Earn out, not bail out
Universities: Serving the People; Helping Rebuild Britain; Earning a Bright Future
By Professor David Green CBE
As Britain starts to plan for life after lockdown, universities can, must, should and will make a powerful contribution to the national recovery from the Covid-19 pandemic.
There has been consistent, well-informed media reporting about the Universities UK request for a package of government support measures, headlined by a 100% increase in QR funding for 2020/21, representing a £2 billion government ‘bail-out’. Recently it has been reported that this is “falling on deaf ears”.
In The Times Red Box on April 16th I set out an alternative proposal, to create a ‘Rebuilding Britain’ policy to which universities could contribute very significantly.
A ‘health education led’ approach, it demonstrated how the universities around the country could be secured to educate the third of a million healthcare professionals currently being trained, and then the tens of thousands more the nation needs to overcome the profound shortages of health professionals generally, and of skilled nurses in particular. Shortages, which are now universally acknowledged. The original article, in full, with data tables by institution, is available here:
An excellent question about this proposal was rightly posed by an expert respondent:
“I did wonder why the proposal was simply for additional cash, rather than scaling up the numbers being trained? The latter would seem to perhaps be a more directly useful use of national funds to support the NHS, while still offering support to those providers doing the most to train doctors, nurses and other medical workers.”
This article seeks to answer this question directly, whilst broadening the approach.
It provides a detailed estimate of impact by institution and direct costs in ‘teaching grant’ to HM Government.
Earn Out not Bail Out
The approach proposed for universities and relevant Government policy focusses on the contribution which universities can make to the national recovery, particularly through their educational role.
In this Vice Chancellor’s view, universities should be seeking a sensible, sympathetic, but demanding, policy framework and accompanying practical measures from HM Government.
The policy framework and practical measures should produce a situation which:
- Secures the national supply of vitally skilled people.
- Significantly stimulates the growth of such supply, providing individuals with opportunities to gain higher level and professional skills from an inclusive, flexible, high quality education.
- Enables many displaced from the labour market by the effects of Covid-19 to re-skill at a higher education level and then to re-enter the labour market/create a business from 2021 onwards.
- Distributes opportunity and economic stimulus around the country contributing to the ‘levelling up’ policy of HM Government.
- Enables anchor universities to continue and increase their valuable work in cities/regions, including those parts of the nation frequently identified as ‘left behind’.
This proposal builds on this original concept, expanding it to cover teacher education specifically and the displaced workforce more broadly. It demonstrates how our universities can be part of the vital springboard our nation needs as we recover from the severe economic shock induced by Covid-19. As education is a devolved responsibility, this article concentrates on England. Similar approaches can be adopted in Scotland, Wales and Northern Ireland if desired.
The central proposal made is that the University sector is given the opportunity to better contribute to the national recovery by earning its way out of financial difficulty. Policy should:
- Remove barriers to mature students seeking a higher education as a means to gain new skills. This will meet the needs of many citizens and lead to economic growth and social development.
- Introduce/increase relatively modest teaching grants to institutions for educating health professionals and teacher training students. This will both secure supply and enable the country to begin to overcome the significant shortages of skilled health and education professionals with all the consequent social and economic benefits.
By investing in our universities now, by increasing teaching grants, the Government will be investing in the future of the entire nation, ensuring we have the healthcare workers and the teachers as well as the social workers, scientists and business professionals we need to go forward and prosper.
Securing the UK supply of educated health and teaching professionals will also help secure the future of the University sector as a whole, with its vital original research and knowledge exchange which has done so much for human health, scientific advance, business progress and society.
This ‘Rebuilding Britain’ policy will produce highly socially beneficial impacts, including re-skilling and professional development opportunities for many of the hundreds of thousands of people abruptly displaced from their industries by the pandemic, as well as many of those graduating into the deeply disrupted labour market of summer 2020.
The ‘Rebuilding Britain’ policy will enable a substantial, sustained increase in the numbers of health professionals being educated and trained nationwide, ending the skilled health professional shortage in the NHS at long last; and it will enable a significant increase in the number of teachers being trained, with subsequent beneficial impacts in schools all around the country.
