Government refuses multi-billion pound bailout for universities

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The UK government has reiterated their commitment to “ensuring our world-class HE system delivers for all students and the wider economy” in their Government Support Package. There will be no government bailout of the HE sector, but measures including earlier payment of tuition fees, use of government support schemes and a cap on student enrolment per university have been announced. Current students will not receive tuition fee refunds on account of COVID-19 related disruption.

Universities Minister Michelle Donelan has said “We are working determinedly with the sector and my counterparts across the UK, to support them during this time”. The government support package guarantees HE institutions will receive tuition payments, totalling a projected £2.6bn across the sector, earlier, providing more cash in the first academic term. Universities are also eligible to apply for government support schemes including the Coronavirus Business Interruption Loan Scheme (CBILS), Coronavirus Large Business Interruption Loan Scheme (CLBILS), COVID Corporate Financing Facility (CCFF) and Coronavirus Job Retention Scheme. Depending on take-up these schemes represent potentially hundreds of millions in funding across the sector.

However, at this time there are no additional funds earmarked for the HE sector specifically, leaving some HE officials dissatisfied. UCU General Secretary Grady has criticised the package for not providing enough support and demands “the government must underwrite funding lost from a fall in domestic and international student numbers”. Nevertheless, the government believes their support package is adequate to stabilise most institutions finances and will only intervene to prevent the closure of any HE provider “as a last resort”.  

The business consultancy London Economics have been commissioned by the UCU to predict the impact of COVID- 19 on the HE sector, and they estimate a 24% decline in student enrolment of the 2020-21 cohort compared with 2018-19. This reduction will result in an average loss in income of £20 million per institution, with universities dependent on international student fees disproportionately affected.

For students enrolling at Newcastle University in the 2017/18 academic year, 5,415 were from outside the European Union, representing 20% of total enrolment according to the Higher Education Statistics Agency. Prices vary by course, but international students typically pay higher tuition fees than the UK/EU students. For example, a BSc in Biology at Newcastle University costs £9,250 per annum for UK students but £22,800 per annum for international students.

Continued restrictions of international travel into the next academic year due to COVID-19 have the potential to severely restrict the international student intake and result in lost income. This has been a significant motivator for HE institutions requesting robust financial support from the government in recent weeks. The Institute for Fiscal Studies reports international students are one-fifth of the total student population in the UK but provide nearly one-third of all tuition income.

However, long-term projections for the HE sector are not all bad. Nick Hillman, Director of the Higher Education Policy Institute, has reported in Times Higher Education to expect an increase in student enrolment in HE over the upcoming years. Hillman expects students to turn to HE to bolster their employment opportunities in the wake of the inevitable economic downturn resulting from COVID-19. Ultimately, the effects of coronavirus on the HE sector is still unknown with variables such as the timeline for quarantine and social distancing making guarantees impossible.

Last modified: 26th May 2020

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