The means and ends of higher education

by Clive Barnett March 28, 2018

This article is part of a JCE online curation of the UK university 2018 industrial action.


Things I Learnt While on Strike

Whatever else it meant, the strike action undertaken by academic, academic-related and professional services staff in so-called pre-92 universities in February and March 2018 meant that lots of people spent lots of time not teaching students, not librarian-ing, not providing professional support to researchers, not, public-engaging, and not doing lots of other things they’d rather have been doing.

The strike was the occasion for much solidarity and comradeship – publicly on picket lines, through teach-outs and on social media. It was a time for talking to one’s colleagues or meeting new ones, in person, or through tweets and re-tweets and blogs. The phrase a ‘teachable moment’ was been heard often enough during this period, although I’m coming to think of all this as having been a ‘learnable moment: an awful lot of us know a lot more about pension financing and asset pricing and investment and projected life-expectancy, and the mendacity of our employers, than we did a few weeks ago. Because that’s what academics tend to do when they are on strike: they do further research into the issues animating their grievances and seek to teach other people about them so that they too can learn.

We might think of the strike as an example of John Dewey’s account of inquiry – as a form of shared investigation and learning provoked by a problematic situation into which people finds themselves thrown. This sort of learning is also lay social science, if you like, if by social science you mean the form of learning oriented towards helping people to reflect meaningfully on the attachments they have to the worlds they inhabit. None of what we are learning about how the USS pension system has been undermined, or how this is related to the systematic financialization of university funding, or how university governance has been rendered obscure and unaccountable, is actually a secret. Some of it people have known about for a long time, and lots of this is actually a focus of robust research. But who has the time to keep up with all this? And who imagined that those that one might reasonably think were meant to act in the best interests of those who work for Universities would turn out to be, well, less than honest and trustworthy and competent, if not deliberately misleading?

Who really knew, for example, that the USS pension system has actually served as a live empirical experiment for economists researching the unequal effects of pension scheme redesign? Financial economists have used the 2011 rule change, when USS closed its final salary scheme to new members, to assess the redistributory effects of rule changes to pensions systems (2011 is also when the national government withdrew from underwriting the USS system, thereby transforming the nature of the risk to which this system is technically exposed, a central issue in the current dispute). This rule change involved a redistribution of wealth from ‘members’ to ‘sponsors’ (that is, from university staff to universities), and that the costs of this redistribution fall unequally on younger/newer members. Here’s the summary of the findings:

“The rule change in October 2011 resulted in the transfer of about £32.5 billion of wealth from the members to the sponsor during the 2011-2015 period. This is the equivalent of about £600 million per year, or over 60% of the sponsor’s contribution in 2011 of £938.4 million.”

Let that sink in for a moment. And then think about it next time you wander past an extravagant new building on the campus where you work. The conclusion that follows from that finding is fairly straightforward: “Since pensions are deferred pay, this represents a substantial pay cut”.

It is this sort of analysis that lots of people found the time to read while on strike, because our attention was directed by our colleagues to better understanding the economics of pensions systems and the business models of universities. There is a lesson here, surely, concerning what it says about the Efficient Market Hypothesis, a model so central to the restructuring of higher education in UK over the last decade: it is only when employees are on strike that they have enough time to actually begin to even imagine being able to access all of the information they are supposed by to have at their disposal in order to function as rational fools in market-like scenarios.

Who really knew, either, that there has been a determined effort by a cartel of British Universities (i.e. an increasingly Russell group dominated UUK) to facilitate a shift away from Defined Benefits pension provision to Defined Contributions not-really-pensions-at-all-schemes? That is just one of the things we’ve all learnt because of the work of Dennis Leech and Michael Otsuka and Gail Davies and Felicity Callard and Henry Tapper and Hilary Salt and others in reconstructing the explicit efforts of the self-declared ‘Voice of Universities’ to legitimise the shift from collective pension support to individualised “Die Quickly” savings plans, as Ewan McGaughey helpfully calls them.

One thing we all now know is that the whole programme of de-riskifying pensions is related to a broader shift in the strategizing of UK universities. The urge to reduce the financial risks associated with pension liabilities is intrinsically linked to the imperative to diversify sources of funding in a context of reductions in direct government support. Now, the logics of financialization in higher education are perhaps longer established, and subject to more research scrutiny, in a North American context. But that’s a different context when compared to the UK. Let’s not forget, in the midst of realising just how badly managed British universities have been, that the changing political economy of higher education has its source in the determination of Tory-led governments since 2010 to try to make higher education conform to ridiculous models of markets and competition. Universities’ turn to capital investment programmes as a way of seeking to enhance ‘student experience’ is an index of a motivated effort to enforce a competitive spirit on higher education institutions, and the move to ‘de-risk’ pensions liabilities is a central element of the resulting and still emergent business model in which getting better interest rates on loans is the driving imperative. The integral link between the pensions dispute and the financialization of University expansion plans involves a search for new sources of revenue, in a context of declining direct funding from government and uncertainty over the reliability of student fee income, the real value of which is declining year on year anyway. This dispute, however enlivening and affirming for many of those involved in it, is taking place in a context in which a decadent Tory government is intent on forcing through a series of ill-considered structural changes to higher education, including revisions to student fee systems, intrusive regulatory regimes (e.g. TEF); heightened competition by allowing ‘new entrants’ and actively encouraging bankruptcy; and further compromising the autonomy and integrity of research at the altar of ‘innovation’ and ‘regional growth’ and ‘impact’ and ‘global challenges’.