As the Covid-19 pandemic and current ‘lockdown’ continue to evolve, it is increasingly necessary to have a rational, skilfully conceived plan to enable our universities, great and small, to move forward to meet the new normal, whilst serving the people well. Any such plan needs to be profoundly student-centred, using the high-level professional skills and deep commitment of the UK’s university staff to meet the challenges of post-pandemic Britain.
Re-skilling the workforce
Amongst the hundreds of thousands of people who will, sadly, need to find new employment post Covid-19, are very many who will make excellent healthcare workers, including much-needed nurses, as well as teachers, technologists, business professionals and more, if given the opportunity.
Recently, citizens on furlough from their positions as cabin crew at easyJet, bravely and willingly stepped forward and built on their excellent customer care skills and first aid qualifications to become healthcare assistants at London’s Nightingale Hospital. If, as widely forecast, the airline industry sheds many posts, then it is likely that a proportion of these citizens will wish to have the opportunity to retrain. The same will be true for many others.
We therefore must have a plan that gives our universities the capacity to re-skill the equivalent of a whole generation of workers.
Economist Gerard Lyons, presenting evidence to the Treasury Select Committee, last week (21 April 2020) lucidly summarised the imperatives:
“In coming out of this we need quite clearly a very robust health system and our economic policy needs to be more pro-growth.”
A critical element of meeting these twin, vital national imperatives is to provide excellent support for workers to retrain through an appropriate system of retraining grants. University specific student support measures also need to change to meet the post pandemic, pro-growth imperatives.
The key university-education specific measures needed to enable those worst affected in the labour market by Covid-19 to re-skill are to:
- Increase the amounts mature entrants to university may borrow for maintenance.
- Harmonise the student support/fee loan system for Masters’ courses in England with the undergraduate system. This will greatly help graduates, including particularly the graduates of 2020, whose studies have been so disrupted in many cases by strikes as well as the pandemic.
- Relax the Equivalent and Lower Level Qualifications (ELQ) restrictions for all undergraduate courses (including levels 4 and 5 courses leading to a qualification) for the duration of the Parliament. This will facilitate much needed flexibility, re-qualification and appropriate additional qualification. This will be particularly helpful for the many graduates who will lose jobs as industries contract and wish to start an equivalent level course, but in a different field, for example an English graduate now taking advanced entry into the final year of a BSc Business or a Creative Industries course such as BSc Digital Design.
- Introduce a universal, non means-tested bursary of £6,000 for all students taking PGCE courses and Undergraduate Initial Teacher Training courses leading to Qualified Teacher Status from September 2020. Retain other existing incentives for severe shortage subjects.
- Increase universal (non means-tested) bursaries for students studying subjects allied to medicine to at least £6,000 per annum plus enhancing the additional amounts already announced by government from September 2020.
- Progressively increase places to study medicine by at least 2,500 per year in England by the end of the Parliament. This is necessary as medical school places are still controlled to the one by HMG. As well as expanding existing medical schools, fund the creation of new medical schools to meet the specific needs of communities and regions by the allocation of places and appropriate capital grants.
Taken together these measures will provide very valuable, high impact opportunities for many citizens whose immediate job and economic prospects have been deeply harmed by the effects of Covid-19. These measures will enable the universities to play a full and vital part in the broad national recovery which will be so greatly needed post-pandemic.
A complementary plan and initiatives will be needed for further education.
A health workforce for the future
Demand for healthcare and health professionals is growing fast, so greater opportunities to gain health professional skills and qualifications are needed all over Britain.
The work of health professionals is rightly valued very highly throughout society. This has become even more the case through the pandemic as is evident to all.
