Universities are preparing a case for government help with the financial fallout from coronavirus
A package of “stability measures” to help higher education cope with the fallout from Covid-19 is being discussed by the Universities UK board, for consideration by the government after Easter.
A UUK spokesperson told Playbook: “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. Support from government for universities will be necessary to ensure we can be ready to play our part.
“On behalf of the sector, UUK has been working with education officials and ministers to provide further information about the support required from government to help deal with the impact and issues affecting the sector as a result of the outbreak.”
Among the measures likely to be under consideration are action on student number controls, increased quality-related funding—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.
However, any bailout would come with strings attached. Institutions will want to agree solutions to higher education’s problems for themselves if at all possible, rather than having them imposed by the government—but reaching agreement could be tricky given that diverse universities are coming from very different positions.
In a letter to UK universities dated 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”. Sophie Inge reported on its formation for Research Professional News earlier this month.
Financial crisis
Playbook readers need only look about them to see just how vulnerable institutions are, and a report from the credit agency Moody’s this week confirms the worst. Fiona McIntyre reports that the ratings analyst has told universities to prepare for a financial crisis.
While the Moody’s report stresses “underlying strong demand” for higher education to support recovery once the pandemic is over, it predicts that Covid-19 will “negatively affect higher education for the next year as universities worldwide grapple with lower student demand and lost income”.
A crucial factor will be how long the crisis continues, the agency makes clear. If campuses could reopen before the next academic year, the effects would be more manageable. If not, lower income from tuition fees, student halls and conference facilities would force universities to cut staff levels and cancel lab-based teaching and research, says Moody’s.
The agency considers Australian universities most vulnerable because of their heavy reliance on international students and the fact that the academic year starts in February and March. It also predicts that the United States, Canada, the UK, Singapore and Mexico will enrol significantly fewer students from overseas than had been anticipated.
Home student numbers are also likely to be down, which Moody’s expects will lead to greater competition and to application deadlines being relaxed.
“For states, regions or countries that are facing a declining university-age population, including Canada, the UK, and the mid-west and north-east of the US, lower domestic demand will exacerbate adverse demographic challenges,” it warns.
Perhaps most interesting is the agency’s view that the impact on individual countries could vary significantly depending on perceptions of how competently the country has handled the coronavirus outbreak and therefore how safe students think they will be there.
The kinds of travel restrictions a student’s home or host country imposes will also be a factor. As Chinese students account for 23 per cent of international students, any travel restrictions imposed by China on its citizens will have a major impact.
“Similarly, if the US response to the outbreak leads to a more widespread and prolonged outbreak relative to other key international markets, leading to a perception that it is less safe than its competitor countries, students may instead opt to study in Australia, Canada or the UK,” Moody’s says. “Over the next year, international student demand will be even more affected by national reputations.”
The analysis judges universities in the US to be at risk of cuts to state funding and warns that they are also particularly vulnerable to disruptions to financial markets, because of their generous endowments and reliance on gifts.
The UK, by contrast, is unlikely to receive less funding from central government as a result of the outbreak, Moody’s rather boldly predicts, because the government does not spend much on teaching anyway and has recently committed to increasing research funding.
But Moody’s says that expenses could increase because of the need to switch to online learning and to pay for security for empty campus buildings. Increased competition for students may also lead to higher marketing costs.
“We expect some universities to also consider cost-cutting measures, including permanent and temporary layoffs of non-essential university staff, and to scale back some of their research activity, especially those that require physical space,” the agency says. It also predicts, rather less boldly, that capital projects could be postponed or cancelled.
University leaders are well aware of the financial difficulties they face. At Universities UK’s (online) International Higher Education Forum, Steve Smith, vice-chancellor of the University of Exeter, warned that universities were looking “over the edge into a very significant financial abyss”, as Fiona McIntyre and Chris Parr covered at the time.
Writing for Research Professional News yesterday, universities minister Michelle Donelan urged universities to take advantage of government schemes to avoid redundancies. Responding to Donelan’s article, University and College Union general secretary Jo Grady said: “If university employers can access the government’s job retention scheme as a last resort, we would want to see all institutions top up the 80 per cent of staff pay funded by the scheme to 100 per cent—as some institutions have already pledged.”
