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Government ‘restructuring regime’ to impose strict measures

Vice-chancellors’ pay under fire as government scheme hints at multiple conditions for struggling universities

Struggling universities in England may be forced into mergers under the government’s Covid-19 restructuring scheme. Institutions could also see campuses closed and assets sold to pay for emergency loans.

On 16 July, the Department for Education launched its restructuring scheme detailing the conditions that the Westminster government might impose on universities in England that seek state assistance if they become financially insolvent as a result of the Covid-19 pandemic. The scheme was first announced in its 4 May support package, with further details published today.

According to the Department for Education, universities accessing the scheme must use any money they receive to “develop cost effective restructuring plans with conditions designed to focus the sector towards the future needs of the country”, including possible cuts to vice-chancellor pay and the offering of courses with “strong graduate employment outcomes in areas of economic and societal importance”.

As well as vice-chancellor pay, the DfE will consider mergers with further education colleges, selling assets to pay back loans or fund the restructure and “closing unviable campuses”. Universities must also show the government they are “fully complying with their legal duties to secure freedom of speech” before they receive any money.

Education secretary Gavin Williamson said: “We need our universities to achieve great value for money – delivering the skills and a workforce that will drive our economy and nation to thrive in the years ahead. My priority is student welfare, not vice-chancellor salaries.”

Earlier this month the Institute for Fiscal Studies warned 13 UK universities are at risk of insolvency because of Covid-19. There are widespread fears that fewer international students and loss of income from accommodation and conferencing will hit universities’ finances hard.

The DfE said it would look at whether degree courses “could be more effectively offered at Level 4 and 5” at the university or a further education college when deciding whether to lend restructuring loans. It will also look at graduate outcomes data for courses, whether the university’s research is “internationally excellent” and student protection plans when making a decision.

A Higher Education Restructuring Regime Board will be set up to advise Williamson on whether to give a repayable loan to a struggling institution. The DfE cautioned that receiving a loan was “not a guarantee that no organisation will go into insolvency” and would “only be offered as a last resort measure”.

Alistair Jarvis, chief executive of vice-chancellors’ body Universities UK, said the restructuring scheme was “further recognition of the severe financial challenges facing UK universities as a result of Covid-19”.

But Jarvis added the government should be “more ambitious” in its support. Rather than opening the scheme to a small number of universities, he said it should instead “use this as an opportunity to help universities to undertake innovative changes to maximise their contributions to the economy and meet the needs of students and employers”.

He said UUK was “seeking further clarification” about whether universities in other UK national could access the loans.

Jo Grady, general secretary of the University and College Union, said the government’s “obsession with graduate earnings as a sole measure of quality exposes its refusal to engage with the real issues behind inequality”, and called for a “proper plan” to underwrite universities’ funding.

“This third so-called bailout in a matter of months suggests the government has recognised there is a serious crisis, but would rather use it to try and impose severe restrictions on universities than ensure their survival,” she added.