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Bailout: government sets out university Covid support package

Tuition fee payments and research funding brought forward in bid to assist universities

The government has today announced details of its much-anticipated support package for the higher education sector, which has been financially poleaxed by the coronavirus pandemic.

The so-called “bailout” package sees ministers re-introduce student number controls in England for the first time since the coalition government abolished a previous cap in 2013, will see £100 million of quality-related research funding brought forward to this academic year, and advanced payments on tuition fees worth £2.6 billion to ease cash flow problems.

Under the plans, English universities will be able to recruit full-time undergraduate UK and EU students for the next academic year up to a “temporary set level”—their forecasts for the next academic year, plus an additional 5 per cent. This is in keeping with the cap requested by Universities UK when it first sent proposals to to the government for consideration.  

However, while some people—including former universities and science minister Jo Johnson—have called for the cap to be implemented by universities themselves rather than centrally, ministers today confirmed that the number controls would be controlled by the government using the student finance system. This process will “work alongside a voluntary commitment from members of Universities UK in England and Wales to follow an agreement on fair admissions practices, so providers will recruit students in an impartial structured way”.

The government has said that student number controls will only apply in the 2020-21 academic year.

Ministers will also “have the discretion to allocate an additional 10,000 places, with 5,000 ring-fenced for nursing, midwifery or allied health courses to support the country’s vital public services”, according to the plans.

Universities will also be able to access advanced payment of tuition fees by the Student Loan Company, estimated to be £2.6bn. The government says this should be sufficient to address any short-term financial risks.

However, it says “should that not be sufficient, such that a higher education provider finds themselves at risk of closure, the government will only intervene further where we find there is a case to do so, and only where it believes intervention is possible and appropriate, and as a last resort.

“In such instances, the DfE will be working with [the Treasury] and other government departments to develop a restructuring regime, through which we will review providers’ circumstances and assess the need for restructuring. Where action is required, this will come with attached conditions”. 

The government says the measures aim to allow students to access higher education “while avoiding competition among providers taking a form which would go against the interests of students and the sector”. There had been fears that universities perceived to be more prestigious, such as members of the Russell Group of research intensives, might vacuum up a disproportionate number of domestic students if a cap was not imposed.

England’s regulator the Office for Students will now consult on a new temporary registration condition so it can intervene if providers take actions that are found to be harmful to the sector and students—including by fining institutions “up to—or in some cases more than— £500,000”, depending on their size.

Such actions could include changing student recruitment practices in an effort to increase intake beyond normal levels—for example by converting existing conditional offers to unconditional; lowering academic or language requirements for international applicants; offering incentives for students to accept offers; or making misleading statements about other universities in an attempt to discourage students from attending them.

The condition would be in force for up to one year, unless it was actively renewed. If a university were found to be in breach of this condition, it could be fined up to—or in some cases more than—£500,000 per breach. The condition would prevent universities taking action that could have serious negative consequences for students or the higher education sector during the current crisis.

The £100m of QR research funding is just 5 per cent of what UUK had asked for in its original pitch for support. Last week, an analysis by the University and College Union and London Economics estimated that the coronavirus outbreak will result in a £2.6 billion shortfall in university finances in the 2020-21 academic year.

The government has also confirmed that providers are eligible to apply for its existing Covid-19 support packages, including business loan support schemes.

Gavin Williamson, the education secretary, said the government was “putting measures in place to help protect students and staff from the impact of coronavirus”.

“I know this is an unsettling time for all involved, and we are working tirelessly with the sector to do everything we can to stabilise admissions and protect a vital part of our country’s economy and society,” he said. “I am very grateful to universities for their innovation and dedication in their frontline response at this time.”

Universities minister, Michelle Donelan, added: “Universities have an integral part to play in our economy, society and culture, which is highlighted now more than ever through their important role in the fight against the virus. That is why we are introducing a package of measures to boost support for students, stabilise the admissions system and ease pressures on universities’ finances.”

Amanda Solloway, the science minister, said that the UK was “home to some of the world’s leading scientists and researchers”. And that “their work has already proved itself to be invaluable to our response to coronavirus”.

“This £100 million we are bringing forward will provide immediate help to ensure the excellent research taking place in our universities continues throughout this period of uncertainty,” she added.

