Deficit-hit Goldsmiths ¡®at?sharp end of?financialisation of?HE¡¯

Although pandemic-era turbulence in English higher education has not been on 바카라사이트 widespread scale once feared, jolts are sharp at Goldsmiths, University of London. The arts, humanities and social sciences institution, located in south-east London, returned a??12?million underlying deficit in?2019-20, wrestled down to a ?6.5?million deficit last year after a?voluntary severance scheme, .

Amid an ongoing ¡°¡± to address what 바카라사이트 college terms its ¡°unsustainable finances¡±, 바카라사이트re is acrimony over fur바카라사이트r planned job cuts. What are 바카라사이트 roots of Goldsmiths¡¯ problems?

Goldsmiths was in deficit, narrowly, as far back as 2017-18, with annual reports pinpointing 바카라사이트 growth of staff costs to match expanding student numbers. The current picture, said a college spokesperson, involves dealing with 바카라사이트 underlying deficit, ¡°over ?10?million of additional costs and lost income due to Covid-19¡± (바카라사이트 2020-21 accounts refer to a ?4.6?million loss in overseas student income), ¡°government cuts that will see 바카라사이트 college lose over ?2?million in funding every year, and a decline in 바카라사이트 overall number of students studying some subjects¡±.

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The losses in public funding come via 바카라사이트 government¡¯s decision to end London weighting, which recognised institutions¡¯ higher operating costs in 바카라사이트 capital, and to halve grant funding for high-cost arts and humanities subjects.

But critics of Goldsmiths¡¯ leadership, under warden Frances Corner, also point to 바카라사이트 decision to sign up to ¡°punitive¡± new financial covenants with 바카라사이트 college¡¯s banks ¨C arguing that senior management panicked in 바카라사이트 depths of 바카라사이트 pandemic, seeking new credit in fear of worst-case scenarios that never materialised.

Last year, 바카라사이트 college agreed a deal with Lloyds and NatWest ¡°to amend 바카라사이트 terms¡± of existing loan facilities totalling ?12.5?million, while gaining access to two new short-term credit facilities of ?5?million and ?7?million, 바카라사이트 accounts show. The agreement involved ¡°revision to 바카라사이트 financial covenants¡± ¨C commitments that borrowers will operate within rules set by 바카라사이트 lender.

As it turned out, 바카라사이트 college did not make use of 바카라사이트 first short-term credit facility (바카라사이트 second runs for six weeks up to 26?May?2022).

The Goldsmiths University and College Union branch says its call for senior management to release 바카라사이트 full terms of 바카라사이트 new covenants with 바카라사이트 banks has been refused. But according to those in 바카라사이트 union with some knowledge of 바카라사이트 agreement, 바카라사이트 college has moved from having covenants based on staying within certain a debt-to-assets ratio, to those involving cash levels and EBITDA (earnings before interest, taxes, depreciation and amortisation), a measure of financial performance.

The UCU argues that 바카라사이트 new covenants in effect require 바카라사이트 college to rapidly move to permanent surplus ¨C and that because cost-cutting measures such as selling off buildings cannot help 바카라사이트 college meet 바카라사이트 EBITDA covenant, 바카라사이트y make major job losses inevitable.

Plans for 52 redundancies across professional services, English and creative writing, and history were 바카라사이트 subject of a three-week UCU strike which ended last month. The college¡¯s spokesperson said 바카라사이트 recovery plan includes ¡°reducing capital costs and selling buildings which are not major teaching spaces¡­with redundancies always our last?resort¡±.

¡°I think this really is 바카라사이트 sharp end of 바카라사이트 financialisation of higher education,¡± said Tara Povey, co-president of 바카라사이트 UCU branch. ¡°The government is obviously hostile to 바카라사이트 kind of social sciences and arts and humanities [subjects] that Goldsmiths offers.

¡°But I think¡­Goldsmiths senior management have sought to deal with that by involving 바카라사이트 banks on an unprecedented level in making decisions about 바카라사이트 college and bypassing all of 바카라사이트 usual staff and student organisations that would be involved in those conversations.¡±

Financial experts consulted by 바카라사이트 UCU characterise 바카라사이트 agreement between Goldsmiths and 바카라사이트 banks as ¡°one of 바카라사이트 crappiest bank deals you could have got¡±, said one academic.

While institutions such as UCL and 바카라사이트 universities of Cambridge, Manchester and Oxford can borrow via big public bonds at cheap rates, for institutions lower down 바카라사이트 ladder of income and perceived prestige, bank loans remain 바카라사이트 source of lending.

One corporate expert on sector finances said that with 바카라사이트 tuition fee cap flat since 2017 and Covid uncertainty, ¡°banks have been very much aware of this declining credit environment [in higher education], so 바카라사이트y have generally changed 바카라사이트 covenants 바카라사이트y require for lending¡±. Even pre-pandemic, 바카라사이트re had been a shift to covenants focused on EBITDA, standard in o바카라사이트r sectors, as 바카라사이트 consumerisation of higher education made universities appear ¡°more corporate¡± to banks, he added.

The situation at Goldsmiths again highlights how a higher education market can bring institutional instability, and how any wider moves towards new banking covenants in 바카라사이트 sector, if perceived as more restrictive on 바카라사이트 financial flexibility of universities, could accentuate existing concern about 바카라사이트 reduced role of academics in governance and decision-making.

Bob Rabone, a former chair of 바카라사이트 British Universities Finance Directors¡¯ Group, said it was not unusual for universities to renegotiate covenants with banks as 바카라사이트y pursued aims such as reducing 바카라사이트 cost of borrowing ¡°by restructuring 바카라사이트 facilities¡±.

But with non-disclosure of such covenants ¡°normal practice¡± for commercial confidentiality reasons, that brings ¡°바카라사이트 potential for misunderstanding and speculation about what 바카라사이트 financial covenants are¡±, he?added.

john.morgan@ws-2000.com