But we should also probably resist the temptation to think that universities are simply passive actors in a process of higher education transformation, buffeted by the edicts of government. The idea that senior university leadership teams are pursuing internal organisational changes because they are trying their best to protect their institutions, and the people who study and work in them, from even worse outcomes favoured by government is a shibboleth of UK higher education discourse that seems no longer plausible. To continue to give credence to that view of the interests and motivations of senior leadership in many universities really is to remain attached to a version of cruel optimism. We all know, now, that it is perfectly possible for University VCs to respond to crisis situations in very different ways, and even for them to speak out in support of many of the same values and commitments of their striking staff members. Which just underscores the point that university leaderships are able exercise considerable agency in shaping the field in which they operate.

Redistributions of Risk in Higher Education

One of the features of the dispute was the claim made by spokespersons for the UUK, parroted more or less faithfully by some individual VCs, to have access to a singularly authoritative interpretation of complex financial information. This included the attempt to put beyond question certain facts, especially about the size of the USS ‘deficit’, as if actuarial knowledge is, and even presumes to be, an exact predictive science. To do so, of course, UUK had to present the advice of its own favoured actuarial advisors, Aon, as correct and dismiss the advice of First Actuarial, who advised the UCU’s position in negotiations in 2017. In digging into the role of consultants in informing the UUK’s policies on pensions going back at least to 2014 if not before, investigations by academics has revealed how UUK and a number of the Universities for whom it claims to speak have involved not just in a process of adjusting to a “shifting landscape” of pension finance, but have sought to actively instigate a shift away from the collective pooling of risk by universities to the benefit of their staff through supporting a pension system to relocate all the risk onto staff by instigating individual savings plans (remember, we now all know that “a DC is not a pension at all“). It turns out that the universities we work for stand as very good examples of the efforts to deliberately enact market practices in new ways that academics themselves have analysed. And there is a deeper story to be told here about how the senior management cultures of British Universities have been effectively captured by the epistemic conventions of a network of private sector consultancy expertise that has seen the public sector, broadly defined, as an increasingly lucrative source of profits.

To understand why it is a pensions dispute that has caused such a catastrophic collapse in the legitimacy of higher education leadership in the UK, we need to understand how the financialization of higher education funding is reshaping all aspects of the personal relationships upon which education depends. The relationship between the pensions dispute and broader trend towards the financialization of higher education in the UK is well captured by a statement from the Vice Chancellor of Exeter, where I work, on the eve of the first wave of staggered strike action at the end of February. In a ‘personal message’ (a mode of e-mail communication that is itself an index of a particular kind of management culture), he informed staff at the University that the costs of continuing to support the existing pension system as proposed by the UCU would involve “a reduction to our resources, and would limit our ability to deliver our key missions around research and education as well as our ability to invest in, and improve, the facilities we provide.” Now, if you are wondering why investing in decent pension provision for staff runs against the core educational and research missions of a university, then the answer has to do with a set of assumptions about the relationship between “student experience”, “research power”, and “capital investment”. To get a better sense of how these things are related, it’s worth looking at Exeter’s formal response to the much discussed USS Survey of Universities on their favoured options regarding the much contested 2017 valuation of the pension scheme, which is helpfully available on Twitter.

Exeter was very strongly against any increase in the risk associated with the USS system, and stated that the University “could afford additional funding” to support the existing status quo model of defined benefits only “in extremis”. Any step towards increasing its commitments, would be “at the cost of making compensating budget savings and/or scaling back its capital programme”. The first point, about budgets, is a standard management line, you might think; it’s the second point, about the capital programme, that is really crucial, as is made clear as the response continues:

“Such action would detrimentally impact on the student and staff experience and on the University’s ability to attract students and staff in an increasingly competitive environment. Altering the University’s investment priorities to fund increased pensions costs over other staffing costs, equipment, space, student facilities etc then runs the risks of undermining the strength of the covenant we can currently offer the scheme”.

There’s a lot going on here, and it is worth underscoring that this argument does not present the relationship between pensions costs and the capital investment programme as a zero-sum trade off. Rather, increased pension costs are seen as threatening the capital investment programme that is, it turns out, quite central to sustaining future commitments to the pension system itself. What is certainly clear here, however, is that Exeter’s capital investment programme (more on that below) is the inviolable principle upon which it’s approach to pension financing is based. Notice too that pension costs are quite distinct in this account from ‘other staff costs’. This is because those other staffing costs are a matter of budgeting, whereas pensions commitments are treated as capitalised liabilities to be offset against capital assets, and so they impinge directly on the financing of the capital investment programme in the way that other staffing costs do not. And if you don’t believe me, read the experts.

