University of the Channel Islands

I placed an amendment to the Policy Council’s report on a proposed University of the Channel Islands. Basically the report was asking Members to support a university in principle. Although the proposal would be a private venture, due to the effect it may have on the Island it was necessary to ensure that politically it would be acceptable.

I laid an amendment, which was successful, to ensure that the financial regulatory implications were considered. My speech is below.

Sir,

When I first found out about the potential opportunity of a University on Guernsey my immediate reaction was wow, this could be a real game changer. Could this be the silver bullet we are looking for, that reduces our dependence on the finance industry and at the same time helps our other economic sectors such as retail and tourism?

Now, several months on, having had time to  consider it in some depth and undertaken quite a bit of research, I still think this is something worth exploring but I am really concerned that by approving the idea of a University in principle, it will be considered a fait accompli.

It is for that reason that I have proposed the 2 amendments – one relating to finance specifically, the other to regulation. Both of which are about managing risk.

My first amendment seeks  to direct Treasury & Resources to report to the States on the financial cost implications to the States of Guernsey and how it proposes to mitigate such financial cost implications arising from the establishment of a University.

 

I believe that  the Policy Council’s statement that a University would not involve States funding is naïve. It is my worry that if that is what it believes now, no proper consideration will be given  to  the financial cost implications of such an establishment being set up in Guernsey. That is, before fees are raised, buildings leased and people employed.

There will be costs and we will need to ensure that it’s not the Guernsey taxpayer that foots the bill. We have to be satisfied that the business model stacks up, that the University can pay its way and that it will bring a net economic benefit to Guernsey and I will consider these points in turn.

Without sight of the business model of this specific proposal it is impossible to know whether the assumptions made are reasonable.  However, it is possible to look at what is currently happening  elsewhere in this sector and assess whether what is stated in this report makes reasonable sense.

From the research I have undertaken I understand that it is very difficult to build up an outside market and that is what will need to be done here. It is not evident whether the proposers in this instance have done this before as from my research I do believe their plans may be ambitious from a cold start.

 

There are over 100 universities in the UK and there’s intense competition to attract students now. It isn’t like it was 20 or 30 years ago when you would be delighted to get a place at a University. And nowadays the whole world is pitching for same market – India and China. So what is our USP? What can we offer that others can’t? Why would a Chinese student come here?

If it is such a good idea, why aren’t  existing UK universities beating a path to our door? Postgrads in particular – see why go to Cambridge with technology parks, incentive is the research facilities. Will this Uni be able to attract those kind of people?

It seems the University will be heavily dependent on what is called a flying faculty, but who will be arranging this? Not an easy job. And v Expensive – will this match with being competitive on pricing?

 

So, there are questions as to whether it will be viable in the first place. And what happens if it fails. Yes there will be reputational issues of course but there could be serious cost implications if the necessary contingencies are not put in place, there will be a moral obligation for the States to pick up the pieces. I therefore do not subscribe to paragraph 11.1, which states;

“ The organisers plan to generate funds in part from contributions from HNWI individuals and there is always the risk that those funds cannot be raised but this is purely a matter for the proposers.”

With all due to respect, comparisions made with horticulture, finance and export sector are not valid, a university is a completely different kettle of fish.  You can’t just  switch it off.

Private universities can and do fail for a number of reasons, such as the backer pulling out, failing to meet quality assurance standards, or just not being able to attract enough students to make it a viable business.

It will be necessary for the States to plan for this eventuality and mitigate the risks for the Island. Whether this is secured through insurance or by other means, it still needs to be thought about at the start.

So, that is the University’s business model. But what about the wider impact of having a University with 2,000 students. On the one hand, yes spending on goods and services should increase. It might result in Beau Sejour, bus service and Aurigny becoming profitable and for other leisure facilities to either be developed or enhanced. However, there is a need to consider the impact on our infrastructure and other services.

 

Whilst we have been told about how Loughborough and Birmingham have benefited from their Universities, Research done in Pennsylvannia in 2007 showed that there can be a negative economic impact on a host municipality compared to towns without universities. This was because of the fiscal regimes in that State that meant the Universities and students ended up benefiting from the services of the towns without contributing to the provision of those services.  This could be the case for Guernsey.  For example, the work of the Border Agency will increase, with visas having to be dealt with. The police and health services will also be affected. This will require expenditure and we can’t expect our local resident population to pay for it.

One method adopted in Pennsylvania has been a scheme called PILOT, Payment In Lieu of Taxes, which the educational institutions pay. Guernsey would need to consider such a method to ensure we get back what we put in.

In addition, we need to consider whether a University would provide a net economic benefit to Guernsey. With the reliance on a flying faculty, will we get any of the potential tax take from lecturers. Based on our current fiscal regime we could find that fees come in and fees go out without the States seeing any of it. I therefore believe Treasury & Resources need to start thinking laterally, seeing how we can do things differently from what we do at the moment. This might involve consideration of withholding taxes or other fiscal measures that mean the risks of allowing such a body to set up here to be worthwhile financially.

My second amendment relates specifically to the activities of the University itself and directs Policy Council to report to the States on the necessity for any future University to be regulated.

And by this I don’t just mean regulation in terms of financial matters, but also in terms of quality assurance.

I felt it necessary to place this amendment as I was not convinced from reading the report that the Policy Council had given this any thought, although the risks, both financial and reputational could potentially be quite high.

By ensuring that the University is adequately regulated it will provide assurance to the States of Guernsey that such risks are being adequately managed.

The need for quality assurance is essential to ensure that the University can award degrees that are internationally recognised.

In addition, we must be satisfied that the finances are such that the States of Guernsey have assurance that the business is viable, before it is too late.

Whether this is something that CICRA could or should be involved in may need to be considered. It is not something I have the answers to, but as I said at the start, I think it does needs proper review. Instinctively I believe regulation is required, but I believe this is something Policy Council should be looking at formally before we allow anyone to establish a University in Guernsey.

I hope fellow members will understand the need for these amendments.



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