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Will universities get a bail out, and at what cost?

24 April 2020

Patrick Traynor looks at the challenges facing higher education as a result of Covid-19

The Government has turned down a “two billion-pound bailout plea” from the university sector, according to recent reports in the Financial Times.  

The idea that the higher education sector has been forced to plead for a bailout might seem surprising, but the reality is that many of the UK’s universities operate on very fine margins and the Covid-19 crisis could push some into crisis.

Tuition fees are an essential revenue stream for universities, and this stream looks set to shrink in the next academic year. Potential students, both domestic and particularly international, are reportedly choosing to defer entry to the 2021-22 academic year.  This is partly due to uncertainty around how long social distancing measures and travel restrictions will be in place, as well as concerns around the impact this will have on the quality of education in the 2020/21 academic year. 

A mass deferral will put huge holes in revenue streams, and universities without a substantial research income will be particularly vulnerable. Reports suggest that Bolton, Sunderland and Wolverhampton are most under threat in the short term, but the strain will be felt by almost every university across the UK.

Former Universities Minister Sam Gyimah made the case for the Government to bail out the sector, stating that higher education is a strategic asset for the country” calling it an “anchor employer in most towns, leading export sector, and cornerstone of our skills, research and industrial base. Mr Gyimah asserted that if the sector did not receive the financial support it needs, then the government’s aims to protect the economy and promote Global Britain “will ring hollow”.

According to latest reports, there is a split amongst ministers and departments on whether or not the Government should provide this bail out. Education Secretary Gavin Williamson is said to be in favour, but is reportedly facing a battle against the Treasury , which is more resistant to a bail out. If a high profile university does run out of money, the Government will have a stark choice to make.

Government bailouts have a history of coming with conditions, and The Guardian has reported that the government is pushing the sector to “to accept controls on new student numbers, and for making support conditional on shrinking ‘low-quality’ courses, such as those whose graduates go on to earn well below sector averages”.  This reflects a long-held view amongst some figures in government that there are too many courses that don’t deliver value because they aren’t rigorous enough. 

But what is a ‘low-quality’ course and how should this be measured? At present there is no agreement on how to define or measure value, and every metric is fiercely debated as to whether it truly achieves what it sets out to do.

The quality debate also comes during a time where society is currently reflecting and reassessing the skills that it values most. Many of those battling on the frontline against Covid-19 are in jobs such as nursing and social care that have been traditionally lower-paid.  Metrics that focus purely on the financial success of alumni are unlikely to reflect the new national mood, and universities will be keen to stress the wider societal value they add – both regionally and nationally.

For the university sector, the next few weeks will be vital as it seeks to secure funding ahead of the delayed impact of the crisis in September.  Yet to do so, it will have to enter into a hurried debate around course quality and value in order to meet the likely conditions imposed by Government for a bailout.