The apparently stark choice between investing in uniformly high quality pay and conditions for staff OR delivering on a rather vague sense of education and research ‘missions’ that centre on ‘facilities’ is hardly peculiar to Exeter. To understand what is really going on in these attempts to fix the terms of debate, and quite why a university’s capital investment programme is presented as both what needs to be protected from the risks of pensions liabilities at the same time as being what will secure the ability of a university to live-up to its future commitments, it’s certainly necessary to keep in mind the broader context of higher education policy. But it’s also important to appreciate just how active a whole apparatus of leadership, management, and governance of universities has become to driving through organisational transformation. The relationship between these questions of institutional culture and the shift towards capital investment strategies by universities is neatly captured by Philip Roscoe, discussing the origins of the strike in decisions made by UUK in 2017:

“In the summer of last year USS asked employers – via Universities UK – whether they wanted more or less risk. It might seem a silly question, for out of context everyone wants less risk. But universities have a particular agenda. USS is what is known as a ‘last man standing’ scheme, meaning that should institutions start to fail, risk would pile up on those still operating. And university managers, now thoroughly versed in the language, practices and salaries of business, are obsessed with avoiding risk. Risk has practical implications, for under current accounting rules employers must carry full pension liabilities on their balance sheet. This affects administrators who, seeing themselves primarily as curators of rankings in a market-driven system, are diverting all the funds they can into an arms race of building and infrastructure investment. Universities can borrow very cheaply – often at less than the cost of inflation, and almost free money is too good a ticket to be passed up. But lenders are not going to offer such preferential terms to borrowers with huge pension liabilities; for a university, the covenant of USS begins to loom as an enormous blot on an otherwise shiny credit rating.”

Roscoe highlights that universities have become fixated on risk, understood both in financial terms, but much more broadly as a basic element of routine management systems. There really is something called the ‘The new risk agenda‘ that is being embedded through bought-in, consultant-led higher education strategizing, management and administration. It’s a world in which future pension liabilities show up as a financial risk while leveraged on- and off- balance indebtedness doesn’t; no-one takes seriously the risk of undermining the professional confidence of university staff in senior leadership; and the generation of an awful lot of ‘data’ about student experience is used to make it appear that future student recruitment is a lock-in. And it’s worth noting that in this consolidated model of management and strategy, while pensions liabilities are now taken-for-granted as significant financial risks, ambitious capital investment programmes are not.

The view that pensions liabilities are a risk that should be managed down, and that any increase in pensions commitments would get in the way of delivering key missions, rests on the two key strands of university life – research and teaching. British Universities are very keen to increase their “research power”, which basically means they want to grow the number of research active staff in order to maximise the income they hope they can generate from direct government grant through the REF allocation. You need new buildings, not so much to give English professors offices, but to make room for high-tech Kit – that’s what will attract big teams of solution-oriented scientists producing potentially commercializable knowledge. But, it is worth noticing the degree to which the pensions dispute reveals just how important teaching students remains to the changing meaning of ‘The University’, including ‘research intensive’ ones. Indeed, one reason why research is thought to be important is, via ‘research-led teaching’ initiatives, because it is meant to contribute to enhancing that most valued, measured, and yet oddly elusive sounding variable, “student experience”. Student experience is a kind of interactive phenomenon, but it is widely assumed that maintaining and (of course) improving it turns in no small part on providing access to high quality work spaces, to fantastic sports facilities, accommodation, high-tech teaching spaces, and the like. I have nothing against those things – people who teach tend to like them too, after all. But the interesting question is how it is that we have arrived at a situation in which all those material things are rendered affordable only by drastically restructuring academic labour markets in increasingly bifurcated ways while also streamlining academic support professions. Or, if you prefer, how should we make sense of the shifting ratio between constant capital and variable capital in the twenty-first century research-intensive University?

Keep Digging

To start to answer that question, it’s worth attending to the ways in which the transformation of the economics of higher education has provided an opportunity for growth for certain fields of private investment. The reason that there is so much consultancy information by the likes of Barclays and KPMG flying around the higher education sector is because this knowledge serves as a way of introducing potential investors to potential borrowers. So, for example, here is pwc summarising the new landscape of higher education funding:

“In an increasingly competitive market where all Universities are striving to offer their students, staff and visitors the most positive and rewarding experience possible, the quality of the built environment, the accommodation offering, and the delivery of estates services are playing a more critical role than ever before. In response to this, Universities are developing exciting and ambitious estates plans that propose significant investment in new facilities, and innovative ways of delivering services.”

The key thing to bear in mind about this increasing focus upon capital investment in the infrastructures of teaching and learning and research is that buildings and facilities require long-term financing, and it turns out that traditional lenders – banks – “are unable to write loans with the same duration and pricing levels of the past”. And this leads to a very evident sense of excitement:

“New sources of finance, as well as new commercial modes for securing this finance, are therefore needed and are being employed across a variety of projects in the sector”.

And, as NatWest nicely put it, capital debt markets “have capitalised on the lack of bank liquidity for longer-duration financing”.

The most publicly visible example of Universities turning to debt capital markets has been individual institutions – ones as very different as De Montfort and Cambridge – issuing their own bonds (an instrument of indebtedness sold by the issuer to the holder; i.e. universities can do what governments can do too). This trend serves as a way of securing the long-term finance that bank lenders are not prepared to extend. But the logic of financialization is not only evident amongst institutions that have leveraged credit in this way.

