Proof that TEF is evil

I know a lot of you will have been thinking this, and I now have proof:

This clearly needs to factor in the debate on the HE and Research Bill, should a post-referendum government still want to address such matters.

Counting the cost

HEPI published today the outcomes of the annual Student and Academic Experience Survey, which they conduct jointly with the Higher Education Academy. It’s a really interesting survey, which allows comparison with previous years while also adding content to address current policy issues. You can read the survey here.

One issue which features prominently in the survey is student perceptions of value for money. There’s plenty in the survey about whether students think they’re getting value. Most don’t, it seems, but my experience is that the value of a university education stays with you for a long time – it isn’t a good which you consume, it’s an investment which stays with you. We’ll get more relevant data if we ask these students the same question in 40 years.

It takes a lot of these to make a building

All well and good, or not. But there’s another aspect of this question which I find fascinating. The survey asked students to identify their preference for what universities should spend less money on, in order to be able to reduce the cost. There were two clear favourites here: Spending less on buildings (49% of respondents) and spending less on sport and social facilities (46%).

This is a genuinely hard challenge for universities to address, for three reasons.

Firstly, let’s look at the money. Buildings last a long time, and money spent on buildings is regarded as being spent over the lifetime of the building. It’s not unusual to see the value of a building spread over 50 years. So the value in the accounts in any one year of a £50m new build is £1m. (If you use straight-line depreciation. Ask an accountant.)

Another way of looking at it is the cost of borrowing the money. Universities get good interest rates at the moment – 4% would be at the higher end. So the loan for the £50m building would cost about £3.8m per year, if we assume repayment over twenty years.

Now neither of these numbers - £1m per year, or even £3.8m per year – is going to make a big dent in a university’s cost structure. Even if a university was minded to reduce fees (and there’s lots of reputational reasons why they shouldn’t, and market data from students that shows that there’s no point), it wouldn’t make much impact in a university big enough to need a £50m building.

But, you say, perhaps universities don’t need the shining edifices of glass and metal which spring up all over campuses. What if they had plainer buildings? What indeed.

Few university buildings are truly high specification, in terms of the extravagance of the fixtures and fittings. But for the sake of argument let’s assume that the £50m building would cost £40m if it wasn’t so luxuriously specified, or if space was better used (now that’s more likely to be an issue, I will concede). This means that the university spends less money, but – for exactly the same reasons as I set out above, not as much as would be needed to make a dent in fees. An extra £200k - £700k per year – a 20% reduction on the cost of the building – wouldn’t mean a University could do much about fees.

And thirdly, the buildings are needed. The reason university campuses are building sites today is that many university buildings had become worn out and no longer functional. Without investment to renew and replace, campuses would become progressively less welcoming, and the impact on students and staff would be serious.

But all of these don’t add up to a good reason to ignore what students are saying: regardless of the reality of the costs of running a university, students don’t share the management’s perceptions about how to spend (their!) money. I think that the survey tells us another approach.

The survey shows that only 18% of respondents think that they definitely or maybe are given enough information about how fees are spent. But interestingly, 21% first years (who will have seen universities’ response to CMA strictures about information) feel that they have had enough information. If you know what the money’s spent on, it’s easier to come to a more reasonable conclusion about the proportionality of the cost.

It’s a baby step, but it’s a significant one (significant at 99% confidence, according to the report footnote). If universities want to address student perceptions of value, one thing they could do much more of is tell students where the money goes.

On #Brexit and Universities

The EU referendum on 23 June is a timely prompt to look at what impact the EU has on universities.

There’s no doubt where Universities UK – the sector-wide representative group – sits. “The UK’s membership of the European Union makes our outstanding universities even stronger, which in turn benefits everyone in the UK.”. So that’ll be a preference for In, I guess.

No, it isn't Eurovision ...

The underlying argument is one about mobility: through schemes like ERASMUS, staff and students in UK universities get a chance to work and study at other EU universities, and vice versa. And this leads to a better education, better research, and more capable people.

The EU funds such schemes, and helps to make them happen: it is clear that there are not similar exchanges from UK universities to non-EU countries. The closest thing to such a scheme beyond the EU is the junior year abroad programme that many US universities operate, with some UK universities very happy to bring such students in for a semester or a year. But it’s one way traffic: there aren’t many UK students spend a year at an American university, and where it happens – such as American Studies at UEA – it is linked to a specific degree programme, and arises because the University has worked hard to make it so.

There’s a financial angle too. The EU funds research across its member states, often for projects done in collaboration between EU universities - and UK universities are active in this. And students from other EU nations study at the UK’s universities, on the same terms as home students. (This gives rise to some oddities: Scottish universities are free for Scottish students and non UK EU students, but students from England, Wales and Northern Ireland are liable to pay fees …)

If we left the EU, other things being equal, the research funding would stop, and EU students would be like any other overseas student – and pay the same fees. So what do UK universities currently get from these EU sources?

HESA data lets us find out. Using data for 2014-15, it is possible to calculate for each university how much they get in EU research funding (from finance table 5); and how much they get in tuition fees from EU students (finance table 4 and student table 11a). And this in turn lets you calculate what proportion of their overall income comes from EU sources.

You’ll be pleased to know that I’ve done the maths for you. Across the UK as a whole 4.7% of funding in 2014-15 came from EU sources, with research funding accounting for slightly more of the whole than tuition fees. Of the tuition fees, two thirds is accounted for by full-time undergraduate fees.

The picture varies greatly: while a few universities get less than 1% of their income from EU sources, for others it is a noticeable amount. Here’s the top 10:

What is immediately obvious is the London bias, and also the absence of the big-money research universities. None of the top 10 have medical schools, which drives a lot of UK research money. And of these 10, eight get most of their EU income via tuition fees. But for all of them, the risk of Brexit is clear: 10% of income is a lot to lose, and recovering it is uncertain.

Does this mean that universities are right to campaign for the EU? Money is uncertain, and in truth we simply don’t know what would happen, especially in the medium to long term, if the UK left the EU. To my mind, the better reasons are those of mobility and opportunity, and they are good and noble reasons. The Universities UK campaign seems to me to be based on hope and optimism about making a better tomorrow. I’m all in favour of that.