Julia Buckingham CBE, president of Universities UK—which originally coordinated the higher education sector’s request for support—said the package of interventions outlined by ministers indicated “a welcome recognition from government of the central role that universities will play in the recovery of the economy and communities” following the coronavirus outbreak. 

“It is clear the government has listened to the concerns raised and has drawn from the suggestions that the sector has made,” she said. “Universities will want to examine and understand more fully the details of today’s announcement and then work with government to ensure that detailed measures are developed to meet both the scale and diversity of pressures that universities are facing—including further support to protect the strength, capacity and quality of the research base and ensure the sector is positioned to support economic and social recovery through research and innovation.

“Further work will also be needed by the UK and devolved governments to build on the package to ensure that the necessary support is in place for universities in the devolved nations,” she added.

The range of measures being introduced (as worded in the government announcement)

Stabilising admissions
Temporary measures mean providers will be able to recruit full-time, domestic students up to 5 per cent above their forecasts in the next academic year, which is in line with proposals originating from the sector, to help reduce volatility and ensure a fair and orderly admissions.

The government will also have the discretion to allocate an additional 10,000 places, with 5,000 ring-fenced for nursing, midwifery or allied health courses to support the country’s vital public services.

Preventing exploitative admissions practices
The Office for Students will consult on a new temporary registration condition so it can intervene if providers take actions that are harmful to the sector and students. 

Enhanced clearing process
UCAS is developing a new, personalised clearing system for students this summer. This includes Clearing Plus, a new service which matches students to universities or other opportunities based on their achievements and course interests. If students’ calculated grades exceed their predicted ones, it can suggest alternative courses with higher entry requirements.

University research funding
The government is bringing forward £100m of quality-related research funding (QR) for providers in England into this current academic year as immediate help to ensure research activities can continue during the crisis.

Research sustainability taskforce
DfE and BEIS Ministers will set up an advisory sector working group with the devolved administrations to consider how best to respond to the challenges universities face on research as a result of Covid-19, and so university research can continue to support the UK’s economic recovery following the crisis.

Government business support
The government has confirmed that universities are eligible to apply for the government support schemes, including business loan support, which the OfS estimates could be worth at least £700m, depending upon eligibility and take-up. Providers can also access the Coronavirus Job Retention Scheme to safeguard staff jobs, including for those with short-term contracts.

Changes to tuition fee loan payments 
The Student Loans Company will bring forward tuition fee payments of students in the in the 2020/21 academic year to providers, expected to be worth £2.6bn, to help cash flow. This will not affect the loan liability, amount of interest charged to students or the timing of their maintenance loan payments.

Financial opportunities
As part of existing programmes and using established procedures, the DfE will consider purchasing assets, such as land and buildings, where they can be used for new or expanding schools and colleges. This financial year the DfE has budgeted for up to £100m to acquire sites for planned projects across purchases from suitable vendors, including higher education providers among others.

Financial help for students
The government has worked with the OfS to help clarify that providers can use existing funds, totalling £46m across April and May, to boost their hardship funds for students in financial difficulty. This can include help for IT equipment and internet access.

Supporting international students
The UK continues to welcome overseas students, and ministers are working across government as a priority to ensure universities can continue to attract international students. DfE and DIT Ministers will also chair a group, including key sector representatives, to consider how the International Education Strategy can be updated to respond to the impact of the coronavirus outbreak.

Response from the sector

Emma Hardy 
Shadow universities minister

“This disappointing package offers no long-term security to our universities, putting the anchors of our regional economies at risk. Using the ‘student premium funding’ on student hardship today could further reduce the opportunities for disadvantaged students tomorrow.

“The government must urgently produce a plan to safeguard the future of our universities and ensure that across the UK everyone has the same opportunity to study at university regardless of where they live.”

Daniel Zeichner
Labour MP for Cambridge and chair of the All-party Parliamentary Group for Universities

“Small carrot, very big stick. If anyone wondered whether the government was prepared to work with the sector in a co-operative spirit to come through this crisis the answer is clear—they aren’t. The response to the co-ordinated call for stability measures is limited, bringing forward a little QR is a sop, while positive suggestions to make the UK more attractive to vital international students have fallen on stony ground.

