Let's assume that the AAB boundary stays where it is for the next three years, and that the institutions at risk can't turn around their loss of applications in the current year. These strike me as rather pessimistic assumptions. I've modelled three scenarios, one in which the institutions lose AABs in proportion to their overall loss of applications, one in which they lose AABs at twice this rate, and one in which they lose all their AABs. This last option is pretty implausible on its face, but something similar could arise if they lose most of the AABs, and also lose further sub-AAB numbers to further rounds of core/margin cuts. In summary, the numbers look like this:
|Table 1||Turnover (10/11)||Surplus (10/11)||Scenario 1 Projected Surplus (14/15)||Scenario 2 Projected Surplus (14/15)||Scenario 3 Projected Surplus (14/15)|
|University of Surrey||211,591||10,793||7,678||4,563||-3,695|
|City University, London||183,618||-5,979||-8,180||-10,380||-16,167|
2010/11 was an unusually good year, and 11/12 will be worse for most institutions because of the round of HEFCE cuts implemented, so my three scenarios may be a little rosy on that account. On the other hand I should note that City's 10/11 financial data include a large restructuring cost associated with over 100 redundancies, so projecting forwards the numbers might be £6 million better than shown here if those costs were stripped out. And I should also note that the VC at Surrey claims that the loss of applications has been from sub-AABs, not AAB+. If we accept this basis, none of the institutions are seriously financially threatened by scenario 1 and even scenario 3, although painful for all of them, is leading to losses well below 10% of turnover for all except Aston.
Other than Surrey, all these institutions have quite high proportions of staff costs currently.
Job losses, for better or worse, are hardly a new phenomenon in the sector.
If these institutions are the outriders of the AAB apocalypse, then I think it is clear that this will be a slow-motion apocalypse. It is surely unlikely, on these data, that any institution will go bust in this Parliament but life could get very unpleasant in one or more. I should also re-iterate a point I have made previously. We do not know what will happen in Clearing and institutions like Leeds Metropolitan, doing adequately in the January data, might still have a bad experience in Clearing if Clearing applicants decide that £8,810 is too much to pay for their second-choice university.
So what we can expect in the near term, even if the AAB boundary doesn't move, is perhaps a major impact on particular departments or subject areas in certain universities, but not a life-threatening impact on any whole university.