For example, the University of Exeter’s financial strategy is self-consciously prudent on the face of it. The University is “relatively highly geared”, that is, it’s focussed on paying down relatively high levels of debt accrued from past investments. This is one reason, of course, why pension commitments show up as a risk (not just a liability) for this type of institution.  In the University’s 2016-7 financial statements, “Pensions” are listed ahead of “Impact of the EU Referendum June 2016” when it comes to identifying financial risks:

“The settlement of the USS 2017 actuarial valuation is a key risk, both financially and in terms of industrial relations, with the national trade unions agitating to protect current pension benefits. Current expectation is that the valuation will be settled within the current funding envelope, without increasing costs to the employer or employee but the likelihood that future pension benefits will have to be curtailed is high.”

It is worth noting that the recognition here that the valuation of the USS scheme represented both a financial risk and a risk to ‘employee engagement’, as they say in the world of HR consultancy, might well not have been effectively acted upon. At the end of Exeter’s response to the USS Survey in 2017, already mentioned, there is the following brief request: “We would appreciate help with communication materials covering what is an immensely technical subject and one that is open to misinterpretation.” Judging by how well the University of Exeter managed its’ communications to staff members around the ensuing industrial action – first doubling down on the truth of what became an increasingly contested USS valuation; and then just silence, as Union membership went from the 600s to over 1000 in a couple of weeks – there is not much evidence that that help was forthcoming.

It’s worth pausing a moment and asking why pensions could show up as a more pressing risk than Brexit in Exeter’s imagination? To answer this question, just turn it around: which of these two risks is the University of Exeter in a position to significantly influence in the immediate future? Not Brexit and its effects. But as a powerful, Russell Group University, with strong networks into UUK and higher echelons of higher education policy, it is not unreasonable to suppose that the University of Exeter can imagine itself playing a role in realizing what we now know has been a longer term effort by a cabal within UUK, which is itself basically an unaccountable cartel, to fundamentally off-load the risks of pensions liabilities to enable Universities to improve their access to credit in order to finance their capital investment programmes.

Remember, the idea that pensions are “a material liability” is just technical vocabulary. It is when financial balance-sheets become ‘enveloped’, shall we say, in a wider process of actuarial de-riskification that the idea of pensions as liabilities gets translated into the idea of pensions as a risk. It is this that then helps to generate the search for the ‘resilience‘ in higher education financing. And when this happens, pension liabilities reappear as directly at odds with the capacity to access affordable credit required to those finance capital investment projects which have taken on such central importance in the imagination of a university’s “world class” ambitious – it’s a kind of vicious circle, in which to become world class, you need loads of shiny buildings, which you can only afford to finance by continuing a debt-financed, shiny-building-centric model of higher education management, and so on and so on. Keep Digging.

To return to the example of Exeter for a moment, you might think that if you were already busy paying down lots of debt, you’d calm down about taking on a lot more. But the University of Exeter actually has an ambitious future capital investment strategy, as intimated in the response to the 2017 USS survey. Exeter’s Capital Strategy proclaims,

“The next ten years will see us invest £428.5M in our campuses, estate and infrastructure. We are building the estate we need to deliver world-class research and an internationally excellent education, accommodating our students and our world leading academics in exceptional teaching, learning and research spaces.”

It’s not quite clear on how this strategy was arrived at. But the good news is that University is seeking to actively involve all staff members in the consultations over how to manage the resulting reduction in car parking space on campus. It should also be noted that this investment strategy sits alongside the University’s new “People Strategy”, which has the sub-heading of ‘Attract, Perform, Retain’. Quite how any of those aims can be achieved by supporting the effort to undermine the pension provision of staff members so that one can afford the expensive capital investment programme is not made clear.

But if the relationship between reducing pension risks and financing capital investment programmes (which look kind of risky but don’t seem to generate the same sort of worry) is evident enough, we still need to explore a little further what any of this has to do with ‘student experience’. We need, in particular, to understand how it is that the financialization of higher education funding turns out to place a very weird kind of ‘student’ at the heart of higher education, a student who is not necessarily easily recognisable as a sovereign consumer at all.

Who is the Subject of “Student Experience”?

Exeter is certainly a good an example of the recent spending spree on new buildings that characterises British higher education, a phenomenon that is rooted as I have already suggested not just in a search for research grandeur but also, and not at all secondarily, in a widely shared understanding that this is the secret to attracting students. It’s that same viciously virtuous circle, again – building buildings is seen as crucial to recruiting students in what is always described as an ‘increasingly competitive’ environment (but it’s only really competitive because universities need to attract students so that they can service their debts), then in turn servicing the debt that finances building the buildings depends on being able to guarantee future student income. Notice here that the research activities and the teaching & learning activities of a British university involve very different kinds of money. It is much less easy to guarantee the steady stream of research income into the longer term, however wonderfully 4* all your research is meant to be, because of those dastardly peer review processes and, well, because you’d be stupid to assume that government commitments to ever increasing science and innovation spending – the Industrial Strategy, GCRF, all that – was at all dependable. In short, you can’t really assetize research activity in quite the same way that you can assetize future student recruitment. (I leave aside for now whether that means that investing an awful lot of capital in one or two very big baskets is a wise way of encouraging the laying of golden eggs).

