Saturday, 15 March 2014

University Surpluses: Student money placed in the service of a VC's ambition?

All universities are trying make money at the moment. Although there is a lot of talk about the money they need to keep going, the dominant rhetoric is that there's "another disastrous threat to income around the corner" and so, whatever might appear to be a relatively healthy short-term financial position at present, the university must build a surplus fund to off-set any interruptions to its intake in the future. We have had a number of "looming disasters": the rise in tuition fees, "AAB" students being swallowed up by redbrick universities, and the latest is the removal of the cap on numbers which is believed to be the regulatory force which has restricted the recruitment of places like Leeds, Manchester, Sheffield, etc. All of these events have had impacts - pattern to university recruitment have changed, and these have economic consequences. However, universities can make (and have made) redundancies to off-set these challenges. Any business would. And consequently, they remain viable - if perhaps smaller and (heaven forbid) a bit more efficient.

However, the 'surplus' - that 'rainy day' fund - rarely gets touched to off-set the threat to staffing or morale. When the captain spots a new sea-monster on the distant horizon, he instinctively throws more crew overboard whilst continuing to cram the galleys with 'booty'! Why?

The myth about the education reforms is that some institutions are not viable in a market-driven system. But history tells us that institutions are remarkably viable. An old colleague of mine (now retired) used to say "disaster has always been round the corner in this place - but we're still here" The institution survives, but individuals may lose their jobs. However, the individual who is unlikely to lose his job is the captain. His guarantee of safety is the surplus he has been building up. This is the 'bond of trust' between himself and the governing body: as long as the surplus continues to rise, no question can be asked about his competence, or the 'tough decisions' he makes, and considerable leeway will be granted to the sometimes cavalier investments in 'new opportunities' (for which part of the surplus might be used).

So there is a rherotic and the truth about the surplus. The rhetoric is that it is 'rainy day money'. The truth is that it shores-up the leader's position, enables them to lead vanity projects which (if they ever work) would further enhance personal reputation, and make career progression easier (if they don't work, he can distance himself, make some fall-guy responsible, and stand well back). The surplus is student money placed in the service of the VC's ambition.

There is nothing technically wrong with having a surplus to develop new university projects. But as with all public money (which this is) proper democratic accountability and scrutiny is required. To not do this is tantamount to a kind of despotism - very much of the kind that we have seen in big industrial failures. The lack of proper governance in Universities, the well known fact that boards of governors do not govern (they usually have little idea of what really goes on day-to-day), together with a climate of fear leaves the door open to clever and manipulative people to palm governors off with tales of "millions in bank".

But there's something else which I think we are going to see. Imagine two such motivated people, each in charge of their own institutions and each looking to secure a bigger stranglehold on the regulatory apparatus around them. "How big's your's?" one asks then other with a knowing wink. They compare sizes. "Of course, if we put them together...large captive student market, achieve massive economies of scale in staffing, amalgamate our  property portfolios, enhanced packages for each of us... you'll need a private jet, of course!"

What appeared to be only a small institutional problem becomes a much bigger problem for many more people. Of course the people who should be fighting this are the people whose money it is. Vice Chancellors will be one of the few applauding the political apathy in the young!

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