I’ve seen block grant negotiations as a student officer, university staff member, and as a consultant supporting students’ unions with their negotiations – and I think there are some things we all misunderstand about them.
Usually, block grant negotiation begins with an appeal to moral authority. From students’ unions it usually begins with an argument that with additional resources the union could do more good things for students.
More services, more targeted campaigns, more events, and so on. Universities then usually acknowledge these are all good things and temper the ambitions with the realities of their budgets.
The challenge with this approach is that unions and universities agree with the premise of the negotiation. The key to unlocking more cash is rarely about agreeing a set of things that students want and then funding them.
It’s unusual that unions and universities have wildly different views on students albeit they may have very different views on delivering what students want.
The issue with beginning at a premise of agreement is that the discussion quickly moves from the principled to the reality of budgets which the union has little say over the direction of, and even less control over how universities make their money in the first place. This means the discussion isn’t one of shared ambitions or relationships – but how to do a version of the present with the financial constraints of the future.
Instead, it may be a more useful starting point to consider the block grant as a tool for shaping the relationship between the university, the union, and by extension students.
It’s the principal (agent)
Theories of public administration, basically how organisations funded by public money work, hold that whenever a public organisation like a university fund another organisation like a union to do something they form a principal-agent relationship.
In simple terms a principal-agent relationship is where one body, the principal, funds another, the agent, to act on their behalf.
The paradox at the heart of this relationship is that the principal (university) funds the agent (union) to carry out activity on their behalf which they are better served to do. This is most obviously the independent representation of students but it might also be a range of activities that the union can carry out more effectively or efficiently.
However, in giving away resources and implicitly power the university enters into an asymmetric relationship. As the union is the ultimate expert in student voice the university does not have the same resources, time, or expert knowledge to investigate whether their block grant is being used as they would wish.
There is therefore not just a relationship between the union and the university but two asymmetric power dynamics. A university that is concerned with the way the union is using their resources but has imperfect information. And a union that wishes to access resources but has imperfect influence on the totality of university spending.
Within this dynamic emerge issues that are familiar to all kinds of principal-agent problems. One is that the university might attempt to enforce contractual norms to the block grant to try to elicit more information on the use of spending.
For example, this might be funding attached to specific programmes of work or delivery for students.
Another version of this is that the university might tie the block grant to knowable information like student numbers or NSS scores. This might bring a consistent approach but it doesn’t actually help anyone to understand the impact of the block grant.
From the union perspective this whole discussion becomes annoying pretty quickly. For example, one way the university may resolve asymmetric information is by running parallel student voice services through university departments which can feel like an encroachment of autonomy.
The other perspective of course is that the university is investing in listening to students and the university may argue more student voice is a good thing.
Another issue is that the union can feel frustrated that block grant has not kept up with the sector, demands on their resources, or wider economic pressures. All of these things can be true – and all of these things do not tell the university anything about how funding might actually be used.
Fingers in ears
One solution to the principal-agent problem is to pretend it does not exist. If unions hold a philosophical position that they are operationally independent while being mostly funded by the university then their argument is that the university should fund them irrespective of how they choose to spend their funding – after all, they are run by students and therefore the spending is what students want.
This argument has an internal coherence but in my experience it might not be the most effective in leveraging more funding when university budgets are tight.
Another solution is for an alignment between the missions of the principal and the agent. In the context of the union and the university this would be a shared agreement to work on issues of mutual interest like student employment, welfare, experiences and so on.
This gives a route to funding where there is alignment between shared goals and activity, in this case the union is effectively making a business case, but philosophically some unions might feel uncomfortable if there is too close alignment between them and their funders if it gives a perception their independence has been compromised.
Another version of this is that some funding is withheld until a mutually agreed outcome is achieved like a NSS score.
Another possible approach is to break down the information asymmetry as far as possible through an entirely transparent approach to sharing how funding has been spent.
This might look like regularly sharing budgets, writing impact reports, having university staff on the trustee board, or even closer approaches like sharing live budgets. This brings the advantage of building trust that funding is being spent well and thereby encourages more funding.
The downside is that this level of accountability can feel like managerialism – and thereby an impingement on autonomy.
Across all of these areas is the fundamental question of how a union can support the university to deliver a mutually agreeable set of outcomes within a context of imperfect information and sometimes differing priorities and views on independence. Practically, this might look like greater synchronisation between university and union planning rounds.
The way in which any union and university may approach this problem is highly context dependent. However, moving beyond attritional arguments of broadly agreed principles, to the kind of relationships different block grant arrangements can bring, gives the opportunity for both sides to discuss (and collaborate) on how they wish to work together and the things they are willing and unwilling to compromise on to unlock different funding, working arrangements, and relationships.