Roshan Israni, deputy chief executive of the Universities and Colleges Employers Association, told Playbook: “We are grateful for the minister’s recognition that employers and unions must work together to navigate the resulting workforce challenges created by the pandemic. We are working closely with member institutions to support and advise them on the best way to approach staffing issues over the coming weeks and months.”
However, the Moody’s report would seem to suggest that the scale of the financial crisis, and the existential threat facing universities across the globe, cannot easily be solved by temporary furloughing schemes from national governments.
Cancellations and postponements
The stability measures under discussion at Universities UK may not just be financial. It has already been announced that the Research Excellence Framework will be postponed, and other mainstays of the higher education timetable are looking shaky.
While the Teaching Excellence Framework seems safe for now—it was already postponed as the government contemplates Shirley Pearce’s statutory review—an announcement on the Knowledge Exchange Framework is expected imminently and the Office for Students has said that this year’s National Student Survey will be kept “under review”, as Fiona McIntyre has been covering.
If any of the high street bookies were still open, Playbook might inquire as to the odds of an announcement on a KEF postponement today.
Smaller wheels of the higher education calendar have stopped turning already. Conferences and events due to happen in the next few months have all been cancelled or moved online, including some that had been due to discuss vital issues in higher education.
The annual conferences of the Association of University Directors of Estates and the Centre for Global Higher Education have been cancelled, as well as that of the Association of University Administrators. AUA chair Chris Ince writes for Research Professional News about the challenges of running a university remotely and the sadly postponed after-dinner conga.
Many events—including the University and College Union’s annual congress and the annual conferences of the Association of Research Managers and Administrators and the International Network of Research Management Societies—covering issues from diversity and inclusion to social mobility, higher education employment law and international students, have gone the same way, each a lost opportunity to make contacts, raise awareness and take action. Not to mention their potential for finance generation.
Easter egg
Meanwhile, Playbook itself is pausing for an Easter break—a family staycation.
Last time Playbook had a hiatus—at Christmas—Boris Johnson had just achieved his lifetime ambition of becoming prime minister but was yet to announce his impending engagement and fatherhood; Chris Skidmore was still universities and science minister; there still was a universities and science minister; Jeremy Corbyn was leader of the Labour Party; and the main concerns of university planners were REF preparations and when they would see a government response to Shirley Pearce’s TEF review—something they were able to discuss over seasonal drinks in a crowded pub.
That was less than four months ago, and ‘waiting for Shirley’ is just about the only element of continuity for universities in a rapidly changing world. Johnson remains in intensive care, suffering from Covid-19; Skidmore is out of government and his former brief has been divided in two; Corbynites have been largely deleted from a Labour front bench now led by Keir Starmer; and crowded pubs have given way to Zoom conference calls, where higher education decision-makers contemplate an immediate future lacking international students, a REF and a confirmed admissions process.
Who knows what will have happened by the time Playbook returns on 20 April?
Playbook readers will still be able to follow events as they unfold, as our expert team of journalists will be running a full news service on our website. Follow us on Twitter (@HE_Analyst) for breaking news across higher education, research and science.
And finally…
It has emerged that the tripartite talks between the University and College Union, Universities UK and the Universities Superannuation Scheme agreed upon a “definition of sustainability” for the pension fund just as the scheme was forced to refer itself to the Pensions Regulator for breaching its sustainability framework. Better late than never.
The panel yesterday published a statement of its eighth meeting, held on 12 March, at which it agreed that affordability, stability, clarity, adaptability, relevance and viability were all important elements of sustainability. It conceded that “some parties may place greater importance on certain of the elements than other parties”. So, that’s clear then.
“Sustainability over the long term is desirable, but short-term decisions have implications for the long term,” the definition states. “Long-term sustainability means meeting the needs of the future without compromising the present.” It’s almost as if it’s a definition of sustainability designed by a committee.
But the same day, amid the chaos sparked by the coronavirus, the USS was forced to report to the Pensions Regulator after breaching one of the metrics used to determine how sustainable it is for the fifth day in a row.
