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Treasury cautious over ‘rushed’ university bailout request

Image: Willy Barton, via Shutterstock

Government understood to be unimpressed by aspects of coronavirus financial support package

A much-anticipated government response to a request for financial aid for universities during the Covid-19 pandemic has still not been published as the Treasury is understood to be unhappy with the proposal.

A response to Universities UK’s request for a cash injection to help universities avoid “financial failure”, thought to total around £2 billion, was initially expected at the end of last week or early this week. However, Research Professional News understands that the Treasury is not convinced by the plan.

Whitehall sources have suggested to us that while the government understands the challenges facing universities as the coronavirus squeezes student recruitment and incomes are likely to fall, it does not feel the need to rush a solution and wants to explore the longer-term effects of the pandemic on higher education and research. In particular, the Treasury is understood to want further evidence on the full extent of the cross-subsidy of research by international student income across different institutions and by different disciplines.

Sources also suggested the government wants to wait to assess student recruitment levels in September before agreeing to a financial package now. One Whitehall insider described UUK’s request dossier—sent to the government on 10 April—as “rushed”.

UUK confirmed that it had written to government ministers asking for bridging loans to support universities suffering “significant income losses”, which needed temporary support “to maintain cash flow” until student numbers recover.

In its proposal, UUK warned a serious slowdown in the international student market due to the pandemic could see UK universities lose £6.9 billion in tuition fee income, while £790 million could be lost from accommodation, catering and conference income, and extra spending on online learning. The vice-chancellor’s body also called for a de facto numbers cap to stop higher-tariff universities scooping up students and leaving other universities struggling.

On 19 April, a spokesperson for Universities UK told Research Professional News that “the package is with government and constructive discussions are continuing. They are, of course, mindful of the impact on universities and students.” UUK chief executive Alistair Jarvis said universities “need urgent support to weather serious financial challenges posed by Covid-19” in a social media post the same day.

Another source close to the discussions and who has the ear of UK vice-chancellors told Research Professional News that any financial package was always going to be multi-faceted and require the agreement of several Whitehall departments. They told us that the proposals had "landed well" and the government was holding off making an official response “until more ducks are aligned”.

Universities Scotland and Universities Wales have submitted similar bailout requests to the devolved governments.

Research Professional News has contacted the Treasury and the  Department for Education for comment. More detailed coverage of this story can be found in today’s 8am Playbook