Universities in Wales face a “dramatic” loss of income as a result of Covid-19

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

The report by Cardiff University’s Wales Governance Centre estimates losses of between £100 million and £140 million in 2020/21 from the decrease in student fees alone.

Cian Siôn, a researcher on the Wales Fiscal Analysis programme that wrote the report, said: “Taken together, pressures on student recruitment as a result of the COVID-19 pandemic represent a serious financial threat to the Higher Education sector in Wales. Several surveys point to a sharp drop in international and home student enrolment in September. 

“Welsh institutions were already in a relatively weaker financial position before the crisis, so this is a blow that will be felt more acutely here.”

Research from a UCAS survey concluded that a 15% reduction in new UK student numbers would reduce Welsh universities’ fee income by about £25 million. 

Universities such as Cardiff, Aberystwyth, Bangor and Swansea will be hit particularly harshly due to their reliance on international student fees. 

Welsh institutions were already in a relatively weaker financial position before the crisis, so this is a blow that will be felt more acutely here

– Cian Siôn

The report calculated that a 50% drop in international student recruitment would cause a £60 million reduction in tuition fee income during the next academic year in Wales. This would leave many universities facing “operational challenges in the medium-term”.

UK universities are already being hit by financial losses on accommodation, conferencing and, in particular, staff costs. 

Staff costs take up an average of 66.5% of total income at Welsh universities, higher than the UK average of 63.2%, “meaning that any reduction in operating expenditure to offset lower fee income will likely impact staff numbers”, the report said. 

As Welsh 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, this economic reduction is likely to affect the economy. 

A spokeswoman for Universities Wales said: “Wales’ universities are making important contributions to support the national effort in response to COVID-19, and will have a vital role to play in the Wales’ recovery from this crisis.

“Welsh Government and UK Government must take urgent action to provide support to ensure universities are able to weather these very serious challenges, and to protect students, maintain research, and retain our capacity to drive the recovery of the economy and communities.”