Will UK universities survive the lockdown?

Education ministers are clashing with Treasury counterparts over a proposed bailout package for universities, as vice-chancellors warn of bankruptcies at institutions in the Midlands and north of England.

New figures suggest that international student enrolments will drop significantly for the next academic year as a result of the coronavirus outbreak, cutting off a key source of income for UK universities.

What is the debate?

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Education Secretary Gavin Williamson is arguing in favour of a stabilisation package that would offset losses experienced by universities as a result of the global pandemic.

But Chancellor Rishi Sunak and his Treasury colleagues are “not receptive” to what they view as “special pleading”, arguing that universities should take other action before getting government assistance, the Financial Times reports.

Wolverhampton, Bolton and Sunderland universities are believed to be among the most financially vulnerable institutions.

An unnamed university leader asked: “These universities are major employers in their regions, and all train nurses and other healthcare professionals – do we really want them to go to the brink of bankruptcy?”

According to the newspaper, a cross-departmental meeting last week indicated that there was broad support across government for a university bailout, but the Treasury remains the biggest obstacle.

In a bid to win over the doubters, the Department for Education (DfE) is pushing for universities to accept new controls on student numbers and to cut back on “low-quality” courses that generally send graduates off into low-paying jobs, The Guardian reports.

How great is the risk to higher education institutions?

Universities are facing a worrying lack of certainty over the numbers of students expected to enrol at the start of the 2020-21 academic year in September, with concerns growing in the wake of warnings from government advisers that social distancing measures are likely to remain in place in the UK until at least December.

The falling student numbers means falling revenues, with the loss of international students - who pay higher fees - hitting especially hard.

A recent British Council survey of potential students from India, one of the UK’s main sources of international students, found that 29% had already cancelled their plans to study overseas or were likely to do so.

And similar drops in the number of arriving Chinese students are expected.

A new study by the University and College Union (UCU) suggests that a total of up to £2.5bn in tuition fee income could be lost in the next academic year - with the greater part of that deficit resulting from the expected drop in overseas students.

“The report estimates that there will be a 47% decrease in international student enrolment in the next academic year due to coronavirus, costing the sector £1.5bn,” says Times Higher Education.

And the reaction?

UCU’s general secretary, Jo Grady, has described the predicted drop in students and international fees as “alarming”.

“Our world-renowned universities are doing crucial work now as we hunt for a [coronavirus] vaccine and will be vital engines for our recovery both nationally and in towns and cities across the UK. It is vital that the government underwrites funding lost from the fall in student numbers,” she said.

“These are unprecedented times and without urgent guarantees, our universities will be greatly damaged at just the time they are needed most.”

Alistair Jarvis, chief executive of Universities UK, said the UCU report had “helpfully” highlighted the “critical financial risks for the sector”.

The organisation, an umbrella group for the sector, is urging the government to frontload promised increases in research funding, to compensate for the loss of other revenue and cross-subsidies.

Responding to the calls and growing concerns, a DfE spokesperson said: “We understand the coronavirus outbreak poses significant financial challenges to the sector and are extremely grateful for the work universities are doing in the response.

“The chancellor has announced an unprecedented package of support, including the coronavirus job retention scheme and a range of business loan schemes, to help pay wages, keep staff employed and support businesses whose viability is threatened by the outbreak.

“We recently confirmed universities’ eligibility for these schemes, and we are committed to working closely with the sector to understand the financial risks they might face, stabilise the admissions system, and help them access the support on offer.”