Government investment in significantly increasing the number of health professionals post-pandemic will be expected and warmly supported nationwide. Under the proposal set out here, Britain can significantly increase the numbers of health professionals qualifying to work in the NHS, enabling, over time, a transformation for the better and the creation of a truly robust system. At the same time the UK supply of skilled professionals can be secured:
One straightforward way to accomplish these policy aims is to:
- Make additional teaching grant payments in proportion to the new students numbers being educated in 2020-21 in medicine/nursing/paramedicine and subjects allied to medicine by £2,500 per student (full-time equivalent) for the first year of their course and then by £1,250 per year (plus inflation) for subsequent years.
- Increase the teaching grant to institutions for second, third, fourth, fifth and ‘top up’ year students (FTE) studying medicine and subjects allied to medicine courses by £1,250 per student (plus inflation) for the duration of this Parliament.
- Increase investment in ongoing continuing professional development for existing nurses, midwives and other already qualified healthcare professionals to gain specific additional qualifications, such as non-medical prescribing and New-born and Infant Physical Examination, as well as more general further health qualifications at BSc and MSc levels.
- Progressively increase places to study medicine by at least 2,500 per year in England by the end of the Parliament, thus expanding existing medical schools and founding new ones in chronically underserved regions. This represents investment in institutions as well as opportunity for students and, in due course, a more robust NHS for the people.
Health education, particularly subjects allied to medicine, is well distributed around the country. This is because of the practice based nature of the courses. The 3yr BSc Nursing requires every nursing student spending 2,100 hours in practice (20 weeks a year); the Midwifery students spend the equivalent time in practice and must deliver at least 40 babies. Placements include shift work at nights and weekends.
There is an acute shortage of qualified nurses in England– at least 44,000 pre Covid-19 – many more now. The government has already pledged to increase nurse numbers by 50,000 during this Parliament. This can only be accomplished by growing first year nursing numbers and ‘top up’ course numbers for Nursing Associates by at least 15,000 a year immediately. In practice, this means first year numbers on Nursing courses around the country growing by 20% at a minimum. This includes apprenticeships and Nursing Associate courses, as well as the BSc Nursing courses whose graduates are the largest single absolutely indispensable component of the highly skilled, deeply professional modern health workforce, whom the country as a whole so rightly admire.
Tackling the teacher shortage crisis
The approach towards health education should also be taken towards teacher education. The teacher shortage was already a matter of profound national concern with significant shortages undermining the quality of school education prior to the havoc wreaked by the Covid-19 pandemic.
The most recent House of Commons Briefing Paper on teacher recruitment and retention in England, no. 7222, December 2019 expertly summarised the situation:
“In recent years, the overall number of teachers has not kept pace with increasing pupil numbers and the ratio of qualified teachers to pupils has increased from 17.8 in 2011 to 18.9 in 2018. While the recruitment of initial teacher trainees was above target in each year from 2006-07 to 2011-12, it has been below target in each year since, with wide variations across subjects. In addition, the number of full-time teacher vacancies and temporarily filled posts have both risen since 2011.”
Meeting recruitment target and ending the teacher shortage is possible and highly desirable.
There are many parents and guardians who, during lockdown, have discovered a newfound admiration for teachers. There are others who have found a new vocation to be a teacher. Government policy and the Universities and teacher training schools must help them, and many others, to realise their potential and to become the outstanding teachers our children and young people need by:
- Increasing the grant paid to institutions for all students studying PGCEs beginning in Academic Years 2020-21 and 2021-22 by £1500 per student (plus inflation in 2021-22) and thereafter until the end of this Parliament by £1,000 (plus inflation).
- Increasing the grant paid to all institutions for each student studying Undergraduate Initial Teacher Training leading to Qualified Teacher Status courses (Primary) by £1,000 per year (plus inflation) for the duration of their course, guaranteed until the end of this Parliament.
- Abolishing the remaining numbers caps on all teacher education courses leading to QTS for Academic Years 2020-21 and 2021-22.
- Aiding teacher retention by significantly increasing funding and opportunity for continuing professional development and additional higher-level qualifications.
Like health education, teacher education is widely distributed around the country and for the same reason; so much of the education concerned involves placements and teaching practice. Significantly increasing teacher supply and improving the retention of high calibre teachers will do much for ‘left behind’ communities across the country, creating opportunity locally on a nationwide basis.
