Ministers split over university bailout package

Ministers are reportedly split over providing a bailout package for universities.

It comes as vice-chancellors warn of institutional bankruptcies in the Midlands and north of England, and new figures suggest that international students will avoid the UK during the Covid-19 pandemic.

There is reportedly an impasse between the Treasury, led by chancellor Rishi Sunak, and the Department for Education (DfE), led by education secretary Gavin Williamson.

Mr Williamson has pushed for a stabilisation package to offset the losses that universities face, as a result of falling international tuition fees and falling revenue from other sources, such as conferences.

However, the Financial Times reported that the Treasury is resisting efforts to directly support universities, and that the Treasury “was not receptive to what it sees as special pleading”.

Although there is broad support for a higher education bailout, the Treasury argues that universities should exhaust other options of funding first.

Bolton, Sunderland and Wolverhampton universities were all identified as among the most financially vulnerable.

An analysis by KMPG has predicted that the economic impact of Covid-19 will hit the West Midlands harder than any other region.

There is a very significant chance of some institutions going bust – and part of this proposal is to prevent that from happening

– Alistar Jarvis

The regional economy is forecasted to shrink by 10.1%, and the East Midlands will contract by 9.7%. 3

One university leader is quoted as saying: “These universities are major employers in their regions, and all train nurses and other healthcare professionals – do we really want them to go to the brink of bankruptcy?”

Earlier this month, Universities UK (UUK) proposed a series of measures to the government to deal with economic difficulties caused by Covid-19.

This emergency funding would cost at least £2 billion, and universities would cap student numbers in exchange.

Alistair Jarvis, UUK’s chief executive, said: “There is a very significant chance of some institutions going bust – and part of this proposal is to prevent that from happening.”

A spokesperson for the DfE said: “We understand the coronavirus outbreak poses significant financial challenges to the sector and are extremely grateful for the work universities are doing in the response.

“The chancellor has announced an unprecedented package of support, including the coronavirus job retention scheme and a range of business loan schemes, to help pay wages, keep staff employed and support businesses whose viability is threatened by the outbreak.

“We recently confirmed universities’ eligibility for these schemes, and we are committed to working closely with the sector to understand the financial risks they might face, stabilise the admissions system, and help them access the support on offer.”