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Government considers universities bailout plea

Bridging loans and protection against funding cuts among the requests from Universities UK

Some universities will “likely face financial failure” unless the government offers a multi-billion pound support package to the higher education sector, vice-chancellor’s body Universities UK has warned.

UUK, which describes itself as the collective voice of its 137 members, has written to ministers with a package of measures it believes will help ensure that universities can “play a critical role in rebuilding the nation”.

As Research Professional News exclusively revealed, the UUK board met on 8 April to discuss “stability measures” to help higher education cope with the fallout from Covid-19.

UUK has confirmed that it has now sent details of these measures to Rishi Sunak, the chancellor of the exchequer, as well as education secretary Gavin Williamson, business secretary Alok Sharma, universities minister Michelle Donelan, and science minister Amanda Solloway.

The proposals include a call for the government to “provide bridging loans”—or support changes in lending terms—for institutions that suffer significant income losses and require temporary support “to maintain cash flow”, or those that need help “until a recovery in student numbers and income”.

UUK also wants protection from funding cuts for courses which help meet the national need for public sector workers (including health-related fields), and an allocation of “transformation funds” to support universities that need to “significantly reshape to achieve longer-term sustainability and ensure high-quality provision of skills to meet economic needs”.

In addition, ministers should introduce a “one-year stability measure” in the admissions process, meaning institutions in England and Wales can this year recruit UK and EU-domiciled full-time undergraduate students up to the sum of their 2020-2021 total forecast intake of such students, plus 5 per cent.

There should also be confirmation that universities are “fully eligible” for government schemes designed to protect business interests during the pandemic, such as the Coronavirus Job Retention Scheme.and the Coronavirus Business Interruption Scheme

Elsewhere in the paper, UUK details both the short- and long-term impacts that the pandemic could have on UK universities.

It says that in the current financial year (2019-20), the higher education sector is facing “losses in the region of £790m from accommodation, catering and conference income as well as additional spend to support students learning online”.

In the next financial year, universities are projecting a “significant fall in international students and a potential rise in undergraduate home student deferrals”, while UUK modelling shows the potential loss of fee income from international students across UK institutions totals £6.9 billion.

“Without proactive action from both institutions and support from government…some universities would likely face financial failure, with severe impacts on their students, staff, local community and regional economy,” read a UUK press statement. “Others would come close and be forced to reduce provision for students or to significant scale back research activities and capacity.”

Alistair Jarvis, UUK chief executive, said the proposed package of measures “will support universities across all four nations of the UK to ensure that they remain able to weather the very serious financial challenges” posed by the coronavirus outbreak.

“It will help protect the student interest, to maintain research capacity, to prevent institutions failing and maintain the capacity to play a central role in the recovery of the economy and communities following the crisis,” he added.

Andy Westwood, professor of government practice at the University of Manchester and a former adviser to the Treasury, said that the government “need to act to shore up the sector and institutional income, so that no university goes bust or runs out of cash in the short term”.

“I think there are…priorities for the government—such as boosting R&D spending capacity, and activity ‘levelling up’ regional inequalities—that can provide a rationale for supporting the sector as a whole, and individual institutions in the short term,” he added.

A Department for Education spokeswoman said that the government was “very grateful for the work universities are doing in the fight against coronavirus—from supporting students, undertaking ground-breaking research and providing specialist equipment”.

“We recognise the outbreak poses significant challenges to the sector and the government is working closely with universities to understand the financial risks and implications they might face at this uncertain time,” she added.

Response from key sector figures:

Chris Skidmore
Former universities and science minister

“The call for research to be protected should be an immediate priority—as I’ve argued, more quality-related funding is the best means to do this, but with the loss of income through a reduction in international students, now is the time to reflect upon the underlying weakness of the dual support mechanism for funding research.

“Cross subsidies have been a sticking plaster for too long on a system that deserves better—we should use this time to re-evaluate what we want the system to do, and fund the full economic cost of research.

“At the same time, we should place at the forefront of our minds what future students themselves want. It’s clear that demand for a degree continues to rise, so any discussion of future funding should encompass a universal basic offer of a degree place to those who apply for this year, ending the uncertainty around admissions so that no student misses out. From that starting point, institutions should work with government to look at how places can be distributed as best as possible.

“It’s increasingly clear that now is not the time to be destabilising institutions by altering existing fee levels-. At this time in particular, it’s more apparent than ever before that this would lead to several universities going to the wall.”

Emma Hardy
Shadow universities minister

“Our universities are key facilities in knowledge development, research, industry and scientific innovation, not to mention the role they play in improving social mobility and career building for our young people.

“On March 10th I submitted a written question to the Secretary of State for Education asking what plans the government had to help compensate UK universities with any potential loss of income as a result of COVID-19, and whilst their answer acknowledged the potential problems the universities are facing, it provided very little detail on any financial support.