Costs and Benefits
The cost of the additional teaching grants proposed above for health and education students are estimated at £0.57 billion nationwide in 2021-22.
The benefits of this investment are that health professional and much teacher training supply will be secured and will grow significantly. The results will lead to ending the shortages of health and teaching professionals which have plagued the country for years.
A detailed table showing the impact of these proposals for every higher education institution in England and the costs to HMG is attached at the end of this article as Appendix A.
It is projected that the proposed policy measures combined with institutional and sector initiatives will result in:
- 20% Growth in 1st year nursing and other subjects allied to medicine students and
- 10% Growth in 1st year medical students and
- 10% Growth in 1st year teacher training students; both postgraduate and undergraduate
Entry points for many nursing and midwifery courses have long been early September and early February. The more recent Nursing Associate courses frequently have 3 or 4 entry points. This flexibility will permit more rapid growth, which will be particularly helpful post-pandemic.
A similar approach may need to evolve in teacher education depending on the way in which the relaxation of the ‘lockdown’ impacts on schools.
In the case of medicine, it may be that the growth begins in 2021. A decision now to increase medical school places from September 2020 would yield immediate growth. A later decision will mean growth from September 2021.
Stabilising university finances, improving universities
Taking the measures above will significantly stabilise the finances of the majority of UK universities and enable them to adapt, grow and expand to meet vital national imperatives.
The fundamental ‘Earn Out not Bail Out’ nature of the proposal will be a spur to responsible institutional reform and effective, innovative management and leadership. The student-centred nature of the proposals will encourage educational quality and responsiveness to students – particularly mature students. The nationally distributed impact of the proposals will be highly beneficial for ‘levelling up’.
The combination of teaching grants and increased demand from mature students should mean that most Universities around the UK avoid a ‘financial heart attack’.
The proposals to increase teaching grants at the rates above, at a cost in 2020-21 of an estimated maximum of £572 million will leave much ‘financial oxygen’ for additional measures concerning research funding, should HMG consider that desirable. As it has already been identified elsewhere that such measures can sensibly include bringing forward some funding by HM Government already allocated for future years, the table shows the impact of increasing QR grants by 25%, for the purpose of illustrating institutional impact as well as the original 100% increase as proposed by Universities UK.
It is highly likely, and certainly desirable, that HM Government will decide to make fresh and additional investments in research on future pandemic prevention and resilience, Covid-19 and viral illness treatments generally, as well as science and research infrastructure nationally. These would all be most positive initiatives on their own merits. There is also a very strong case for making Universities central organisations for the purposes of civic investment throughout the country and for investing in clinical simulation centres, new medical school facilities and advanced IT capability.
Should it still be the case that despite all the positive opportunities for and investment in universities outlined here, that a ‘big’ financial stabilisation measure is really required for some universities to compensate for the possibly temporary loss of income from international student fees then, in this author’s view, the appropriate policy measure is to make repayable loans at Public Works Loan Board rates available.
There are a modest number of universities and specialist institutions who do not benefit from the proposals made here, as they will not benefit sufficiently from the growth of mature students seeking an education in such fields as the creative industries, business, the applied sciences and others to compensate for the projected loss of their international student numbers in the short term. The institutions included in this list are sometimes specialist in fields such as agriculture, art, dance, music and other creative industries. The author of this article served on the Small and Specialist Institutional Review group of HEFCE in the mid noughties. There are a wide variety of discretionary measures available to support such institutions. They should certainly be employed.
Overall, these proposals are highly inclusive, strengthening communities and universities right around the country.
Financially vulnerable universities in sensitive areas
The front page splash in the Financial Times on Wednesday April 22 reported on the poor reception of the Universities UK ‘100% increase in QR’ led package. Using the £2 billion figure initially reported by the Education Editors of both The Times and The Telegraph the headline read:
Universities’ plea for £2bn bailout falls on deaf ears in Treasury.