In his recent discussion of ‘the allure of capital markets’ for universities, the FT’s Thomas Hale (who has been writing about higher education for a while now) helpfully identifies just how important University rankings are to this process of financialization. They play two related roles, in mediating demand of “student-consumers”, and also in “the overall marketing process of debt issuance” (i.e. in reassuring investors that Universities looking for credit are actually any good). Rankings are, of course, just one part of the ‘avalanche of numbers’ that has swamped higher education over the last two decades. More and more ‘data’, of less and less coherent sorts, is used to manage universities internally so that they can act in certain ways externally, not least to establish and maintain institutional credit worthiness (remember that next time you are congratulated for achieving a better position in a methodologically dodgy league table). To be precise, rankings and league tables are now built into systems for finessing the calculation of the risks of different sorts of assets, liabilities, and both estate investments and human capital.

If students are quite central, in certain incarnations at least, to the investment-led strategies that have led to the imperative to de-riskify pension liabilities, then it should perhaps not be a surprise to find that accommodating them has become, both figuratively and literally, so important to senior leadership of universities. And here, we can see that developing expansive capital investment strategies does not only involve individual universities directly raising capital through bond issues in the ways that have attracted lots of public attention. Let’s return to our friends in consultancy, pwc, who provide a helpful outline of other options available:

“We are, however, seeing significant interest from certain large investors to increase their exposure to the higher education sector through property-related income that is backed by a strong covenant”.

What is being referred to here is the turn to using “lease based structures” that allow Universities to access capital with long maturities indirectly, and therefore not messing up their balance sheets. That line about large investors ‘exposing’ themselves to the HE sector is, of course, a piece of sarcasm: it’s not really the investors that are exposed in these deals, which actually depend on the assumption that investing in university estate is a relatively safe bet. This second form of ‘innovative’ higher education financing through the credit markets involves Universities partnering up with specialist financial companies, of which University Partnership Programme (UPP) is the most visible in the UK. UPP is a University accommodation developer. It provides Universities with ‘special purpose vehicles’. Basically, they raise the capital for Universities and build and run student accommodation, and ownership of the buildings only passes on to Universities when the original debt is paid back (that model might sound familiar). UPP describe what they do in the following way:

“Our vision is to deliver the very best student experiences, in partnership with great universities. Our mission is to create exceptional academic infrastructure and support services in partnership. We design and develop high quality, affordable, student accommodation, academic infrastructure and support services. Our unique partnerships enable universities to make best use of their assets, freeing up university resources and improving services to students.”

The final point about ‘freeing-up’ resources is important – this way of financing building projects allows Universities to keep the costs of investment off their balance sheets, thereby enhancing their on-going borrowing strategies. There is clearly nothing to raise any concerns about riskiness going on here then. Nothing at all.

The subtext of all this consultancy advice is that investing in university capital projects is attractive because it is generally seen as relatively safe. Universities remain very heavily dependent on government funding in all sorts of ways, primarily in terms of credit-extended to fund student fees as well as direct grants and research funding. And for this reason, amongst many others, it’s not at all clear that the model of financialization of higher education upon which the trashing university pension provision was premised is actually even sustainable. And it’s worth slowing down a moment, and recognizing that the emergence of this debt-fuelled model of higher education is rapidly evolving. Until very recently Universities were able to raise capital on favourable terms because of an implicit assumption that they were in the last resort guaranteed against failure by government. That’s no longer such a wise assumption. The British government now not only seeks to facilitate new entrants into higher education but says out loud it will not automatically prop-up a financially failing University. This is, no doubt, a quite fundamental factor in accounting for the determination of the ruling cabal of the UUK to try to crash universities out of the defined benefit model of USS in 2017 and into 2018. And this effort to enforce marketization is one reason why it is important to differentiate between arguments that higher education is currently an imperfectly functioning market that could be made more perfect, and an argument about why it might not be a good idea to imagine they it should or could be in the first place.

And if we remember that this whole dynamic of the financialization of higher education turns on a concern to secure future student recruitment under conditions of artificially induced non-price based ‘competition’, then we shouldn’t be surprised if the subject of ‘student experience’ turns out to take on a rather odd appearance in the emerging ecology of higher education finance. It’s quite common to bemoan the idea that students are increasingly treated as consumers. It has been the premise of government policy, from the stupidity of the Browne Review in 2010 through to the establishment of the pernicious Office For Students, that putting students at the heart of higher education depends on them able to leverage their influence as if they were customers in the market place. Only, it turns out that it is not as fee-payers for a service that students are presumed to be able to exercise influence over ‘providers’ at all – it is as indebted peons hoping to secure a rather uncertain high-paying future career (and this is one reason why, as good as it might sound as a headline or ironic joke, the idea that students should receive ‘refunds’ for classes cancelled due to strike action doesn’t hold up – that would technically involve giving money back to some people who would never actually be required to pay it anyway). In UK higher education policy and senior management, it is being in debt that is meant to help generate the virtues of customer oversight amongst students.