“The impact this crisis will have on our future students and universities will be severe and I urge the government to work closely with our universities and to develop a financial support programme.”

Nick Hillman
Director of the Higher Education Policy Institute

“I think the UUK work is a good reflection of the sector’s priorities and it is an impressive feat because it brings together the disparate needs of dozens of institutions throughout the UK. Sector bodies are never more important than in a crisis. But I do still worry that any number cap could become permanent – for example, when the Treasury is looking for post-crisis savings. So that is far from my favourite idea in the UUK list.

“It would be great if Ministers could do everything else in the list of asks, but there would be a hefty price tag attached if they did them all. So we may need to be clearer in the conversations that will take place after Easter about which measures are the most important ones and what the sector is willing to offer in return for additional help. The plea for more QR funding is well made and many people were calling for it even before the current crisis so that should be near the top of the list.” 

Diana Beech,
Head of government affairs at the University of Warwick and a former adviser to three universities and science ministers

“Over the past few weeks, universities across the country have proved themselves to be at the heart of the national effort to overcome the current coronavirus pandemic —from training the medical staff we are all reliant on in our hospitals to honing the science and expertise that will guide us through this crisis. Many are also donating equipment, beds and personnel to bolster the frontline fight against the virus.

“Right now, UK universities really are giving all they’ve got to help the country through this crisis – and all this while facing a crisis of their own, with immediate financial impacts and, in some cases, the clear risk of institutional failures.

“Although there are bound to be lots of competing claims on the Treasury’s purse strings over the coming weeks, I hope the Government will recognise the need to provide stability to a sector that is not only giving so much to the nation’s fight against Covid-19 but which also holds the key to a brighter future.

“To deny UK universities the safety net they so desperately need right now could seriously impede the nation’s chances of getting out of this pandemic successfully – depriving thousands of people the chance of a high-quality education and further crippling local economies and recovery efforts.”

Eva Crossan Jory,
Vice President (Welfare), National Union of Students

“Our further and higher education systems are at risk and it’s a generation of students who will pay the price if we don’t act now. It is equally clear there are enormous financial and logistical challenges for the whole sector: this is a systemic problem and it needs a systemic answer. However, any package of support for higher education must include appropriate support for students, especially considering the mounting student discontent that courses are not being delivered as promised and demands for refunds.”

Tim Bradshaw
Chief executive of the Russell Group

“The whole Higher Education sector—like almost all others in the UK—is at risk in these unprecedented times. The financial situation for universities is complex with everything from international student flows to charity and collaborative research income disrupted by the Covid-19 crisis.

“There are no simple solutions and while our universities play their part in responding to the immediate crisis through research, testing and practical support for the NHS, they are also taking steps to make savings and deliver the best value for every pound they spend. However, to secure long-term sustainability for students and for the UK’s vital research and innovation base, sector-wide financial support and stabilisation measures are needed.

"As we look to the future, it is vital the country is in a strong position to bounce back again after this crisis. More than ever, the UK will need the skills, research, innovation and expertise universities bring. We therefore support the full package of measures that have been developed with Universities UK on behalf of the whole sector. The right investment now will underpin the future growth and prosperity of the country.”

Daniel Zeichner 
Chair, All Party Parliamentary Group for Universities

“I welcome a co-ordinated approach from universities in their request to government and am pleased that protecting research is a key ask that should fit with any government’s long-term recovery plan. The danger is that institutions fight amongst themselves for a share of diminished resources —a united, co-ordinated response is much preferable, but there will need to be self-discipline if the inevitable pain is to be distributed fairly.

“Every sector will be looking for support – the key will be to present proposals that Government can see will help them navigate the difficult path to recovery. The proposals from UUK seem to me to be broadly sensible and I hope will attract widespread support.”

Jo Grady
General secretary, University and College Union

‘This looks like a piecemeal approach that fails to recognise the size of the problem, or the damage we risk doing to our academic capacity. We need a fundamental shift in how universities operate if we are to protect our institutions, staff and students, and to ensure higher education can play its vital role in the recovery.

‘Instead of talking up mergers or narrowing the curriculum, universities need to step back from the dog-eat-dog approach of recent times and come together properly in the wider interest. We fear these proposals risk leaving many universities vulnerable at a time when we need the whole sector to be firing on all cylinders.

‘The proposed cap will do nothing to stop Russell Group institutions hoovering up more students from the newer “post-92” universities. To rein this in, the government must provide proper underpinning for whole sector and insist on more effective cooperation from universities.’

‘We wrote to the secretary of state last week setting out what government needs to do to retain academic capacity and ensure that education can be a driver of our recovery. We need a clear plan that protects jobs and institutions, and stops universities competing with each other when they should be working in the wider interest’.