Universities face ‘financial failure’ without government support
Universities are likely to face “financial failure” amid the Covid-19 crisis without additional support from the Government, vice-chancellors have warned.
At least an extra £2bn of government funding is needed for the sector to overcome challenges posed by the pandemic, according to Universities UK.
There could be “severe” consequences for students, staff and local economies if universities and ministers do not take urgent action to prevent institutions from failing, the group has warned.
Universities UK (UUK), which represents vice-chancellors, has recommended a number of measures to enable universities to play a central role in rebuilding the nation after Covid-19.
The paper, which has been sent to ministers, warns that universities’ positive impact on the economy will be “severely diminished” without mitigations from the Government and institutions.
Calculations by UUK suggest that the sector could lose £790m this financial year from accommodation, catering and conference income, as well as extra spend on remote learning.
And they expect major financial risks in the next academic year (2020-21) as UK universities project a significant fall in international students and a rise in home student deferrals.
A 100% fall in fee income from international (non-EU and EU) students would result in a £6.9bn loss of income to the UK higher education sector, according to UUK calculations.
The paper warns: “Without government support some universities would face financial failure, others would come close to financial failure and be forced to reduce provision.
“Some will be in places where they are the only local higher education provider, with damaging impact on the local community and economy.”
It adds: “Universities need investment from Government to protect the student interest, to maintain research capacity, to prevent institutions failing and to ensure that universities are able to play a central role in the UK’s economic and social recovery following the crisis.”
The proposals for the Government include doubling QR research funding, which is around £2bn, for 2020-21, as well as providing bridging loans for institutions suffering significant income losses.
UUK is also calling for a one-year stability measure in the admissions process which would only allow institutions in England and Wales to recruit UK and EU undergraduate students up to the sum of their total forecasted numbers.
The organisation has said the measure would avoid “volatility” in the system by stopping institutions from embarking on a large expansion of UK student numbers to offset a fall in international students.
It comes after the vice-chancellor of Sheffield Hallam University suggested that a cap on student numbers may be needed to help universities deal with financial uncertainty amid Covid-19.
Alistair Jarvis, chief executive of UUK, said: “The package of measures we have proposed today will support universities across all four nations of the UK to ensure that they remain able to weather the very serious financial challenges posed by Covid-19.
“It will help to protect the student interest, to maintain research capacity, to prevent institutions failing and maintain the capacity to play a central role in the recovery of the economy and communities following the crisis.”
Earlier this week, five unions representing higher education staff urged the Government to ensure universities did not “go out of business” amid Covid-19.
Jo Grady, general secretary of the University and College Union (UCU), one of the unions which wrote to the universities minister, said: “This looks like a piecemeal approach that fails to recognise the size of the problem, or the damage we risk doing to our academic capacity.
“We need a fundamental shift in how universities operate if we are to protect our institutions, staff and students, and to ensure higher education can play its vital role in the recovery.”
Eva Crossan Jory, vice president for welfare at the National Union of Students (NUS), said: “Our further and higher education systems are at risk and it’s a generation of students who will pay the price if we don’t act now.”
A Department for Education spokesman said: “The Government is very grateful for the work universities are doing in the fight against coronavirus – from supporting students, undertaking ground-breaking research and providing specialist equipment.
“We recognise the outbreak poses significant challenges to the sector and the Government is working closely with universities to understand the financial risks and implications they might face at this uncertain time.”