“Giving the OfS powers to levy heavy fines if universities act ‘in ways that undermine students’ interests or threaten the stability of England’s higher education sector during the crisis’ is deeply troubling. What are the criteria, and who decides? Ministers need to come before Parliament this week and explain these proposals.”

Jo Grady
University and College Union general secretary

“While it is encouraging that the government appears to have recognised the need to provide support for universities, this package does not deliver the protection or stability that students, staff and the communities they serve so desperately need. The Office for Budget Responsibility says universities are most at risk of financial pain from the current crisis and they need more than IOUs to solve the problems they face.

“The student number cap is a misnomer as it will enable the wealthiest universities to substantially grow their domestic student base at the expense of other more locally focused institutions. We cannot afford to let this dog-eat-dog approach risk substantial damage both to our country’s academic capacity and local economies which universities are such an important part of.

“Instead of kicking the can down the road, the government must underwrite funding lost from a fall in domestic and international student numbers and remove incentives for universities to compete against each other at a time when we need to be pulling together.”

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

“The package of support announced by government today is a start, but it cannot be all that is offered to UK universities to cover the damage caused by the coronavirus outbreak.

“While the bringing forward of fee payments may help institutions manage cash flows in the short term, universities have still not been given any real lifeline to ensure they can continue to provide the first-rate higher education experience they have become known for, let alone maintain their world-class research credentials.

“The £100m of public funding promised as part of this package is, after all, only 5 per cent of the original ask. So, unless more substantial follow-up measures are provided on the research-front soon, the sad reality is the UK’s leading universities will have no choice but to plan for the future based on next to no contribution from government.

“More needs to be done urgently to safeguard the sustainability of research and our universities’ futures—not to mention people’s jobs and livelihoods. That is why it is imperative government works on the next phase of the plan now, to give universities the reassurances they need before any difficult decisions will otherwise have to be made.”

Tim Bradshaw
CEO of the Russell Group

“Today’s measures are an important first step in protecting the skills and expertise that universities provide, which contribute billions to the UK economy. They will also help to maintain the best possible student experience to protect our world-leading reputation, which attracts people from around the globe. Bringing forward tuition fee payments and some recurrent research money will help manage cash flow, but we also need other areas of government financial support such as the Covid Corporate Financing Facility to work better for universities.

“The sector-wide agreement on student intakes is designed to reassure anxious students and parents awaiting A level results. To be clear, no prospective student who makes their grades will be disadvantaged by these temporary changes to admissions in England, which also allow for a margin of growth this year. The proposal on student intakes was put forward by the sector itself, so we hope that additional, albeit temporary, regulatory powers proposed by the OfS to oversee the sector agreement will not need to be used. Governments in the devolved nations will also need to consider how they will support their universities and allow additional places for students who will now be an even more important part of the UK’s economic recovery.

“The big remaining challenge is to address the financial sustainability of research. Universities face significant shortfalls in international students and other sources of income that we need to underpin vital work that otherwise goes under-funded. The research sustainability taskforce is central to this next phase, and we look forward to helping the Government develop a plan that can release the investment needed to transform our economy while also tackling major health, societal and environmental challenges.”

Nick Hillman
Director of the Higher Education Policy Institute 

“While we need time to digest the finer details, this seems like a carefully-calibrated package that delivers much of what the higher education sector called for without over-exposing taxpayers.

“The positive elements include some easing of cash flow challenges, a re-profiling of fee and research income and a renewed focus on students as well as institutions. Some of the announcements that look more routine, like the new working groups on research sustainability and international students, could be crucial in the recovery too.

“Overall, the measures should give managers and governors the time they need to reset their institutions for the post-Corona world.

“The package does not obviate the need for tough decisions. Any institution that faced serious financial challenges before the pandemic will still face them and, even with this new support, the structure of our higher education system is likely to change.”

Andrew Westwood
Professor of government practice at the University of Manchester and a former adviser to the Treasury

“Allowing 5 per cent on top of forecast is generous but will worry those universities at the bottom of the pecking order—there’s a lot to potentially lose there. Some of the higher forecasting—and popular—institutions are going to do pretty well out of this.

