Universities face cash catastrophe with threat of mergers and course cuts - Sian Griffiths

I think some academics would say that some universities have been extremely badly managed, that university leaders, in the rush to get these students from abroad, they've sort of borrowed a lot of money from the banks to build big accommodation centres or all kinds of facilities to attract them, and perhaps they've overextended themselves, borrowed too much, and now they can't, perhaps financing those loans looks a little tricky. Universities then are facing a cash catastrophe with threats of mergers and course cuts and job losses. The financial crisis is so serious that a senior Whitehall source has described it as top of a list of challenges inherited from the last government. It's the Sunday Times lead story today and Sian Griffiths, the paper's education editor, is with us now. Sian, good morning to you. Morning, Kate. You'll be well there, Sian, in the fact that our universities run at budget deficit, many are in a precarious position. You've got some up-to-date reporting here ahead of a brand new year in September. Were you taken aback about some of the challenges being faced? Does it feel like we're at a bit of a make-or-break moment in trying to make this work for some universities, at least? Yes, I think it does, absolutely. This story is partly based on an interview that I did with Dr Jo Grady, who is the chief of the Universities and Colleges Union, that's the main academic union, and she has written a letter this weekend to Bridget Philipson, the new education secretary, calling for an emergency bailout of universities, a kind of rescue package from government. She told me that she thinks three leading universities are understood to be in serious financial peril. Academics at the union have come up with this long list, 66 universities, which are looking at job cuts, looking at course closures, some of them significant job cuts, about 2,000 jobs we think are at risk across the sector. I spoke to some star academics, people that are almost household names, Michael Rosen, for instance, a former children's lawyer to his professor of children's literature at Goldsmiths. He only knew a couple of weeks ago, he says, that his job was safe, but he still doesn't know whether the degree he teaches on is secure. So it's a massive problem, and the courses that are really under threat are the arts and humanities courses, and they are under threat across the university sector now. And I think it is a kind of national issue. The government needs to step in, I would say, if it can, to save the mix of courses and degrees that we can offer students in the future. Why have universities got themselves into this position, or why has this position been arrived at, in terms of course choices, fees, budgets? I mean, have they got themselves to this point of disaster? I think university vice chancellors would say that the funding model is broken. I mean, that the funding model for universities now essentially depends on students. You know, you have to recruit large numbers of students. Now UK students pay £9,250 a year for their tuition. Overseas students from China, India, Nigeria in particular, they can pay up to £34,000 or £35,000 a year for an undergraduate degree. So what universities have been doing is kind of, you know, trying to recruit as many overseas students as possible, because that's where they get their money from. But the problem is, overseas student numbers are flattening out. Visa restrictions that were introduced by the last government has also seen a decline in the numbers of overseas students applying to study here. And the latest figures show that, you know, the recruitment pattern from overseas and UK students is not as healthy. The government might think that they shouldn't bail out institutions that should have been keeping their books better. Well, I mean, I think some academics would say that some universities have been extremely badly managed, that, you know, university leaders in the rush to kind of, you know, get these students from abroad, they've sort of, you know, borrowed a lot of money from the banks to build big accommodation centres or, you know, all kinds of facilities to attract them. And in perhaps they've overextended themselves, borrowed too much. And now they can't, perhaps, you know, financing those loans looks a little tricky. Yes, I think it's complicated, to be honest. But I know, and the last government said very clearly, it was not going to bail out a university. But really, we have never seen a university collapse. If we were to see a major university collapse in this country, that would send shockwaves, not just across this system in this country, but around the world, because our universities are world leading. Well, OK, well, one solution, as you write, is to merge medium size universities. There's more detail at the front page of The Times and online at thetimes.com in that one. Sian, I must speak to you about VAT on private school fees. It had been expected. So we had heard from Rachel Reeves at the Times CEO summit, actually, saying that the increase to private school fees, the added VAT, wouldn't happen before 2025 at the earliest. People thought, well, it won't be halfway through. It'll naturally be September 2025, beginning of the academic year. But we're hearing, The Times is hearing, that that is not the case. Well, it could come in as early as January 2025 is what we are reporting. That is a possibility that we know that Bridget Philipson is extremely keen and very serious about bringing in this policy. And technically, it could come in as early as January 2025. Headteachers in some schools have warned families that they may see a double hit on their fees in the academic year 2024-2025. Obviously, they've already seen an 8% average fee increase from this September. Well, if the VAT charge comes in as early as January 2025, many, many schools will raise fees again at the beginning of the academic year. And that is six months away. So schools are going to have to get some clarity on this really soon, aren't they? And parents, obviously. Yeah, but I think what the government and many people in the government are saying is, listen, we've been talking about this for a couple of years now. You've seen our manifesto. You knew this was coming. You've had plenty of time to make your plans. You don't have to pass all these savings on to parents. You can make efficiencies. The state sector has had to make efficiencies. This money is going to be spent on recruiting 6,500 extra specialist teachers for state schools, and goodness knows they are needed. Always great to speak to you, Sian Griffith, the Sunday Times education editor. Thank you so much for being with us. Do let us know, by the way, does that news of it could be as early as January 2025 for the VAT on private school fees, if that affects you. If you've been presuming September based on what you've been reading or hearing before, let us know, 0333 003 2353. How would January 2025 for VAT on private school fees work for you? Do let us know.