Out-Law Analysis 6 min. read

BREXIT: Mitigating the impact of Brexit in the higher education sector

ANALYSIS: With higher education relatively far down the government's list of Brexit negotiating priorities, universities should be making contingency plans now to safeguard access to funding and mitigate against the possible loss of staff and students from other EU countries.

According to a document obtained by The Times earlier this year (registration required), the government has classed higher education as a tier 3 'low' priority sector. It is expecting it to need little support post-Brexit when compared to the likes of financial services and agriculture – despite the sector's reliance on highly skilled academic staff from the EU, and funding streams which originate within the trading bloc.

Anecdotally, applications from students from elsewhere in the EU to study in the UK are already beginning to fall, despite government moves to guarantee financial support for the duration of courses that begin in 2017 and 2018. Although there is a debate within the sector about how best to mitigate the risks to funding, students and staff as a result of Brexit, it is clear that providers should be considering their strategies now.

There are four main challenges which UK higher education providers should be seeking to address in their mitigation strategies:

  • some loss of access to future European research funds, currently worth around £1.2 billion per year;
  • fall in the number of EU students and associated loss of fee income, although those students that do choose to study in the UK could be charged higher fees;
  • uncertainty unsettling EU academic staff - although the government has said that securing the rights of EU citizens in the UK and UK citizens in the EU on a reciprocal basis will be an early priority of talks;
  • market perceptions, and changing attitudes of EU research partners.

Post-Brexit access to EU research funding

All EU member states can access EU research funding, for example through Horizon 2020, the EU's Framework Programme for Research and Innovation. In addition, a number of mechanisms exist to enable scientific institutions and researchers in non-EU countries to participate in, and receive funding from, EU framework programmes.

Although the UK could apply for one of these statuses post-Brexit, each would require greater or lesser degrees of financial and other commitments.

Associated countries

Currently, 13 countries have 'associated country' status and contribute to Framework Programme budgets proportionally to their GDP. These include Norway, Israel and Switzerland. Associated countries' researchers and organisations can apply for Horizon 2020 projects with the same status as those from EU member states.

Associated country status is open to countries that are members of the European Free Trade Association (EFTA) and current EU candidate nations. The terms of their association differ slightly by country, offering a number of different models that the UK could adopt depending on the outcome of the Brexit negotiations. However, as they are not EU member states, none of these countries have a role in the negotiations that shape EU research funding.

Norway is not an EU member state but is an official associated country, meaning it participates in framework programmes under the same conditions as EU member states. The nature of the agreement signed between Norway and the EU means that terms do not need to be renegotiated with each new framework programme.

As an associated country, Norway is not represented on the European Council or in the European Parliament so has limited ability to influence the direction of European research funding. However, it does engage extensively in EU-funded research, contributing to, and receiving funding from, EU framework programmes.

Switzerland is now a fully associated country, but until recently was only partly associated to the EU framework programme. During that time, researchers based in Switzerland were able to access some parts of Horizon 2020 funding on the same basis as those in an EU member state, with the extension to full associated status dependent on Switzerland's ratification of an agreement on free movement of people related to Croatia joining the EU.

Non-associated third countries

Institutions and researchers from other countries can also apply for and participate in EU framework programmes under the 'openness' strategy, and in some circumstances may receive direct funding. Depending on the exact scheme, third countries might have to provide matching funds.

There is a strong likelihood that, should the UK leave the EU and refuse to accept freedom of movement as part of its Brexit negotiations, UK institutions could lose access to Horizon 2020 funding beyond third country status.

Scientific and technological cooperation

The EU has international agreements for scientific and technological cooperation with 20 countries. These create a framework for participation in joint projects, sharing of facilities, staff exchanges or the organisation of specific events.

Potential mitigation strategies

Focus on efficiency

For those universities who are not heavily dependent on EU research funds and students, cutting costs and generating savings by focusing on operational efficiencies may be the best response to any post-Brexit potential loss of income.

Institutions in this position may choose to focus their recruitment efforts on domestic students and staff, through targeted outreach and investment in technology and facilities. Non-core functions could be outsourced in order to cut costs.

Establish a European base

There are two principal ways in which a UK HE institution could maintain a presence in the EU post-Brexit: either by setting up a standalone campus in an EU member state, or by forming a bipartite joint venture with an EU partner.

A standalone campus, established as a subsidiary of the UK provider but governed by the laws of another member state, is not without precedent – and, whilst press reports suggesting that Oxford University is considering this  route have been denied and appear wide of the mark, it is likely that a small number of universities will consider this option carefully. Subject to the necessary regulatory approvals and legal and tax approvals, such a subsidiary could be eligible for EU framework programme funding in its own right and could also potentially be used for research and teaching activities. However, this route is not without risk, and providers would have to consider the scale and viability of such a project very carefully.

Forming a bipartite joint venture with an EU partner could be a more viable and less risky option for many universities. The joint venture entity could make use of the EU partner's physical infrastructure, be registered within the EU and could potentially be used to apply for Horizon 2020 funding in its own right. There is a definite appetite from some leading EU universities to enter into such arrangements, which could focus on just research or teaching depending on the needs of the UK partner.

Multipartite association

Bringing together a group of EU and UK universities to form a collaborative research association, structured as one or several separate legal entities, is a potentially complex but possible solution from which many providers could benefit. The entities would have to be hosted by one or more of the EU partners in order to have the optimum access to Horizon 2020 funding.

Concentrating outside of the EU

A final option is for UK universities to look outside of the EU in order to recruit new students and, potentially, obtain funding for research projects. The likes of China, Malaysia, India and Singapore, where there is huge demand for UK education, are already important markets for student recruitment and this will become even more important as a result of Brexit.

Although student recruitment in these markets is already strong, the government is likely to come under renewed pressure to review the immigration status of these students, who are currently included within official migration figures. It may also wish to consider the reintroduction of the post-study work visa, to provide these students with additional incentives to study in the UK.

For research in particular, focusing on further afield will require a change in approach from UK universities, which have traditionally sought to partner with EU institutions.

Case studies

Georgia Tech Lorraine (GTL) is a campus of the Georgia Institute of Technology in Metz, France. Established in 1990, it is incorporated under French law as a non-profit organisation and offers reciprocal dual degrees through several French and EU institutions.

All full-time students pay the full Georgia Tech fees per semester plus a fee per semester for the full degree programme.

Clark University Poland is a branch campus of Clark University, Massachusetts. Established in 1994, it has 13,500 students across a number of campuses, including in London.

Whilst fees for students from the EU, Ukraine and Belarus are far lower than those payable at English universities, the fees for US and other overseas students are at comparable levels depending on the course.

Martin Priestley is a universities law expert at Pinsent Masons, the law firm behind Out-Law.com.

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