Universities are particularly vulnerable to the effects of Covid-19 and need a creative response
On 27 January, I was discussing the outbreak of coronavirus in Wuhan with Melissa Leach, director of the Institute of Development Studies. Melissa suggested that this might be the ‘big one’, whereas, despite being worried about the real devastation being wrought in China, I was more sanguine. Melissa was, of course, spectacularly correct, and this episode serves as a salutary reminder both of my fallibility and of the speed with which the pandemic has overtaken every aspect of life.
Universities have responded well to the immediate challenges. In education, we successfully shifted our mode of delivery almost overnight and are pulling out the stops to help doctors and nurses graduate early; in research, we are proving our worth through the work of epidemiologists, virologists, psychologists and engineers—not to mention the scholars in the arts and humanities who have helped to make life worth living; and in our local communities, we are providing support in myriad ways, ranging from accommodation for key workers to assistance with mortuary capacity.
This response has been possible because of our intrinsic strengths and because the challenges for universities have been less immediate than they have been for many businesses. Sure, the immediate economic costs of investing in our IT infrastructures at breakneck speed, seeing students leave our campuses and helping students return from abroad have been eye-watering, but the majority of our income looks assured for the remainder of the academic year.
This shouldn’t lull us into a false sense of security. This is a moment for which Joseph Schumpeter’s idea of creative destruction could have been coined, and the future of a vibrant, vital and energising component of the UK’s—and the world’s—public life is more uncertain than at any other point in our lifetimes.
Retreat from globalisation
Let’s start with the potential for destruction. Overseas students contributed just short of £7 billion in income to UK universities last year. The pandemic places this income at a major but indeterminate risk in every respect.
As it seems unlikely that the pandemic will have passed by the early autumn, potential students will feel cautious about leaving their families, cultures and social structures. Even if the more optimistic estimates are correct, a lot of potential students will stay at home.
Meanwhile, the global economy has taken a harder hit than at any time outside a world war during the past century. Supply-side and demand-side shocks are hitting every region at the same time. These are unprecedented circumstances in modern times.
And the geopolitical auguries do not look auspicious: populism and post-financial crash austerity were already signalling a retreat from globalism, and the lack of real international cooperation and solidarity suggests that we face a neo-mercantilist future in which every country has its own version of America First. This weakens us all. As intrinsically global institutions, we look vulnerable when the world is shrinking.
Although it is possible that I’m being pessimistic, the combination of concerns about health, economic uncertainty, individual hardship and geopolitics means that we should be extremely cautious about the prospect of there being nearly half a million international students in the UK this autumn. It also seems likely that many home students may decide to defer for a year.
Tight margins
Significant change will be hard for every institution. Broadly speaking, because English universities lose money undertaking research and only break even in teaching students at the home fee cap, international student income has become the essential balancing item. Margins are even tighter in Scotland, Wales and Northern Ireland.
I should say, though, that my use of ‘broadly speaking’ hides significant differences along a range of axes. There are institutions such as the London School of Economics and Political Science, London Business School and the University of Sussex whose international orientation means that they are much more dependent on international fees as a share of income than many other universities. Meanwhile, unpublished analysis by consultancy EY Parthenon has shown that 14 universities had deficits in each of the past three financial years—half of them seeing progressive deterioration in their finances—and around the same number have a negative income-to-debt ratio.
Adding this together and considering other factors including a drastically weakened UK economy, increased government debt, uncertainties over demand from domestic students and the disproportionate impact that Brexit will have on higher education, next year looks very concerning for all universities great and small.
Creative solutions
The challenge for us all is to find the spaces for creativity amid the destruction. It is almost certainly too early to see them clearly but perhaps there are some outlines through the haze.
First, I can’t see any scenario in which there are as many higher education institutions in 24 months as there are now. The worst outcome would be uncontrolled failure, where universities face forced takeovers or insolvency, leaving staff jobless and students fundamentally unprotected. The lack of an insolvency regime for higher education makes the risk of disorderly failure greater and it isn’t clear that the student protection plan regime can cope with systemic failure. As scale provides a degree of resilience, institutions need to seize the initiative to merge and to consolidate.
Second, we all need to work as effectively with partners in further education as the best universities do already. Further education faces challenges at least as serious as those of universities and will be just as vital a part of Britain’s recovery from Covid-19. In the same Office for Budget Responsibility report last week that singled out education as being the most adversely affected part of the economy, Crawley in West Sussex was identified as the area facing the worst economic catastrophe. With serious collaborative work, local universities and further education colleges can help to turn this around sooner rather than later.
Third, our local communities have really appreciated the recent practical demonstrations of our expertise and influence. Higher education can be caricatured as being globalist in orientation, but engagement with our immediate and neighbouring towns and cities should show how we can do more than underpin local economies. We mustn’t let austerity cause a retreat to a narrower version of what we are for; universities are best when they are deeply embedded in their localities.
And finally, we need to take the positives from the speed of our coronavirus response. Universities have led the scientific effort, and investment in us is vital.
Permanent changes
Remote and online learning are different from familiar pedagogies and we’ve adapted rapidly. We can’t go back to business as usual: we must use digital tools and techniques to provide a better campus-based education for our students in the future and fully embrace online degrees for those who don’t want to commit to our traditional model. If we don’t, smaller, nimbler universities and those from abroad will.
None of these changes are right for everyone and nor will they be easy. Even as we adapt and change, I fear that we’ll be diminished. The price for government support will almost certainly be that we are demonstrably less independent of political priorities. The task that we face is to remain vibrant, relevant and wedded to intellectual values.
As the University of Birmingham’s vice-chancellor David Eastwood brilliantly put it in a lecture two years ago, the “future of universities rests in our unflinching commitment to be cathedrals of knowledge, where we celebrate what we know, we remain humbly curious about what we don’t yet know, and we share what we do know generously and rigorously”.
Adam Tickell is vice-chancellor of the University of Sussex.