Universities UK: state bailout required to save institutions

Vice-chancellors’ group makes unprecedented appeal for government aid following dire financial forecasts caused by coronavirus restrictions

April 10, 2020
Source: istock

Some UK universities could go bust unless they receive significant government support given the immense financial impact of the coronavirus shutdown, Universities UK has warned.

In a direct appeal to Rishi Sunak, the chancellor, and other senior cabinet ministers published on 10 April, the organisation said that “some universities will face financial failure, with severe impacts on their students, staff, local community and [the] regional economy” without “proactive support” from government.

“Others would come close [to failure] and be forced to reduce provision for students or to significantly scale back research activities and capacity,” added Universities UK, which said that the sector was facing losses in the region of £790 million from accommodation, catering and conference income, as well as additional spend to support students learning online, in the current 2019-20 academic year alone.

The potential impact on UK higher education in 2020-21 was also “extreme”, added Universities UK, saying that institutions were projecting a “significant fall in international students and a potential rise in undergraduate home student deferrals”.

A 100 per cent fall in international students will deny UK higher education £6.9 billion in income, it added.

Setting out a detailed list of proposals, which were endorsed by UUK’s board on 8 April, Alistair Jarvis, the group’s chief executive, said that the support would help ensure universities “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,” said Mr Jarvis, who added that institutions “moving forward will act collectively and responsibly to promote sector-wide financial stability in these challenging times and help the country to get back on its feet and people to rebuild their lives”.

The specific measures proposed by UUK include a 100 per cent increase in quality-related research funding for 2020-21 – which would equate to about £2 billion annual uplift – and that the state funding agencies pay the full economic cost of research, rather than providing about 80 per cent of funding.

UUK also proposed a one-off return to student number controls for 2020-21 – with institutional caps frozen at 2019-20 levels, though a 5 per cent increase in undergraduate recruitment would be permitted.

It also called for “targeted support to protect and sustain courses that meet the national need for key public sector workers, maintain high-cost STEM provision and facilitate planned growth in 2020-21 and 2021-22 in key areas such as nursing, healthcare, medicine [and] teaching”. It also urged government to consider targeted support for small and specialist institutions, plus help for measures that aim to support retention and recruitment of students from disadvantaged backgrounds.

It also said that a “transformation fund” should be established to support universities over the next two to three years “to reshape and consolidate through federations and partnerships or potentially merge with other higher education institutions, further education colleges or private providers”.

More clarity on whether universities could access the government’s Job Retention Scheme, which would allow them to furlough staff on 80 per cent of their salary up to £2,500 a month, was required, while greater flexibility on student visas would also be needed, said Universities UK.

Its blueprint for the sector’s survival “provides a commitment to universities doing everything they can to reduce costs and further increase efficiency through strong actions such as recruitment freezes and new tighter controls on spending”, explained Universities UK, adding that “when paired with this package of government support it will mean the higher education sector can maintain capacity to play its vital part in the difficult period ahead for the nation”.

Welcoming the UUK plan, Tim Bradshaw, chief executive of the Russell Group, said that the “whole higher education sector – like almost all others in the UK – is at risk in these unprecedented times”.

“The financial situation for universities is complex, with everything from international student flows to charity and collaborative research income disrupted by the Covid-19 crisis,” said Dr Bradshaw.

“To secure long-term sustainability for students and for the UK’s vital research and innovation base, sector-wide financial support and stabilisation measures are needed,” he added, saying that the “right investment now will underpin the future growth and prosperity of the country”.


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Reader's comments (11)

Any overpaid VCs offering to take a wage cuts ? Anything about the huge money being wasted on excessive and unnecessary admin and money wasted on generally useless quality control? What about getting rid of the QAA and all the associated bureaucracy it creates ?
Do you wonder what 1/3 of administrative staff are doing during the work week currently? As a faculty member, I am marking, prepping a new exam, and a revised later semester course, as well as getting ready to advise dissertation students on how to navigate data collection this summer. Also carrying through research studies with colleagues around the world. But I receive emails all day with administrators coming up with great ideas. More work for me. More confusion for students regarding exams. On the bright side, I have heard from private sector employers who say they have never been able to be more innovative now that processes need to be changed quickly and they can tell compliance folks (compliance to preferred procures, not laws) that work is being done different. Crossing our fingers that HE comes out of this more nimble, more responsive, and 33% lighter.
Its a measure of the tone deafness at senior levels. VC's should immediately have cut their salaries to the PM level weeks ago, then 'asked' other senior staff to do the same. They should have done this before asking for a bailout. You do wonder who advises them sometimes. You can see the headlines ahead. I know saving a few million does nothing about the big picture, but bailout is political and needs public support. Perhaps some VC should read the newspapers by themselves and sense the public mood.
The future has to involve public ownership with “top” salaries set by parliament and a step change in regional planning. Marketisation has failed at the first hurdle it seems but mergers and optimisation are inevitable with success hugely dependant on big change at the top.
It's correct to comment that 'Marketisation has failed at the first hurdle' ... and it's also correct to comment on the infected modern University Sector; bloated by its own administrative virus. It's neither gratifying or satisfying to witness the University Sector's leading figures struggling to cope with something of their own making. At a time when they should be able to demonstrate to their critics just what their leadership credentials are, they employ the managerial tool which betrays them ... the begging bowl!!
Wondering how many uni staff have been furloughed? Or will they be protected by a massive bail-out?
Many academics are working from home producing alternative assessment materials amongst other things. Staff who work in, for example, catering will likely be furloughed but the tone of this message implies that we will get special treatment. Like many sectors, HE is bound to see cuts and difficulties so we are in a similar position to lots of other professions.
A bail out without massive Reform and Reduction in the sector would be the wrong action. Universities cannot have it both ways: independence when it suits them and massive bail out when it doesn't. The sector still needs to make a "Public case and a Business case" to justify the massive investment made by the taxpayer and the students in the sector. It currently fails too often in teaching, skills training and research appropriate to the world today. The country needs a smaller University sector unless it can prove it adds value beyond the cost of the current investment being made. It needs to earn the respect it seeks. Bail out is not the answer.
Interesting comments.
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Governments across the world have major responsibilities for other sectors of the economy and providing major financial support for all these sectors is obviously impossible. Governments would obviously prioritize. Given the harsh realities of what is facing governments, it is indeed for them to prioritize sectors where people are most desperate: social welfare, agriculture for example. Just as the covid virus has dealt a harsh unexpected blow globally, so too universities have to make major immediate strategic decisions like governments. University administrators can take salary cuts; reduce the size of their bureaucracies by half; offer to collaborate with the government to reduce inflation or reduce crime, unemployment and poverty in selected communities or even ask alumni over the last five years to contribute 50 pounds bimonthly to their alma mater's fund. Government would certainly be willing to pay the university for its contribution in that regard and even reduce the cost of online degree programs/courses in order to attract more students to such online offerings. Despite how much we cherish our institutions, university and otherwise, pre-covid conditions will never return.