The UK university system is experiencing a severe financial crisis at a time when the whole of the public sector is itself facing financial difficulty. The paper argues that rather than relying on what they see as the priority of their case universities should give greater attention to financial self help, to not responding to the freeze in the level of home tuition fees by concentrating on cutting expenditure but to actively look to generating income from new sources and thereby maintain their academic shape until the national position improves. It shows how severe financial downturns have occurred before and how in the first of these, the Thatcher cuts of 1981, one university adopted a ‘save half, make half’ policy which resulted in an increase rather than a decrease in funding and an enhancement of its academic profile. Economic and other conditions have changed since the 1980s and new solutions need now to be found appropriate to an institutions circumstances but the principle of exercising an institution’s financial autonomy remains valid. One important difference between the circumstances of 1981-82 and 2024-25 is the extreme differentiation between the size and financial profile of institutions in the university sector and particularly their relative dependence on income from home tuition fees. The paper analyses the income streams of a sample of six universities, two Russell group, two post-1992 universities and two post-post-1992 universities where there are variances in dependence from 23% to 62% to show that some financial models are much less sustainable in current conditions than others. The missions of some of these vulnerable institutions in terms of academic profile and roles in their communities are directly in line with the new Government’s priorities. The financial vulnerability of these institutions, arising largely from history and location, make a special case for intervention. The most important factor, however, in facing the funding crisis is a change in the internal financial culture of universities and the impact this can have on academic morale.
Working Paper 119
Financial Self Help and Institutional Autonomy in British Higher Education
Published November 2024