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Government unveils financial ‘lifeline’ for universities

Image: Willy Barton, via Shutterstock

Bailout 2.0: package offers loans to offset decline in international students and £180m R&D support

The UK government has moved to shore up the teetering finances of university research with a package of loans to make up for the expected loss of a cross-subsidy from international students, plus £180 million to support salaries and laboratory costs.

The package, announced on 27 June—the same day the government unveiled £200m in support for innovative businesses derailed by the pandemic—will “protect thousands of highly skilled jobs” and ensure vital research can continue, said science minister Amanda Solloway.

Business secretary Alok Sharma said the support would be a “lifeline” for universities. Bodies including the British Council and London Economics have predicted billion-pound losses to universities from an expected decline in international student numbers in the next academic year.

As part of the package, institutions deemed to be “research active” have been promised a new stream of funding: long-term and low-interest loans covering up to 80 per cent of their lost income from declines in international students versus numbers in 2018-19. There is a direct correlation between those universities with most to lose from the collapse of the international student market and those with the largest research portfolios.

The government says the funding will be available to universities “who are taking their own steps to make efficiencies, in line with the rest of the economy”. It is “capped at the level of an institution’s non-publicly funded research”.

This latest attempt to address the perilous finances of higher education follows a previous package of government aid, announced on 4 May, that included bringing forward £100m of quality-related research funding and an advance of £2.6 billion on tuition fees.

The latest package is recognition that research-intensive universities are also facing a precipitous decline in their income from businesses and charities. The £180m will, according to the Department for Business, Energy and Industrial Strategy, “support researchers’ salaries and other costs such as laboratory equipment and fieldwork”.

The funding will be distributed by government funder UK Research and Innovation, and another £80m of existing grant funding, which is likely to be underspent due to the coronavirus, will also be redistributed.

“The purpose of today’s announcement is to help sustain UKRI grant-funded research, research talent and the capability of UK research organisations, all of which will underpin the post-pandemic national recovery,” said Duncan Wingham, executive chair of UKRI’s Natural Environment Research Council. “This is vital support for UKRI-funded research but will not address all the challenges the sector faces.”

Alistair Jarvis, chief executive of Universities UK, said the package was “a timely and welcome acknowledgement from the UK government of the importance of protecting and supporting research activities and talent as universities weather the financial storm created by the Covid-19 pandemic”.

He added: “We are committed to working with government on the fuller details of this package of loans and grants to ensure that they provide accessible support for university research and innovation across all four nations of the UK.”