Once you notice that students are, first and foremost, presented only as the active subjects of their own indebtedness in this system, then you will further notice how ‘the student’ towards whom so much lip-service is paid is actually figured in various ways in contemporary higher education policy and strategy that the much maligned figure of ‘the consumer’ does not quite capture:

  • First, as future recruits to be assetized through league tables and rankings, students serve as securityagainst which Universities can secure loans;
  • Second, amazingly, students are quite publicly presented as superficial air-headswho are easily dazzled by ‘shiny buildings’ when making life-changing decisions;
  • Third, students are expected to be only ever motivated as utility-maximisersby the promise of future earnings in their choices and expectations and satisfactions;
  • And fourth, rather importantly given the debt-leveraged nature of all this building work going on around University campuses, they are constructed as reliable rent-payers.

I am sure there are other figures you could add to the list. But perhaps what is important to underscore is that it is the disaggregation of ‘The Student’ into a dispersed range of abstract singularities that in turn facilitates the re-aggregation of “student voice” and “student experience”. These are both figures always and only ever spoken-for – or, perhaps the better word is wielded – by University managers to force poorly thought-through changes to curriculum, teaching practices and timetables upon professional educators who are systematically disempowered as experts despite being the primary interface through which the learning experiences of students is mediated.

It’s Not Neoliberalism!

At this point, I want to step sideways and make what might appear to be an arcane theoretical point. I want to say out loud that I think none of this can be helpfully analysed with reference to extant conceptualisations of neoliberalism. I have made this argument on a couple of occasions as contributions to local UCU-related teach-outs in Exeter during the strike, and it was an argument that received a decent hearing at least, so as a matter of good faith I should reiterate it here. The reason to do so is the observation that the wider context for this dispute is often framed in the terms of a popularised discourse of ‘the neoliberal University’ set against an idea of Universities as a public good.

I want to suggest that this might well be a moment to slow down and consider what difference it makes to think about higher education as a public good or as a means of achieving the public good. In neither case, it should be said, are market mechanisms necessarily inimical to desired collective outcomes. There is no necessary reason why private means cannot be used to secure public goods (in that respect, Adam Smith remains a rather insightful theorist of modern public life). The example of pension provision, after all, shows us that. The history of pension provision in the UK from the early 20th century until the introduction of George Osborne’s “Freedom and Choice’ reforms in 2015 illustrates that it’s perfectly possible to combine private markets for investments with specific tax regimes to deliver positive welfare outcomes.

The analysis of processes of the marketization, financialization, and consumerization of higher education in the UK needs to be freed from the weight of the theoretical edifice of critical discourses of neoliberalism. This is not a matter of mere academic argument. It is a matter of thinking through how theoretical presumptions shape the horizons of expectation of mobilisations and campaigns and, yes, negotiations and compromises. What makes neoliberalism a good, if rather arcane sounding, slogan, might also lay the seeds for a political moralism embedded in a wider culture of systematic disenchantment.

In critical theories of neoliberalism, it is presumed that market mechanisms – including the sorts of financialized practices discussed already – can only ever undermine properly public values. It’s never explained why this infectious relation cannot work in the other direction as well. I will leave aside here the question of whether neoliberalism is a descriptive or explanatory term, or both, or whether it has any meaningful coherence at all. There are certainly broader issues at stake about what kind of social theory is at work in critical analyses of neoliberalism, analyses which tend to be heavily reliant on functionalist theories of the state and of subjectivity, and therefore devoid of effective understandings of the rationalities of action.

All critical theories of neoliberalism tend to suffer from a somewhat unhealthy identification with their putative object of analysis. This is related to the methodological basis of most social science research on neoliberalism that, for all the talk of political-economy, tends to be based on fairly simplistic forms of discourse analysis (without even admitting it) and interviews with elite actors; or, for those late to the game, it is related to having no regard for the empirical at all, and preferring to simply demonstrate the normative inadequacies of a set of theoretical propositions that are presumed as a condition of the analysis to have already been perfectly realised in the world. This feature of the discourse of ‘bad’ neoliberalism – the degree to which it provides a series of preconstructed frames within which to place and evaluate events and situations – is what needs to be questioned as we attempt to make sense of what challenges lie ahead in contesting a set of transformations to systems of higher education that are already well underway, if not quite complete.

There are at least three reasons why the framework bequeathed by critiques of neoliberalism doesn’t really help in analysing what has been collectively learnt about the political economy of higher education through involvement in this dispute:

  • First, it disallows the possibility of any positive knowledge of the economic. And if there is one thing we’ve all learnt these last couple of weeks, it’s that it’s really useful to be able to know about finance economics.
  • Second, as already intimated, riskis the central theme linking the use of rankings, pensions as liabilities, and the financing of capital investment. Risk is, of course, quite central to modern concepts and practices of public life, in a way often underestimated by traditions of critical theory. There is certainly a debate to be had about ‘the privatization of risk’. But that’s not quite what is involved in the restructuring of higher education, where what seems to be happening is a process in which privatised models of risk, via actuarial practices and the operations of debt markets, have become integral to the delivery of new understandings of the ‘public benefits’ of higher education.
  • Third, and related to this point, it should be said that prevalent theories of ‘actually existing neoliberalism’ – whether of the Carpet Theory type, where neoliberalization is a variegated process of the rolling-out and rolling-back of policy paradigms, or those of a more sophisticated poststructuralist variety – turn on stark contrasts between states and markets, or between the political and the economic, or, at a deeper level, between bad individualism and virtuous sociality. It should surely be possible to imagine various configurations of the objects, subjects and mediums of public liferather than holding to a stark contrast between two separate, and opposed realms. Entrenched critical discourses of neoliberalism find it very difficult to acknowledge that the marketization and financialization of higher education involves the reconfiguration of the relationship between the means and ends of the public dimensions of higher education, rather than the diminution of the public qualities of University life in the face of unrelenting privatisation. After all, the values of efficiency, accountability, freedom and choice are no less virtuous values of public life than, say, equality or justice.