“But we can see that the DfE is keen to retain the market approach, more or less, firstly by promising that this is just for one year and secondly by giving the OfS more powers to crack down on recruitment activities that threaten ‘stability or integrity’ of sector. So, in other words, it’s still a regulated market for numbers and there will be winners and losers.

“Bringing forward the institutional payments from [tuition fees] is sensible—though it is not clear when this is going to happen.

“On the research side, £100m extra of QR doesn’t sound like much for this year, though there is a decent increase already baked in to UK Research and Innovation budgets. Presumably the task force will be able to recommend further financial issues and needs as we go on—otherwise there doesn’t seem much point.

“Overall, though, what [the package] doesn’t do is fill any anticipated gaps from falls in international student income. So at this stage at least, it is stabilisation rather than bailout, though I would expect there to be additional measures for R&D as the task force gets up and running and potentially for institutions too but likely on a case-by-case basis—not least as the threat for some universities will still feel very real.”

Rama Thirunamachandran
Chair of MillionPlus and vice-chancellor of Canterbury Christ Church University

“MillionPlus welcomes the government’s recognition that the university sector will continue to play a vital role in the economy and society as we look to recover from the impact of Covid-19. The proposals to stabilise higher education in this critical period to ensure their sustainability rightly address how payments to universities are profiled, bringing forward standard payments for teaching and research by a few months.

“Student recruitment is an essential part of this much-needed stability—universities will doubtless engage positively with proportionate measures to ensure that prospective students are not disadvantaged in this period of uncertainly. The guarantee of expanded numbers for educating key public service workers is to be welcomed and follows work highlighting this priority area last week by MillionPlus.

“Rebuilding Britain after the Covid-19 crisis will require fresh investment to expand the university infrastructure to support these crucial subject areas. I hope that in due course further proposals by government will set out an ambitious agenda along these lines.”

Debra Humphris
University Alliance chair and vice-chancellor of the University of Brighton

“During this crisis the interests of students has been at the forefront of decisions taken at a local and national level. The temporary measures outlined will protect the ability of current and future generations of students to choose from a diverse range of world-class providers.

“The stability this package provides will also ensure that our members can continue to focus on serving their communities. As providers of professional and technical education, including the training of nearly 25 per cent of undergraduate nursing students in England, we are particularly pleased the package offers specific designation for public sector workforce subjects, which will protect and sustain the vital pipeline of key workers.”

Clare Marchant
UCAS chief executive

“UCAS has given all applicants extra time to make their decisions and we are encouraging them to make their firm and insurance choices as soon as they are ready.

“We are confident the new personalised Clearing in 2020 will transform the experience for students. Building on last year’s reforms, they won’t need to search through a mountain of courses or make endless phone calls. The most appropriate course options for them as an individual will be presented through their online account.”

Andrea Nolan
Convener of Universities Scotland

“Scotland’s universities are going to depend on both Scottish and UK governments agreeing a shared approach to ensure that appropriate financial support is targeted at a level that will help them navigate this crisis and be fit to support both Scotland and the UK’s post-pandemic recovery. Scottish higher education is mostly devolved but with a very active role in the UK’s higher education ecosystem. It puts Scotland’s universities in a very different place to universities in England and that necessitates a bespoke, twin-track response, crafted to acknowledge and respect that difference. We’ve had assurances from both governments that they recognise this and will reflect it in their approach.

“While today’s announcement concentrates on immediate measures to protect students’ interests in England, we support its acknowledgement of the need for the UK government and the devolved administrations to work together to protect higher education’s contribution across the UK. The proposed Research Sustainability Taskforce can help with this, and we welcome devolved participation. Beyond that, we need a partnership approach from the UK and Scottish Governments to ensure the right support reaches Scotland’s universities.”

Claire Sosienski Smith
Vice-president (higher education), National Union of Students

“We need to ensure students’ interests are safeguarded in this challenging time, and understand why these changes have been proposed by the OfS—but the language used is very broad and OfS must take great care and provide clear guidance to ensure universities and colleges are not deterred from working together to make changes that support students for fear of regulatory action.

“That the OfS felt it had to take this action proves yet again that the marketisation of higher education has failed students and created perverse incentives for institutions. It would benefit students and society far more to promote collaboration and cooperation among universities rather than wasteful competition. Students are ultimately still stuck in a system which threatens their education by leaving it to the whims of the market.”