UK business schools face a “brain drain” of talent and funding if the country crashes out of the EU without a deal, business school deans warn.
As the UK government on Tuesday 15th January votes on the latest Brexit deal, deans tell BusinessBecause that universities’ finances could come under pressure, leading to closures or mergers under a “no-deal” scenario.
The deans make their warning at what some believe is the most uncertain period in UK universities’ 800-odd-year history.
They are not mincing their words. “It’s a huge systemic shock coming, and we’re all at risk of it, and the uncertainty is really hard to deal with,” says John Board, dean of Henley Business School at the University of Reading. Attracting research funding is the chief concern, according to a survey by the Chartered Association of Business Schools (CABS).
Already, funding has been lost. Over the past year, the number of UK business schools having their funding cut by EU countries has more than doubled, from 6% to 15%, says CABS, raising concerns over their finances.
A reliance on EU funding?
Business schools, which contribute £13 billion to the British economy annually, have in recent years relied more on EU research funding, as UK money has been harder to come by, leaving them exposed to Brexit.
UK government body funding fell by 17% between 2012 and 2017, according to CABS. Meanwhile, money from EU government bodies surged by 38% during that period, and it accounted for a quarter of all business school research funding in 2017.
Losing access to European research networks would be a significant blow to universities’ research and recruitment efforts, deans say.
One example is the EU’s €80 billion Horizon 2020 research and innovation program, which has doled out €5.1 billion to Britain to date. Exiting the EU would put access to further funding at risk, although the UK government has said it will guarantee funding for these competitively bid EU projects.
Baback Yazdani, Nottingham Business School’s dean, says the “bar has become higher for us to win” European research grants because they usually require collaboration with other European universities, which are now less willing to work with the business school.
“Research collaborations are a major source of income for UK universities,” says Baback. “The government has made positive noises, but people in Europe hesitate to work with us as they don’t know what will happen in future. That uncertainty has had an effect.”
Job applications from European scholars have thus “dropped drastically” recently, and some employed international academics “feel they are outsiders," he claims.
CABS reports that 19% of UK business schools saw a decrease in EU staff retention last year and 17% saw a decrease in EU staff recruitment.
“It’s a brain drain,” says Baback, a British citizen who immigrated from Iran.“The atmosphere [in the UK]—the talk about foreigners—it puts people off. The noise makes people feel unwanted. They can go to fantastic institutions in another country, like Germany, or France, or the Netherlands.”
A decline in reputation
Many of Baback's counterparts at other business schools are very concerned about UK government immigration policy, and study and work visas for foreign students.
Some 35% of business schools polled by CABS experienced a decrease in EU postgraduate applications for the current academic year. Approximately 15% saw an increase and 50% reported no change.
John, at Henley Business School, has not witnessed an immediate drop in student or faculty applications. But his “biggest worry” is that it could become harder to attract overseas talent to British shores in future.
“The core discussions around Brexit—will we be seen as a marginal country—will have a huge effect on us,” he says. “Traditionally, having a big, well-ranked UK school on your CV is really good for you.
“But if our reputation goes down, we become a lot less attractive. You could imagine people in 10 years’ time saying, ‘You have a degree from the UK, so what?’”
EU students are especially concerned about potentially being treated as international pupils come Brexit, which would likely subject them to higher fees.
And according to the UK government’s recent white paper on migration, the 130,000 EU students would need visas sponsored by universities, which they argue would be an “administrative burden”.
“That would be a competitive disadvantage for us,” says Baback. “And I think it will put EU students off.”
That has raised fears about the financial stability of some UK universities, should they fail to attract enough tuition fee revenue to remain viable. EU business students provide £119 million in fees to UK schools each year. That’s 10% of the industry’s total income, CABS says.
The Office for Students, Britain’s higher education regulator, has warned that the government will not bail out universities like it did banks, after reports suggested that a number of them were struggling to get by.
The end of UK business schools?
Nick Hillman, director of the Higher Education Policy Institute, says some universities are facing a “perfect storm” of pressures.
“I do genuinely believe that we are more likely to see a university go bust in the next one or two years than [has been the case] at any point in the last generation,” says Nick, whose institute forecast that EU student numbers could plunge by 57% post-Brexit.
Baback, at Nottingham, says his institution has “put money aside just in case” and scaled back its expansion plans. They included new program launches and research partnerships, he says.
Business schools are hedging Brexit risk in other ways. The percentage of schools seeking research collaborations outside the EU has more than doubled from 16% last year to 38%, says CABS.
And 29% are now offering dual awards with EU schools, compared to 18% in 2017. But John at Henley says such tie-ups “won’t save us”.
“If I lose 1,000 students in the UK, I won’t suddenly create 1,000 in Paris,” he says. “If there is contraction, there will undoubtedly be closures and mergers of business schools—not just consolidation of UK schools; they could be attractive for a foreign institution.”
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