So, if we step back from the sloganizing about resisting (or even rolling back) neoliberalism, we might open up some space to recognize that what is at stake in conflict over the future direction of higher education as it has been crystalized by the pensions dispute is not a struggle between public values and private interests, but between different visions of the means and end of public life. 

Should Universities Calm Down?

To return to an earlier point, I don’t think higher education is a public good. There are multiple public goods associated with higher education (and they might actually be proliferating even as the means of achieving them is being narrowed). I have already suggested that the marketization and financialization of higher education, expressed not least through heavily leveraged capital investment programmes, represents a reconfiguration of the means and ends of the public qualities of higher education. And this reconfiguration is not being done merely in the name of public values – you still have to believe in the concept of ideology to think that this will do as an analysis, and you just shouldn’t.

It is worth remembering that, as subject to the Charity Commission, universities in the UK are obliged to demonstrate that their activities deliver Public Benefit to all sorts of constituencies. There is nothing about the processes of marketization and financialization discussed already that necessarily run counter to the demonstration of such an obligation. Quite the contrary, in fact. The crisis that the current dispute over pensions represents is in no small part an effect of a systematic overstretching amongst a whole cadre of university managers, a stratum which has for more than two decades happily embraced and promoted the idea that universities can ‘do everything’ – deliver social mobility, help drive national economic growth and technological innovation and revive productivity, generate cultural diversity and creativity, anchor local and regional dynamism, and various other functions too. Taking on these undeniably public responsibilities has been associated not only with the adoption of particular models of university financing but also with the consolidation of ill-starred systems of centralised and hierarchical management that are, in practice, at odds with the fundamentally pluralistic qualities of the modern university.

To illustrate how claims to be delivering public benefit are central to the justification of financialized capital investment programmes of the sort illustrated by the example of the University of Exeter, consider the evaluation of the capital investment by the research-intensive Russell Group Universities between 2012 and 2017 produced by the economics consultancy BiGGAR Economics in 2014 (great name – it’s obvious why they got the contract). Most of the increase in capital investment by Universities is driven by a relatively small set of research-intensive institutions (a lot else is driven by them too, but that’s another story). The evaluation found that almost 100,000 jobs would be supported by more than £9 billion of projected investment – spending on “a wide variety of different types of project from new libraries and student accommodation to major urban regeneration projects and world-leading medical facilities” – and that every £1 invested will generate £4.89 ‘gross added value’  – these claims being arrived at by using a “specially developed economic model”, the details of which are not made publicly accessible. These impacts will be felt over different time-scales: the total added value is divided between short-term impacts (the impacts of building the buildings), longer-term operational impacts (which derive from what goes on in the new buildings once they are built) and long-term ‘catalytic’ impacts: there at least 6 dimensions to this latter category, which anchors the really strong claim involved, namely that capital investment by Universities does not just amount to a redistribution of central government moneys but contributes to the active generation of new wealth. The six dimensions are ‘graduate productivity’, ‘medical research’, ‘commercialisation and innovation’, ‘enhanced research competitiveness’, ‘tourism’ (basically, parents coming to stay in University towns when their kids graduate) and ‘improved learning environment’ (which loops back to securing future student recruitment).

The BiGGAR report concludes that “Investing in a high quality learning and research environment” allows Universities “to attract and maintain the best students and researchers”. In this vision, capital investment projects are integral to the building of the ‘human capital’ that is central to both teaching and research. Unfortunately, no-one told the authors of this report that the specific business model upon which these programmes of capital investment depend actually requires that academic labour markets are increasingly differentiated between well remunerated superstars (with personalised pension plans, I guess), a grumpy and stagnating salariat (that’s me), and an increasingly large casualised pool of reserve labour. Oh, and nor were they told that students function in this model as assets and the dehumanized subjects of experiences that can be aggregated in poorly designed surveys. The ‘human capital’ part of the equation turns out to somewhat compromised by the overweening logics that follow from the attachment to the capital-capital part (when you think about it, it’s not necessarily at all surprising that people with a Marxist education can flourish in the systems of senior management that facilitate this form of higher education expansion.

This particular evaluation of Russell Group capital investment programmes illustrates that even when the impacts of higher education are, as they increasingly are, presented as accruing to individuals (the future salaries of students) or private entities (‘industry’) then this is understood as being a means through which wider public benefits can be generated. And it’s just one example of how far the reconfiguration of higher education has involved the trend by universities to claim to be doing everything for everyone, from social mobility, productivity increases, technological innovation, instilling civic spirit, solving climate change, etc., etc.); a trend which drives the adoption of management models that are shaped by the imperative to provide evidence of that capacity to deliver public benefit on so many different fronts.

