Welsh universities face ‘serious and pressing’ threat in virus crisis

Analysis shows that a dramatic loss of fee income will hit institutions in Wales harder than the rest of the UK

May 15, 2020
Source: iStock

Universities in Wales face a “dramatic” loss of income because of the coronavirus crisis and will likely be hit harder than their counterparts in the rest of the UK, a report has found.

The research, published by Cardiff University’s Wales Governance Centre, estimates that Welsh institutions could lose anything between £100 million and £140 million in 2020-21 from fee income alone.

According to Cian Siôn, author of the report and a researcher on the Wales Fiscal Analysis programme, Welsh universities needed “tailored support” because they were “already in a relatively weaker financial position before the crisis, so this is a blow that will be felt more acutely here”.

The country’s institutions may be less able to adapt and respond to the fallout from the pandemic than their counterparts in other UK countries, the report said.

The analysis calculated that if there were a 50 per cent drop in international student recruitment, in line with results from multiple surveys, it would mean a £60 million reduction in tuition fee income during the next academic year in Wales. This would leave Swansea University, Aberystwyth University, the University of Wales Trinity Saint David, Bangor University and Cardiff University facing “significant operational challenges in the medium-term”.

Meanwhile, if there is a fall in the number of domestic students, Wrexham Glyndŵr University, the University of Wales Trinity Saint David and Cardiff Metropolitan University have the most to lose, according to the report.

A 15 per cent reduction in new UK student numbers, in line with results from a YouthSight and Ucas survey, would reduce Welsh universities’ fee income by about £25 million, the analysis found.

Universities are already losing out on income from accommodation, conferencing and catering activities as a result of the lockdown, with residences and catering operations accounting for between 2 per cent and 11 per cent of university income in Wales, according to the report.

On average, staff costs take up 66.5 per cent of total income, “meaning that any reduction in operating expenditure to offset lower fee income will likely impact staff numbers”, the report said. Welsh universities also have higher-than-average staff costs as a proportion of income compared with the UK average of 63.2 per cent, the analysis showed.

The report also emphasises how important universities are to Wales − universities directly employ 17,300 full-time equivalent members of staff, and spending by students and visitors supports an estimated 50,000 jobs in the local economy, it said.

Immediate measures to support the sector − such as the Welsh government’s commitment to reprofiling tuition fee payments so that universities will receive more cash in the first term, plus the UK-wide job retention and business loan schemes − will be helpful in the short term, but “the reliance on fee income from multi-year programmes means that the residual effects of a smaller student cohort in September will likely be felt for several years”.

According to the report, “given the current constraints on the Welsh Budget, delivering support to universities in the form of research capital funding, as the Scottish government has done, may provide the Welsh government with increased scope to act”.

“In the absence of further government support, Welsh universities face a serious and pressing threat to their financial position…operational challenges could ultimately lead to job losses and a shrinking of the sector in Wales,” it said.

anna.mckie@timeshighereducation.com

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