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Covid-19 puts university finances ‘on the edge’, says Steve Smith


Exeter vice-chancellor warns pandemic could also impact research investment targets

UK universities must confront the “financial abyss” as they face up to the impact of the coronavirus outbreak, the vice-chancellor of the University of Exeter has said.

Speaking to the Universities UK International Higher Education Forum online on 25 March, Steve Smith—one of the UK’s longest-serving vice-chancellors and a former president of Universities UK—said that the Covid-19 outbreak would “change how we operate, teach and research forever”.

“[Universities] are looking over the edge into a very significant financial abyss…we are totally uncertain where the bottom is going to be,” he said, adding that the “physical and mental strain” on university staff was “enormous”.

Smith told delegates watching online that most of the calls he and his staff are dealing with come from students and parents worried as to what would happen to belongings left behind at university accommodation as people left campus to isolate, and enquiries about whether fees for summer term accommodation would need to be paid.

Smith also warned that setbacks caused by the pandemic could jeopardise the government’s target to see 2.4 per cent of GDP invested in R&D by 2027. “It may take longer to achieve the ambition,” he said.

Despite the problems, Smith said he believed universities would have a “key role in helping the UK to bounce back”.

“I think the ways in which the sector has responded to this current crisis will further embed universities into their communities showing that they are truly anchor institutions in their regions,” Smith said. “And when the new normal emerges, I have absolutely no doubt that the UK higher education sector can and will be in the vanguard as we build our post-coronavirus society and economy.”

Also speaking at the event was Simon Marginson, director of the Centre for Global Higher Education and professor of higher education at the University of Oxford, who warned that the international student market would take “a massive hit” due to the global economic shock caused by the coronavirus.

“This has been a supply-driven industry,” he said. “We are now seeing a flip-around in that…to a buyers’ market where we will be hunting for scarce international students for some years to come.”

Marginson said it could take at least five years for the pool of international students to recover its size, as there would be a “temporary shrinkage” in the global middle class and many families would not have the money to send students abroad for their education.

Countries in East Asia, such as China and South Korea, will squeeze Western universities if recovery from the coronavirus is quicker as students will be less willing to go abroad, Marginson said. He explained there would be a permanent “shift in traffic” as regional universities expand provision and students stayed closer to home.

Attempts to bring students back to Western universities will partly depend on the reputation of a country’s healthcare system, highlighted by the pandemic, he added.

Marginson also predicted a split between universities that continue to offer online learning after the pandemic has subsided, and those who return to face-to-face teaching—adding that he felt the next academic year would be largely taught online.

If countries want to rebuild their place in international education, he warned assistance from government would become “very, very important”.