The release of government papers in the last weeks under the 40 year rule have shed further light on the post 2019 'incident' era of chaos. Many papers from that time have yet to be released in the archive and most observers prefer to forget the period. Few will discuss it in a public forum. However, we have trawled through the papers relating to university finances in the ten year period from 2019 to 2029. They reveal a tale of miscalculation and financial skulduggery that should be a lesson for our generation. Some universities failed in the ashes of fake employers and fake jobs whilst others reinvented themselves in the private sector. It was easy to cover this up in the chaos that followed.
Employers ‘levies’ and the abolition of university fees.
For at least ten years before 2020, students had to fully fund their university education. This involved paying fees of over £9,000 in the currency used before Bitcoins became the official tender. Most secured loans from the Student Loans Company that was set up by the government. Some with little family support were also able to access a small loan to cover their living expenses. They had thirty years to pay back the loans. In the chaos of 2019 and 2020, and with unemployment and public debt rising, the government realised that there would be little chance of a good return from the loans. Furthermore, private enterprise was no longer prepared to take them on. The plan to abolish university fees altogether took shape in the early days of the Socialist Conservative United Momentum (SCUM) Party. However, the projected cost was proving prohibitive as public debt mounted. The idea of replacing student loans with an employer’s levy was resurrected in 2018 and looked like an attractive way get around the problem. At the start of 2020, a scheme emerged whereby the government loaned vast sums of money to established universities who then taught students and tried to find them suitable employment at the end. Employers paid a ‘levy’ directly to the university and this income was used to pay off the institution's loan. The student was no longer liable to pay a loan back but was obviously paid less by the employer. Over several years, it was predicted that government loans would cease and the system would become ‘self- sustaining’. Employers were expected to pay the levy directly to the employers every time they employed a graduate and would do so as long as the graduate was employed by them.
Unleashing a storm of dubious contracts.
The immediate effect was the every university tried to establish formal relationships with employers. The major universities invited large corporations to register with them at a cost and offered to ‘screen’ their graduate’s for employment suitability. The employers were happy to take on graduates for trial periods on no more than two, one year contracts with no obligation to continue. With the employment laws and rights in tatters at the time, a range of dubious contracts emerged. We found communications and papers that showed one university expected all new entrants to sign an open-ended contract that tied the student to whatever employer the university could find after graduation. Another even looked for transfer fees from employers who sought good graduates already in a tied contract. This was often the only way that small employers, that could not afford to register at a university, could attract good gradates.
Other unintended effects.
Within a few years, there was a plethora of more unintended consequences. Some major employers moved their headquarters out of the UK, as it was then, to avoid a levy. They instead employed UK graduates abroad, without incurring the levy, and 'seconded’ them back to the UK. Many smaller companies simply ceased to recruit graduates. Instead, they offered attractive packages to school leavers with good academic records and trained them in house. Some students started to find that they were recruited after graduation for limited periods. Many were made redundant within two years without any redundancy payment. For those left, they found themselves tied to poor contracts as their employer tried to buy themselves out of the levy. Cash strapped universities took the money when they could. Those dismissed were in limbo with a tied contract and no employer. Often the students themselves had to buy themselves out of the arrangement. Many sought employment abroad to avoid this and with most corporate headquarters now outside of the UK, this was becoming an attractive option.
Another tactic used by employers was to employ more graduates from universities overseas. Student from the UK soon noticed this and in turn set out to find a university elsewhere in Europe (then the European Union countries) and the USA (then a single union of states). Low fees and various scholarships were more attractive and many institutions offered more and more incentives. Indeed some employers helped students through partial funding and sponsorship. This would prove to be much cheaper in the long run if they intended to keep graduates for a greater time.
Many universities also needed to employ graduates but found those from other universities were more costly because of the levy. They could absorb the levy in house by employing their own graduates. This had a devastating effect on research opportunities for UK graduates as even more were recruited from overseas.
A darker side emerged.
Within five to six years, it became clear that a number of universities were in grave financial trouble. They were not attracting employers or students in sufficient numbers. We have seen disturbing reports of several setting up deals with so called ‘employers’ that were simply fronts for their own operation. One had students sign contracts with an 'employment agency' that they had set up themselves and ‘farmed’ the graduates out. Using funds from the government loans available at the outset, several had been caught offering 'incentives' to employers to take their graduates. In one case the employer was using a university 'agency' and taking a ‘kick back’ paid out of the employed student’s pay. In another case, it turned out that a university had set up ‘spin out' companies solely to employ graduates and create the impression of success. Many were wound up within two years. These tactics failed spectacularly and by 2028 there were 32 universities declaring insolvency. They would never pay back the government loans. By then the government had totally lost control and with no overall party in power the situation drifted.
Independent providers step in.
This was how the Alliance of Independent Provider (AIP) universities first emerged. It was a commercial consortium of investors that quickly snapped up the failing institutions and acquired their considerable assets at a knock-down price. They then sought to rebuild the operations outside of government control. Many students were left seeking other places or, if they could afford it, were allowed to continue by paying fees directly to their institution.
A plan to bring the remaining universities back under government financial control was hatched in 2030 and the rest is history.
By our education correspondent. Sean Cogwheel