Government support package could ‘negatively impact’ English sector

The government’s announcement of a package of support for universities, including bringing forward £2.6 billion in tuition fee payments, has disappointed many in the sector, who fear that the financial measures do not go far enough to protect universities and could introduce more problems into the sector.

The measures, announced on 4 May, also include capping student numbers next year, at a 5 per cent additional margin on top of universities’ forecast recruitment, and bringing forward £100 million of quality-related research funding.

Michelle Donelan, the universities minister, said the package would “boost support for students, stabilise the admissions system and ease pressures on universities’ finances”.

However, Mary Curnock Cook, a former chief executive of Ucas, told Times Higher Education that “a cap on student numbers is a cap on student choice, which will probably lead to lower overall domestic recruitment this year”.

“I’d prefer to see students receive fee rebates, recognising only partial delivery of the student experience, with universities continuing to receive the full tuition fee to support the costs of maintaining mothballed services,” she continued.

“This would increase students’ confidence and reduce deferrals. Bailing out students to ensure they start or continue their studies might be the best way to bail out universities.”

Ms Curnock Cook said she doubted that universities would be able to hit the cap of 5 per cent on top of forecast recruitment “in a year of flat demand massively disrupted by Covid uncertainty…With or without it, some universities are going to need financial support.”

Gavan Conlon, a partner at London Economics, which recently compiled a report for the University and College Union estimating that universities will suffer a £2.6 billion shortfall in the next academic year because of the pandemic, agreed that the level at which the cap was set was not helpful.

Experts have warned that the limit is so relaxed that more prestigious institutions will still be able to hoover up recruits, leaving less prestigious institutions at a huge loss.

According to Dr Conlon, although better than no cap at all, the new system was likely to “have a negative impact on a number of HEIs that might have weathered the pandemic relatively well otherwise”.

“There do not appear to be any actual significant guarantees of financial support despite the very distinct possibility that university finances are going to be severely hit,” Dr Conlon said.

“There are some good elements in the proposals, including the potential for government purchase of illiquid assets and the additional regulatory powers for the Office for Students relating to registration conditions,” he added.

"Fundamentally, the package of support does little to protect higher education institutions, but at least the government has started the conversation with universities,” Dr Conlon said.

Jo Grady, general secretary of the UCU, agreed that it was “encouraging” that the government recognised the need to provide support for universities. Nevertheless, she said, “this package does not deliver the protection or stability that students, staff and the communities they serve so desperately need.”

Dr Grady added that the number cap would not prevent the wealthiest universities from expanding their domestic student base “at the expense of other more locally focused institutions”.

“Instead of kicking the can down the road, the government must underwrite funding lost from a fall in domestic and international student numbers and remove incentives for universities to compete against each other at a time when we need to be pulling together,” she said.

Chris Skidmore, the former universities and science minister, tweeted that while the advance on student loans was welcome, it “ultimately does not account for potential huge loss of income due to reduction in international students” and puts regional institutions at risk.

The Russell Group of research-intensive universities said the “big remaining challenge is to address the financial sustainability of research”.

Nick Hillman, director of the Higher Education Policy Institute, urged the sector to see the package as starting point for future support.

He said that although it was a “mixed bag”, the main challenge for the government was that it was unclear what the situation would be in September.

Mr Hillman also pointed out that the universities minister had said the government would continue to review institutions’ financial circumstances and had not ruled out further financial support.

“The real pain will come next year, which is why this should be seen as an initial support package. Now is not the time to throw our toys out of the pram but to use this as a secure base to jump off from,” he said.

anna.mckie@timeshighereducation.com