Higher education funding divide grows across Europe

Since the 2008 financial crisis, the divide between higher education systems that increase public funding and those that reduce investment is getting wider in Europe, according to a new report.

The findings of the Public Funding Observatory Report 2017, published by the European University Association or EUA, also show that while 2012 was the year of “deepest crisis” for universities in Europe with the largest number of systems cutting funding, any recovery that can now be detected is slow and fragile.

In addition, the cuts make it harder for universities to compete for European Union funds, the report concluded.

Only 14 systems had higher funding in 2016 than in 2008 and eight of those have a faster growth in student populations compared to the increase in funding. Nineteen systems still had lower levels of direct public funding than at the time of the financial crisis.

During a webinar discussing the findings, Thomas Estermann, EUA’s director for governance, funding and public policy development, said on Wednesday: “We still have 19 systems with lower funding in 2016 than in 2008, and that shows this is a very challenging situation and it takes a very long time to catch up.

“We really would like to make a drastic call for change and encourage national funders to step up investment, really invest, but also invest at the European level, particularly in the period where we discuss the next level of European framework funding.

“Otherwise we will not have a higher education and research area that is competitive at an international level.”

In a separate statement, Estermann said the report shows a handful of countries have made increases that match student numbers and growth in gross domestic product or GDP, while others “need to up their investments to close the gap”.

The impact of cuts on activity areas varies across countries and can affect teaching, research, infrastructure or staff, the report says.

National funding cuts also make it difficult for universities to compete successfully for EU grants. EU funding itself runs thin, which has caused the overall success rate in the current EU Framework Programme for Research and Innovation to drop to about 10%, EUA said. According to the report, increases are needed at both the EU level and at the national level.

During the webinar, Enora Bennetot Pruvot, deputy director of the EUA’s Governance, Funding and Public Policy Development Unit, said that the EUA Public Funding Observatory’s long-term analysis over 2008-16 indicates that systems such as Austria, Germany and Sweden show sustainable investment patterns, characterised by both significant and sustained funding growth.

Other systems feature more limited, slower investment in “more of an austerity context” – these include Denmark, France and the Netherlands.

Comparatively few systems have embarked on a recovery pattern, whereby signs of investment can be detected after a period of important cuts, as is the case for Iceland and Portugal.

Finally, Bennetot Pruvot explained, there are a series of systems which have continued disinvesting throughout the period, such as Italy, Spain and Latvia.

The report says eight systems that have increased funding in 2016 compared with 2008 are still under pressure because student growth is higher than investment.

The most notable examples are Turkey, whose funding increased by approximately 76% but student numbers increased by more than 185%, and Denmark, where investment increased by around 22% but student numbers increased by approximately 48%.

There are seven systems in a worse position, where funding to universities decreased but student numbers increased and these are considered to be “in danger”. These include Hungary, Greece, Ireland and Iceland, although the latter is now on the path to recovery, Bennetot Pruvot explained.

This category also includes UK-Scotland, UK-Northern Ireland, UK-England, but the UK is a special case because the figures do not take into account publicly subsidised student loans, which are a significant factor in the UK.

There are also 12 “shrinking” systems where both funding and student participation decreased, mainly in Central and Eastern Europe.

But looking at the relationship between funding to universities and GDP over 2008-16, there are some countries such as France and Sweden which have increased investment below the rate of economic growth and could do better; and another group of 11 countries facing disinvestment despite economic growth, which raises the question of what the political priorities are.

Short-term trends

The analysis of short-term trends reveals four categories of developments:
  • • Systems with higher fluctuations in funding patterns,
  • • Systems with positive signs of reinvestment after stagnation or decline,
  • • Consistently investing systems, and
  • • Systems that have continued cutting public funding to universities.
For instance, Turkey made a substantial investment in 2016, increasing funding by 18.6% in real terms to support massification, but the increase dropped to 8.6% in 2017.

Two countries – Serbia and Slovenia – aggravated decline by decreasing funding in 2016 despite experiencing economic growth.

Other countries, such as Austria, Germany and Luxembourg continued to invest, increasing funding respectively by 8.2%, 4.1% and 7.9% in 2016.

Veronika Kupriyanova, policy and project officer at the EUA’s Governance, Funding and Public Policy Development Unit, said: “Countries are following their own trends; there is no one specific trend; investment depends on specific political priorities in different countries.

“We can see research funding is growing in Sweden and Finland, but in Slovakia more funding is going into teaching and staff to increase salaries.”

The report concluded that changes in public funding need to be considered in the light of other developments such as the evolving student numbers and the dynamic economic context.

“Only Austria, Norway and Luxembourg follow a more sustainable funding pathway, where increases match both developments in student numbers and GDP growth. Assuming there will be robust economic growth in Europe, other systems could improve their investment effort,” it said.

It also said there is a strong link between national funding for universities and EU-level funding for research and innovation, with universities from countries that increase public funding adequately tending to have better chances of success in bids to participate in the EU Framework Programme for Research and Innovation.

“More funding is needed at the EU level to improve the efficiency of the Framework Programme and at the national level to build the capacity of universities to compete and remain attractive for international networks,” the report says.