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Universities and Covid-19: Are we looking at a longer term reconfiguration of the sector?

Words by:
Associate Director
June 29, 2020

Universities and Covid-19: Are we looking at a longer term reconfiguration of the sector?

Since the early days of lockdown, as students returned home in droves and lecturers rushed to work out how to move teaching online, it has been clear the Covid-19 crisis would have a significant impact on universities.

In April, Universities UK warned universities were facing a £2.5bn black hole, thanks to a loss of income from accommodation, catering and conferences, as well as the significant impact of an expected fall in international student numbers and a rise in deferrals by new domestic students.

Compared to its action to support other sectors, the government has been slow to set out support for HE, this is despite the significant research, economic and societal contributions universities make to the UK.

The government’s package of support

It took until 4 May for any package of support to be set out. And it wasn’t until this point that the government also formally confirmed universities were eligible for the wider business support measures available, after reports many were struggling to secure loans under the new schemes.

Ad hoc funding boosts for specific research projects aside, until this weekend the main measures announced have been a return to student number controls for 2020/21, a bolstered clearing process to give students more opportunities to switch places once their results are in, and the bringing forward of £2.6bn worth of tuition fee payments for the autumn term and £100m of quality-related research funding to the current academic year to help financial and research stability.

This weekend, two further measures were announced to help mitigate the loss of international student income in order to protect funding for high quality STEM-focused research.

The first measure is £280m of government funding for grant extensions so research impacted by the crisis can continue.

The second is the introduction, from the autumn, of low-interest, long pay-back period loans for research-active universities, supplemented by a small amount of government grants. The government will cover up to 80% of a university’s income losses from international students for 2020/21, up to the value of the university’s non-publicly funded research activity.

All these measures seem sensible at a time of crisis and when funding sustainability is a genuine concern for the sector. However, they are unlikely to cover all the financial implications of this crisis, and when combined with the delays in setting out support, raise questions about its longer-term outlook for higher education in the UK.

The question is, what is the government trying to achieve here?

Both the student number control announcement and this weekend’s research support announcement favour those well-regarded, traditional research-intensive institutions.

The student number controls are based on an institution’s projected intake and allow additional growth of up to 5%. This should mainly benefit those big players that had strong domestic student growth plans for 2020/21.

Meanwhile, the loans announced this weekend are capped at the level of an institution’s non-publicly funded research, so they are focused on ensuring funds are directed towards universities conducting research and will not cover the elements of international student income used elsewhere. That means this will not help those primarily teaching focused or less research intensive institutions.

At the end of all these announcements, the government has also been clear that universities are expected to make efficiencies and that it will only intervene if providers fail as a last resort. This will be done via a new restructuring regime which is being developed by the DfE, BEIS and the Treasury, through which they will review providers’ circumstances and assess the need for restructuring, with attached conditions.

This has been interpreted by some in the sector as indicative of a longer-term plan from the government to shake-up the HE sector, with the government happy to reconfigure those parts of the sector seen as less successful to deliver more FE or merge with other institutions.

Certainly, reforms to the sector were always on the table. We are still waiting for the response to the Augar Review – which is still coming – which when coupled with changes to the TEF, the delays to the REF, and the development of KEF, mean sector reforms are likely.

What do institutions need to do?

In a political environment where outstanding research, particularly in STEM areas, is such a highly valued commodity, those institutions with less of a research reputation, and a focus instead on teaching or non-STEM support, could struggle.

Augar himself recently suggested that rather than the fee cuts he suggested in his review, current fees should be frozen and teaching grants for ‘strategic subjects’ increased. He also mooted the idea of a system where universities pay back grants used for ‘over-supplied, low-cost courses’ with that funding redirected to higher priority subjects. This could be very problematic for those institutions that focus delivery on subjects seen as a low priority.

Value is ultimately the aim: from a national and regional economic perspective and in terms of meeting the major challenges facing government on Covid, issues like climate change, and levelling up the country. At the moment the government seems to see that as being derived from high quality, STEM-focused, research intensive institutions.

Those that don’t fit that mould will need to prove their worth and demonstrate how their work does derive value – either in those priority areas for government or by evidencing why their areas of focus are just as important. This will take time and a concerted effort to speak to the right people, with the right evidence, at the right time.

But without it, there could be parts of the sector who are left behind or see detrimental interventions at a time when they are already in a precarious position.

 

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