Go back

Restructuring regime for universities at risk of closure

Government working on restructuring system as universities grapple with Covid-19

A “restructuring regime” is being set up by the government to support universities in danger of being forced to close, while income lost through international student fees can be covered by Treasury loans—provided it is spent on research.

A briefing note written by the Department for Business, Energy and Industrial Strategy, seen by Research Professional News, explains that several government departments are working together “to develop a process through which higher education providers at risk of closure will be able to apply to government to access a restructuring regime as a last resort”.

Universities are facing intense financial pressures as a result of the Covid-19 pandemic, with income from international students, accommodation and events all expected to drop sharply next academic year.

There will be “attached conditions” wherever the government decides restructuring is needed, BEIS wrote, and the regime “will look to support teaching intensive institutions where there is a case to do so and where intervention is possible and appropriate”.

A Department for Education spokesperson said more details of the regime would be announced “in due course”. Discussions on the restructuring scheme are ongoing between the DfE and the devolved administrations.

It comes as the government confirmed it will pay up to 80 per cent of lost income from a reduction in international students in the autumn, up to the value of a university’s non-publicly funded research activity. Non-publicly funded research is “made up of research in a university that is funded by businesses and charities as well as research activity funded by universities from their own income,” the note states.

Many institutions rely on international students’ fees to cross-subsidise their research activity, and in the briefing note BEIS said the funding is expected “to go a significant way to addressing reductions in research income”.

The loans will be low-interest and will have “a long pay-back period” of around 10 years, although the details are yet to be finalised and “precise metrics” will be developed over the next few weeks. Support will be available across the UK and the government is in talks with the devolved governments.

However, universities taking cash from the government “will be required to demonstrate that funds are being spent on research and on retaining research talent,” particularly in science, engineering, technology and mathematics subjects.

Universities minister Michelle Donelan said: “We understand the difficulties universities are facing right now, which is why we announced a range of measures last month to ease financial pressures, and now I am delighted we are able to offer universities further financial support to protect vital research.”

Commenting on the proposals Vanessa Wilson, chief executive of the technical universities’ body University Alliance, said she was looking forward to working with the government on developing the support package, adding it “will be important that interventions support a wide range of research and development activities, and the role of innovation and knowledge exchange is not lost”.

Greg Walker, chief executive of the MillionPlus modern universities group, said the proposed support “recognises the tremendous positive impact that higher education has on the economy and across communities in every corner of Britain,” but he stressed the government could go further by “considering fee loan forgiveness for those that commit to serve in public service posts for at least five years”.

But University and College Union general secretary Jo Grady said the announcement “fails to put students and staff at the centre of its recovery plans”, and claimed staff on casual contracts and those from black, Asian and minority ethnic backgrounds “will suffer the most as universities lose academic capacity and seek to get rid of staff”.

A second support package grants will see £180million made available to support researchers’ salaries and equipment costs, and UK Research and Innovation will allow £80 million of existing funding in grants which may be underspent during the pandemic to support research activities at universities struggling because of Covid-19.

Science minister Amanda Solloway said: “This package will protect thousands of highly skilled jobs and ensure the UK’s research community continue their vital work to solve some of the most pressing challenges facing our society today, like tackling climate change, unlocking medical discovery and unleashing game-changing new technologies.”