, humanities and social sciences). When I got my first academic job in 2011, the Scottish Government were effectively only funding three years of the four years of a Scottish undergraduate degree. The idea had been that further education colleges would increasingly deliver the first two years on the cheap through HNCs and HNDs and there’d be growing second and third-year entries to Scottish universities. From what I know of the sector, experience of this has been patchy. Also, the “free higher education” policy was paid for by halving the budget for further education, amalgamating colleges in regional mega-colleges, and drastically reducing provision to highly gendered vocational qualifications in a limited range of industries. And then until this financial year, for a number of years universities have had a flat-cash settlement for the teaching grant and research quality grant from the Scottish Funding Council.

Now, I do have some sympathy for the Scottish Government on some of this. Until the recently increased powers over taxation, it was limited by the funding envelope provided by the Barnett formula. It was having to make difficult choices about what areas to fund and what areas to de-fund. Actually, compared to further education, policing, fire and rescue and local authorities, higher education in Scotland has not done too badly. We’ve not seen the wincingly painful cuts they experienced. And I know this personally from living with a local government officer and seeing the struggle he has to get basic things done because the resources simply are not there. But then again, the Scottish Government could have made painful policy choices in 2011 when they won their majority, such as to completely reform local government finance, getting rid of the Council Tax, and creating a new local tax that could have brought billions into the public sector creating more fiscal leeway. But we are where we are. 

Because of this situation, of an underfunded principle policy commitment, Principals and governing bodies of Scottish universities have been forced to make a choice: stick to a flat-cash income from the Scottish Funding Council and watch your university slowly wither away as it loses staff through voluntary severance and natural wastage as staff costs increase, and buildings and equipment fall into disrepair; or make riskier investment decisions in the hope than the return on these is high and allows you to expand. This latter choice of expansion is the policy agenda of the Scottish Government. It needs growing universities to: educate growing numbers of Scottish undergraduates as it seeks to meet its own targets for improving education equality; to invest in regional research and development; to bring in export income; and to be Scotland in international markets.

So we’re left with universities that have aggressively expanded into international higher education markets to pay for new staff, shiny new buildings and equipment, fantastic library resources and who are now horribly exposed as income from international students falls off a cliff. And students from Scotland will suffer because of this, as universities are forced to make staff redundant so class sizes increase and as very basic services like libraries and IT are curtailed to make budget savings.

I’ve tried to be measured about writing this and thinking this through, but I’m not. I’m angry. I’m angry and frustrated that the Scottish Government have pushed universities into this situation. Its made me angry during our current industrial disputes. We’re meant to be angry at our management, but I’m not. I can see why they made the decisions they made. I’m angry at the Scottish Government. And both my trade union and the employers have both been told, explicitly, by the current Higher Education Minister in Scotland that if the sector needs more money then it has to raise it itself through attracting in international students. The Scottish Government want a world-class higher education sector, but the money is not there. 

As I wrote at the start of this post, the current COVID-19 crisis is bringing this into stark relief. Some Scottish institutions will be just as exposed as those in England. So, what to do? This is interesting as higher education in Scotland is such a totemic part of our national identity that the government portrays on an international stage – Scotland had more universities than England until the late nineteenth-century. Higher education is what Scotland does. Therefore, I cannot see the Scottish Government allowing an institution to go bankrupt and a reduction in the number of HEIs through forced mergers (a proposed 2011 merger between Abertay and Dundee never happened). There is also the unquestioned assumption that a Scottish undergraduate degree is four years. Woe betide the Scottish HE minister who suggests that a Scottish degree should only be as long as it’s actually funded for. To clarify, I think the four-year degree is a good thing; I only wish it were funded. 

There was going to be a small real terms uplift in funding from the Scottish Funding Council for universities in Scotland this year anyway. Given the counter-cyclical nature of higher education, the Scottish Government could just chuck more grant income into the sector and hope for the best. Yet for some institutions this will only be pennies compared to what they will need because of the gaping hole from international student income. However, the economic collapse due to COVID-19 might put an almighty hole in the Scottish Government’s budget as income from devolved taxes falls. It remains to be seen whether Barnett Consequentials from UK Government expenditure will be enough to make up the shortfall, or if the Scottish Government’s limited borrowing powers are enough to tide it over until tax income increases again.

But why are we even talking about institutions going bust? Well, that’s the odd quirk of the British higher education system that, due to historical quirk and the demand for academic freedom, our universities are private charitable companies and governed as such. They just happen to get the majority of their income from government. I’m on the board of a similar organisation, so I know well the odd pressures it put on the governing body. On the one hand, you want to deliver a public service, but on the other, you’re subject to company law and have to ensure every year that you are a financial going concern. You have to borrow from commercial money markets, with all the limits that entails.

Which, oddly, brings us to another policy option that would be a sort of radical status quo – turn HEIs into public sector institutions, as they are in many European countries. Government agencies that shadow each HEI could be created and staffed TUPEd across. The charitable companies that are left, with their liabilities could be wound down over time. Academics and all university staff would become civil servants. The sector would become wholly dependent on the whim of government policy, rather than be subject to the “freedom” of the market.

I happen to know that crisis talks between representatives of Scottish HEIs, the trades unions, the Scottish Funding Council and Scottish Government are ongoing. And this is a crisis. There needs to be a policy resolution to the crisis in Scottish universities in the next few months otherwise there will be mass redundancies, massive reductions in investment in research infrastructure, and if the “market doesn’t correct” quickly then HEIs will be forced into the decisions their public sector cousins have been forced to make since 2013: cutting even essential functions just to keep some lecturing staff in the classroom; a fire-sale of buildings and land and an end to pretty much all ongoing investment in infrastructure. Yes, the Principals of Scottish universities have made risky, market-based decisions, that have led them into this situation, but as far as I am concerned, this is because an underfunded Scottish Government policy has left them with no other choice.