In the body of the story, it was reported that:
“Gavin Williamson, the education secretary, is said to be supportive of a stabilisation package, mindful that some of the most financially vulnerable universities — such as those in Sunderland, Bolton, Staffordshire and Wolverhampton — are in politically sensitive areas.”
As these four universities are reported to be of particular concern to the Secretary of State for Education, they are used as a ‘worked’ example in Appendix B of the policy measures outlined here.
The inadequacy of the 100% uplift in QR proposal was clearly illustrated in The Times Red Box article and the accompanying data tables.
Appendix C presents a visual regional comparison between the 100% uplift in QR proposal and the financial impacts of the Earn Out proposals advanced here. The regional distribution effects are highly beneficial in the Earn Out package but regressive in the 100% uplift in QR proposal.
The outcomes of this policy package will be to:
- Provide many tens of thousands of citizens with high quality opportunities to re-train for fresh careers as a result of the economic effects of the Covid-19 pandemic.
- Significantly expand the health professional workforce to overcome systemic shortages and provide the core ingredient of the robust NHS the country needs and wants.
- Significantly expand the teacher professional workforce to overcome systemic shortages and provide the core ingredient of the excellent education system England needs and wants.
- Meet the needs of tens of thousands in the graduating class of 2020 to further enhance their skills and broaden their expertise and experience through studying for additional qualifications rather than graduate into unemployment due to Covid-19.
- Secure the medium-term supply of the country’s professional workforce, providing opportunities in every region for full and part-time higher-level study.
- Provide a highly effective means of distributing government infrastructure investment in ‘human capital’ around the country, providing a crucial ingredient in a much-needed levelling-up programme, made even more urgent by the economic effects of Covid-19.
- Stabilise the finances and futures of universities around the UK, through providing these ‘anchor’ institutions fresh opportunities to earn a future whilst simultaneously enhancing their contribution to their city, region and nation.
It is in the national interest to ensure universities are able to play their full part in rebuilding Britain. In so doing, the universities will earn their way out of the financial difficulties arising from the pandemic by serving the people. This is the policy approach the country needs.
See accompanying excel spreadsheet.
The four universities reported by the Financial Times to be of particular concern to the Secretary of State for Education, are used as a ‘worked’ examples of the policy measures outlined above:
Worked example of four universities
|University||Total current health students (2018/19 data)||10% growth in first year medicine, dentistry students and 20% growth in subjects allied to medicine students||Income from increased teaching grant for health education||Income from fees from growth in health student numbers ||Total current teacher training students || 10% growth in first year students (Under-graduate ITT and PGCE)|| Income from increased teaching grant for teacher training education||Income from fees from growth in teacher training student numbers ||Total financial benefit from ‘Earn Out’ package ||100% increase in QR method |
Overall, in terms of benefits, it is clear that the benefits to Bolton, Stoke on Trent, Sunderland, Wolverhampton and the Black Country as well as to society more broadly, which spring from this approach utterly eclipse the benefit which would arise from the 100% increase in QR method.
Bolton, Staffordshire, Sunderland and Wolverhampton Universities all benefit significantly from this approach as do many other ‘anchor’ Universities throughout the country.
Taken together, securing the future of these four Universities means that they will continue to educate over 10,000 health professionals annually, whilst increasing graduating numbers by nearly a further 1,050 each year.
In addition, the supply of over 2,000 teachers a year is secured whilst graduating numbers increase by nearly 200 from 2022 onwards.
This approach means that all four Universities will continue to play their indispensable civic role.
Nothing in the foregoing should be taken in any way to imply that the Universities of Bolton, Staffordshire, Sunderland or Wolverhampton are particularly 'at risk' due to the effects of the Covid-19 pandemic nor that they are 'financially vulnerable'. The worked example merely illustrates the potential effects of the proposed 'package' on the opportunities and income of the 4 Universities identified in the Financial Times article quoted. All 4 Universities play a very significant and positive role in the communities they serve.
Appendix C: Community and Regional Impact
Distribution of investment in universities arising from Rebuilding Britain proposal:
Distribution of investment in universities arising from 100% increase in QR proposal:
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