The performance of the multiple public benefits associated with a locally embedded University with ‘world class’ reach is, again, well illustrated by the University of Exeter. For example, Exeter makes regular use of economic consultants to help it to publicly demonstrate the benefit of increasing number of international students that it has bought to the city and region. This is just one part of a broader imperative to demonstrate the economic impacts of the university locally and regionally. And in case that sounds a little too economistic, then the university also makes strong claims about acting as an anchor institution the generates all sorts of social and cultural benefits alongside economic ones. The “anchor institution” idea has taken off in government and other public agencies around higher, and it’s an interesting example of travelling theory, whereby the original sense of the potential of certain public institutions driving regeneration in deprived and ‘vulnerable‘ localities and regions has been turned into a generalised narrative about universities driving innovation and growth anywhere and everywhere. The specific combination of justificatory logics behind these sorts of claims about local impact is not peculiar to Russell Group institutions. It’s common across the whole higher education sector. And one of the key roles of the not-so-loved UUK is to scale up these sorts of claims to the national level.

As I have already said, I don’t think ‘neoliberalism’ or ‘privatisation’ or counter-posing ‘people versus profit’ actually captures what is going on here.  Those are slogans. And as slogans, they ask us to buy into a moralistic contrast between bad privatised, competitive, marketized, individualised practices versus good, virtuous, sharing ones. The ‘neoliberal’ frame invites us to misrecognize the degree to which what is at stake is a contest between different understandings of the public responsibilities of higher education, and especially between different understandings of the best means by which to achieve the public purposes of higher education. And one reason to insist upon this is to point out that, in this contest, one side might well have had a head start in redefining the terms of how the relationship between the means and end of public life can and should be ordered.

I think a better place to start building an analytically acute critique of the transformation of higher education is to take seriously Rowan Williams’ passing characterisation of the current trends in higher education restructuring as being shaped by a “half-baked utilitarianism“. It’s a suggestion that has more purchase in analysing the dynamics of the changing world of higher education. We can see the truth of this suggestion in the justification of pensions reform parroted by some VCs discussed earlier, in which the costs of sustaining decent pensions systems is set against the sacrosanct requirement to continue to invest in expansion. Even the slightly more complex positive-sum version, in which capital investment programmes must be protected from the encroachments of pensions liabilities so that the future viability of pensions systems can be secured, exposes the same logic at work: the calculation of the value of the public benefits of higher education – in terms of social mobility and productivity improvements and that innovation and economic growth that is meant to follow from a credit-led expansion strategy – is totted up and then the ‘sufferings’ resulting from gutting staff pensions are simply subtracted from the total. What you get as a result is a projected overall increase in an aggregated utility function. Looked at like this, one can see how the politics of higher education now involves a series of attempts to draw dividing lines and assemble coalitions in which the ‘voices’ of the more or less imaginary beneficiaries of ‘world classness’ can be invoked to drown out, demotivate, and delegitimise those who are standing in the way of the inevitabilities of ‘change’.

#We Are The University

In the UK, a shared sense of hubris continues to drive higher education policy (by government) and strategy (by universities leaders). It is rooted in the belief that universities can and must do everything, and it this shared hubris around which the contradictions and conflicts between these two sets of actors revolve. In turn, it is the imperatives derived from this same shared hubris that drives the increasingly toxic mess of top-down, vicious, paternalist, patronising management systems that has come to characterise university life. In the first few months of 2018, in a remarkable example of distributed collective inquiry allied with creative protest and old-fashioned picketing, a significant proportion of university staff and many students have decided to Call BS on the whole complex of funding, financing, and management that now characterises higher education in the UK.

Without forgetting the political context driving shifts in higher education policy, the pensions strike has been the occasion in which the responsibility of university leaderships for driving the transformation of higher education has been publicly exposed. The current crisis of higher education in the UK has made it clear is that it is not just the governance of collective University decision-making that is the problem, although that much is clear enough when the constituent members of the UUK are themselves complaining that this organisation can’t be trusted. It is a whole model of University governance that is itself in need of urgent reassessment, and a whole shadowy world of consultancy, leadership training, and cartel-building that is in need of exposure. It’s easy, and satisfying, to fixate on the responsibilities of VCs in all of this. For example, from my own part of the intellectual world, geographers can be presented as villains or as heroes, depending on whom you take to stand as a representative of the discipline.

But Ewan McGaughey is surely right to suggest that it is the whole edifice of upper-level university governance that needs to be democratised:

“in every university, staff, the University and College Union, and students should demand every governing body has a majority elected by staff and students.”

But in affirming that ‘democracy’ is the answer to the crisis of British higher education exposed by this dispute, it is important to remember that this is not because because ‘neoliberalism’ is opposed to democracy (the two are rather closely entangled). It is because what everyone keeps calling ‘neoliberalism’ is really a specific assemblage, shall we say, of practices and meanings of accountability, freedom, and public value. That’s my argument, and I’m sticking to it.