On the same day, the deficit faced by the pension scheme if employers were to cease contributions (known as the self-sufficiency deficit) reached £37.4 billion—just one of the rather remarkable tales from higher education we have brought you this season.
Whatever you are doing this bank holiday weekend, do it at home. Stay safe. Playbook will return.
(This was amended to correct the date of the Joint Expert Panel’s eighth meeting)
On Research Professional News today
Fiona McIntyre reports on a warning from the credit ratings agency Moody’s that universities must prepare for a cash squeeze in the year ahead as the coronavirus pandemic shrinks incomes, while universities in Scotland will see a small funding increase in the 2020-21 academic year as they grapple with the “unprecedented” impact of the virus.
At a time when many students are homebound by the Covid-19 pandemic, some UK universities are looking to online courses as one way to entice prospective international students who are unable to visit in person. Pola Lem reports.
Pola adds that companies involved in testing for Covid-19 are saying they are “keen to help” but that the UK government has been slow to react to their offers or clear the way to standardise products already in use in other countries.
As universities respond to Covid-19, the new normal needs new thinking, writes Sarah Richardson.
Speaking of new norms, Chris Ince of the Association of University Administrators tells us about adapting to working from home and the challenges of the future.
Mico Tatalovic reports that pharma giants AstraZeneca and GSK have teamed up with the University of Cambridge to set up a testing laboratory at the university’s Anne McLaren laboratory.
Mico also explores funding and the coronavirus, and with Sophie Inge he looks at which universities have been recruited to drive up coronavirus testing.
Sophie covers how universities are helping the NHS in the fight against Covid-19. She also writes that long-awaited research ethics guidance aims to lay the groundwork for good practice, and that the National Institute for Health Research has designated eight Academic Health Science Centres in England.
A former top official at the World Health Organization has said that Donald Trump’s threat to pull his country’s funding for the global agency would be “disastrous” if carried out, but that international collaboration would continue between researchers tackling the coronavirus pandemic. Robin Bisson has the story.
Following the shock resignation of European Research Council president Mauro Ferrari, Craig Nicholson reports that the group of 19 scientists that helps govern the European Union’s flagship research council said it demanded that Ferrari quit.
Ben Upton tells us that the committee that suggested Ferrari could become president of the ERC knew it was a risky move, while European research ministers have given their provisional backing to European Commission proposals for collective research and innovation actions to tackle the Covid-19 pandemic.
In the news
The BBC reports on students’ anger at being charged rent for empty rooms, and vocational exams have been cancelled in Northern Ireland.
Sky News says that the University of Hull is to make up to 5,000 face shields a day for the NHS.
An opinion piece in The Independent says that student nurses can’t be blamed for refusing to risk their lives.
In the Financial Times, the director of the Wellcome Trust writes about how to get the world from Covid-19 to Covid-Zero with just $8bn.
The Telegraph says that a lab at the University of Cambridge will test 30,000 coronavirus swabs a day by early May.
In The Times, University College Dublin has scrapped plans to water down its policy on academic freedom, a University of Oxford consortium behind one of the leading coronavirus vaccine candidates has chosen Oxford Biomedica as its lead manufacturer, and research has shown that online university is as good as the real thing.
The Daily Express looks at whether you still have to make student loan repayments while on furlough.
Times Higher says that Covid-19 is causing a sea change in access to research, and an opinion piece looks at whether the virus could be the best thing to happen to higher education.
STV News reports that hundreds of University of Stirling student nurses have joined the NHS front line.
The day ahead
Advance HE has a 9am webinar called Moving Assessment Online: Key principles for inclusion, pedagogy and practice.
The Association of University Administrators has a webinar from 11am for members on how to make working from home work well.
The Higher Education Policy Institute publishes a view on looking after international students during and after the pandemic.
The Institute for Apprenticeships and Technical Education launches a consultation on level seven executive apprenticeships.
The Scottish government announces a £5 million student hardship fund to cover the period of the pandemic.
The Playbook would not be possible without Martyn Jones, Chris Parr and Fiona McIntyre.
Thanks for reading. Have a great bank holiday weekend. Playbook will return on Monday 20 April.
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