THIRTEEN universities face ‘a very real prospect’ of insolvency following the coronavirus crisis unless they receive a government bailout, a new report by the Institute of Fiscal Studies (IFS) shows.
The National Union of Students (NUS) said the crisis has ‘exposed many of the flaws inherent in running our education like a market.
‘When funding is so unstable, it’s no wonder that our universities and the jobs of thousands of academic and support staff are now at risk,’ said a spokesperson.
‘We are of course especially concerned about the risk to students that this instability poses.’
The University and College Union (UCU) general secretary, Jo Grady, called on the government ‘to step in and guarantee lost funding for universities so they can weather this crisis and lead our recovery on the other side.
‘We need a comprehensive support package that protects jobs, preserves our academic capacity and guarantees all universities’ survival,’ said Dr Grady.
High-ranking universities with large numbers of international students face the largest immediate drop in income, says the IFS, but the ‘least prestigious’ universities are at the greatest risk.
The IFS does not name these universities, but says a targeted government bailout would be the most cost-effective plan.
The fallout from Covid-19 ‘poses a significant financial threat’ across UK higher education, with most institutions left with reduced net assets, says the analysis.
They say the total size of the sector’s losses is ‘highly uncertain’ – anywhere between £3bn and £19bn, or between 7.5% and almost half the sector’s annual income.
The researchers’ central estimate is an £11bn loss, amounting to a quarter of the sector’s annual income.
Lockdown-related losses include:
- fewer international student enrolments;
- student accommodation, conferences and catering;
- losses on long-term investments.
In addition, universities which are running pension scheme deficits will see them widen during the pandemic as investments stagnate.
But there are big variations between institutions, says the study.