Ministers will consider how to ensure financial sustainability of universities
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A package of “stability measures” to help higher education cope with the fallout from Covid-19 is being discussed by the Universities UK board, and will be considered by the government after Easter, Research Professional News can reveal.
Universities UK has been working with education officials and ministers to provide them with further information about the support required from government to help institutions deal with the potential financial impact of the outbreak.
“Universities will be vital to help rebuild lives, jobs, communities and the economy across the country when we emerge from this and we need to ensure they are ready and able to do so,” a UUK spokesperson told Research Professional News.
“Support from government for universities will be necessary to ensure we can be ready to play our part.”
As we reported in our 8am Playbook this morning, among the measures likely to be under consideration are action on student number controls, increased quality-related funding for research—something called for on Research Professional News by former universities minister Chris Skidmore—and an easing of the cash flow for institutions that do not have enough reserves to see them through an immediate hit to their finances.
The news comes as a British Council survey of more than 10,000 prospective Chinese students in UK universities, published 8 April, found that of those planning to study abroad from September (8,400 respondents) 27 per cent said they were not likely to cancel their plans to do so. However, 22 per cent said they were likely to cancel, while 2 per cent had already done so. Thirty-nine per cent of respondents were undecided. China is the largest source of overseas students in the UK, and a vital source of funds for universities.
Yesterday, Moody’s credit agency said universities should prepare for a “balance sheet erosion” in the coming months as the coronavirus pandemic shrinks income.
Details of what the requested bailout will look like are not yet public, but any rescue package is likely to come with strings attached. Universities will be expected to play their part in ensuring the long-term stability of the sector and serve the interests of students.
In a letter to UK universities on 23 March, science minister Amanda Solloway announced that the Department for Business, Energy and Industrial Strategy had established a joint team involving UK Research and Innovation, the Department for Education and other government departments and agencies “to consider what measures are necessary to support universities, the research community and research institutions”.
Shadow universities minister Emma Hardy told Research Professional News, "on 10 March 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," she said.
Andrew Westwood, professor of government practice at the University of Manchester and a former adviser to the Treasury, said it “makes sense” for UUK and the government to be thinking about different intervention scenarios, “firstly because they may well be needed by a number of institutions and, secondly, because in the longer term the government has ambitions that depend on universities being able to play a part,” he said.
“It is better to get institutions through the immediate financial challenges more-or-less intact, so that longer-term policy objectives can be developed properly and more thoughtfully with a focus on future objectives,” he added.
Meanwhile, Universities Scotland confirmed to Research Professional News that it is in talks with the Scottish government on a similar support package.
David Lott, deputy director for Universities Scotland, said that Scotland’s institutions have seen a “worrying trend” of declining funding from the umbrella research council UK Research and Innovation. He said it was a “strategic issue” for Scotland as universities “can’t afford to win [projects] because they are losing money on research”.
He added, “there is a real concern about the next academic year and international students”.
While institutions in England and Scotland “share a common challenge” when it comes to research, the funding that English institutions generate from £9,250 tuition fees for UK students mean they have more money coming in to spend on teaching. In Scotland—which does not have tuition fees for Scottish students—universities receive around £7,000 per student in funding from the Edinburgh government.
Funding for domestic students is usually topped up through other income streams such as international student recruitment and conferences, but these activities are “most likely to be hit” as campuses shut during the pandemic. “It does leave the Scottish sector more exposed,” said Lott.