The University of Ulster and Queen's University are being asked to re-examine the efficiency and effectiveness of their work educating undergraduates and post-graduates.
Their ability to attract research funding is not directly affected.
The universities deliver a learning and research environment to high international standards. They cannot however specialise in every field of learning. Despite a natural ambition to do more, to expand and to be acknowledged as centres of excellence, inevitably 'width' must logically sometimes give way to 'depth'.
Planning in the two universities is a product of strategic ambition constrained by sources of funding. Government must articulate the funding allocation and consider this along with the revenue from fees. Then the universities, in co-operation with the relevant government department, must prioritise their plans. That logic, on its own, makes sense. However, circumstances have combined to create more serious difficulties. The budget allocation for the next four years is much lower than has been available in the recent past.
The two universities face a cash reduction, over the next two years, in their teaching budgets of £26m and this will continue in future years.
The overall financial allocation for the universities points to a £66m cut in funding. However, it seems that £40m of that reduction could be met by an increase in university fees if tuition fees rose to an average of about £5,500 pa. In other words, the Executive and Assembly need to approve higher fees, in contradiction to statements made in the recent election.
A net reduction of £26m in funding for tuition is equivalent to over 12% of that budget in 2010-11. The real reduction is more than 12% because there have been a number of cost and tax increases which make the impact larger.
The scale of this budget reduction is so large that even a considered redundancy programme could not be effectively implemented in such a short period. Temporary bridging funding must be found. However, even more critically, since there is a four year budget agreed by the Executive, the budget adjustment calls for a continuing structural change. The universities have argued unsuccessfully for a higher allocation.
Now separately, or in a joint planning exercise, they must reconsider their plans.
Logic points to a rationalisation of university provision by:
Whilst there is some satisfaction that we send more young adults to university compared to other regions, there is evidence that the provision of university places either in Northern Ireland or at external universities may be excessive. As a consequence university places should remain capped (or reduced) in the immediate future. Planning for the universities should be to maximise the achievements of two good universities with budgets that are, by international standards, still, substantial.
The minister, Stephen Farry, must urgently ensure that the negotiations lead to constructive plans which end the present damaging uncertainty.
If Northern Ireland followed the parity mechanisms of the Barnett formula, student fees would be higher and necessary policy adjustments could be postponed: not an attractive alternative! Another difficult question. Can local policy remain passive about the budget implications of the number of students who apply and are accepted in universities outside Northern Ireland?
The new minister has inherited a situation that needs a clear longer-term strategy which can influence short-term decisions.