England, Wales and Scotland section of International Socialist Alternative

Economic crisis and the future of education: Redundancies at Leicester’s De Montfort University

Clear signs of a major crisis in global capitalism are becoming apparent in everyday life. Inflation – already an ever-present element in political debate – is now a particularly hot topic. The old nightmare of 1970s stagflation (an uncontrolled and fast rise in inflation that brings instability to the overall economy) is once again a reality. And the economic crisis is showing – once again – its fundamentally political nature. 

In Britain, we can already expect the Tory government and capitalist class to sing an old tune of attacks on workers’ conditions. The tune is always the same: resources are lacking, and workplaces have to be made more efficient (to enable higher profits); workers will have to get a smaller share of the pie and be as productive as before or more. As this logic is being applied to all sectors of societies, it is also showing its inconsistencies and hypocrisy. This is what is happening at Leicester’s De Montfort University.

University finances

According to recent statements from the university’s management, 58 education workers, including about 24 lecturing staff and professors will be made redundant to respond to the economic crisis. The crisis has been affecting universities mostly in the form of a lack of new student intake during the pandemic, the devaluation of student fees due to inflation, and also new waves of cuts to research funding.

The measure has been justified also on account of a new development plan. Representatives from the University and Colleges Union (UCU) have however been able to respond by highlighting a number of inconsistencies in the policy proposed by management. 

For starters, UCU has been able to conduct a review of the current financial situation of De Montfort University, which clearly shows that the financial situation of the institution is actually relatively healthy. This means that a partial reduction in income due to the pandemic does not imply that DMU is lacking savings or a budget to sustain both its current staff and eventual expansion projects.

As a matter of fact, a survey of DMU’s finances conducted by the union (relying on official data and recent statements from the administration) shows a situation of overall economic stability. The survey deserves to be quoted at length:

“There is no urgent financial need driving the Education 2030 strategy. De Montfort University is cash-rich and is well able to deal with any deficits that might have arisen in 2020/21, or that might arise in the current year.”

“DMU held nearly £70m in short-term investments at 31 July 2020 and a further £54million in cash. At £123million its liquidity position was such that it could cover over five months of average expenditure even allowing for £30m required by the Office for Students to be set aside towards covering the £90million bond (this needs to be repaid by 2042).”

“Through more recent statements provided to UCU, it looks like the cash position is still strong, especially now the University has directed some short-term cash holdings into longer-term investments. There are now nearly £29m worth of “market securities”, and the “gain on investments” in the latest figures shows £1.8m for 2020/21. The University has a Capital Redemption provision of £3m, which is the £3m being put aside each year to satisfy OfS requirements. This is basically an annualised cost of the £90m that will have to be paid in 2042, which is not, at this stage, a cost.”

“£60m would be a “prudent” cash balance for DMU, yet it retains nearly twice this amount. This £60m is enough for managing daily activities and enough for a liquid reserve in case of emergencies or shocks (c. £20m is the minimum level stipulated by OfS – i.e. the bare minimum for managing cash flows in and out of a university). Since DMU has more than £115m in “current” investments, this means that £55m+ is available from this source, with another c. £30m invested in “market securities”. This represents about £85m+ of available cash that can be put towards any new capital plans.”

“Our analysis of net cash flow from operations demonstrated that despite the deficit on income/expenditure, the cash generated was still over £35m. Factoring out changes in creditors (c. £13m, where people have paid for a service they have not yet received), and adding back in the annual finance “costs” of £7-8m, this produces an overall sum that represents something over £15m of cash generation.”

“If DMU can generate this kind of cash, then it should be able to finance its current plans without resorting to harmful cuts in courses, research and staffing.”

The survey shows that there is in fact no financial justification for the redundancies. This comes on top of the fact that DMU already has one of the worst ratios of students to lecturers in the country despite being acknowledged as one of the best institutions in the country for the quality of education.

The quality of education at DMU has been recognised by the awarding of the Gold Standard from the Teaching Excellence Framework Award. In other words, DMU lecturers are supplying a good service as educators despite being subjected to the pressure of working with a very high number of students compared to lecturers in other universities. 

The current line of action adopted by management pushes for a simplification of the curriculum in the name of flexibility. This will mean hiring 36 additional lectures, which apparently there are resources for. Eventually, if the new ‘DMU London’ Campus gets off the ground, we may see flexible contracts aimed at reducing the bargaining power of new staff, and their ability to lead students through a fruitful and enriching education.

An attack on the future

What is happening at De Montfort University is not simply a response to a global crisis: it is an attack on the future. It is the future of education workers that will have to put up with worse working conditions for teaching as well as a reduction in research funding. It is the future of students that will be asked to develop the same expertise and skills despite being confronted with an academic environment that will not be able to deliver the same quality of teaching.

The market is only capable of judging our education based on the immediate returns in profits, which rides above concern for the conditions, learning and research. This is why the struggle at DMU is one for the future of our education – nationally and even beyond. 

We could just look at the other university of the city, the University of Leicester, where UCU members have taken industrial action in February and March of this year in response to marketisation and cutbacks.

And we could look at the waves of industrial action undertaken by university workers all over the country since 2018, which all focused on fighting back against the same impositions: cuts on pensions and wages (often in the lack of an adjustment to inflation) and worsening of working conditions.

Solidarity with UCU in this case does not mean to simply take the side of a group of workers attacked by management – although this is crucial – but of the very idea of what we want education to serve for in the constitution of our future.

Socialist Alternative in UCU says:

  • Attacks on jobs at DMU and elsewhere at Wolverhampton, Roehampton, Goldsmiths and others must be resisted
  • We must rebuild the 4 fights and USS national disputes – we cannot leave branches to face down employer attacks on their own, we need a united national struggle
  • A fighting left leadership and a democratic, member-led union is essential to defend Higher Education against attacks from the bosses 
  • No to redundancies – defend every job! 
  • We need co-ordinated action with other campus unions to defend terms and conditions and fight back against marketisation 
  • All out for the TUC demo on 18th June – this must be used as a springboard for widespread industrial action

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