Government scheme launched to help universities in financial difficulties due to coronavirus

Government scheme launched to help universities in financial difficulties due to coronavirus

• New Government scheme to support English universities at risk of insolvency as a result of COVID-19
• Scheme will help protect students, support local skills’ needs, and preserve the sector’s internationally-outstanding science base
• Universities to receive support subject to conditions, such as tackling low quality courses and reducing excessive vice-chancellor pay

Universities facing severe financial difficulties as a result of the coronavirus will now be able to apply for further Government support, the Education Secretary announced today (Thursday 16 July).

Gavin Williamson has announced details of a new restructuring regime, specifically for higher education providers, such as universities and colleges in England, that could be at risk of insolvency. The scheme aims to support the important role universities play in their local economies, and preserve the country’s science base.

Eligible providers will be able to seek this additional support to develop cost effective restructuring plans with conditions designed to focus the sector towards the future needs of the country, such delivering high quality courses with good graduate outcomes.
 

Education Secretary Gavin Williamson said:

“We understand the challenges universities are facing, which is why we have already provided a range of support to ease financial pressures. This new scheme will help those who are still facing financial difficulty as a result of COVID-19.

“As the country recovers from the pandemic we must look to the future, and our world-leading higher education has an important role to play in our success.

“We need our universities to achieve great value for money – delivering the skills and a workforce that will drive our economy and nation to thrive in the years ahead. My priority is student welfare, not vice-chancellor salaries.”

The plan builds on the higher education support packages announced in May and June, by the Department for Education and Department for Business, Energy and Industrial Strategy, as well as the range of business support measures the Government has put in place to support our whole economy. This included confirming higher education providers are eligible to access the Coronavirus Job Retention scheme and business loan schemes, as well as bringing forward tuition fee and research funding. The Restructuring Regime will only provide support after all other finance options have been exhausted and when there is a case to do so.

As a condition for taking part in the scheme, universities will be required to make changes that meet wider Government objectives, depending on the individual provider’s circumstances. This could include ensuring they deliver high quality courses with strong graduate outcomes, improving their offer of qualifications available, and focusing resources on the front line by reducing administrative costs, including vice-chancellor pay.

An independently-chaired Higher Education Restructuring Regime Board will be established, which will include input from members with specialist knowledge external to Government. The Education Secretary will draw on the expertise of the Board on individual cases before making a decision on whether to intervene. 

Financial support in the form of repayable loans will only be provided if there is a case to do so, and this is not a guarantee that no organisation will go into insolvency. It will only be offered as a last resort measure and with specific conditions that align with wider Government objectives. It would also require assurance that providers are fully complying with their legal duties to secure freedom of speech. 

Further details on the regime, including support and conditions can be found here.

Kate Green MP, Labour’s Shadow Education Secretary, commenting on the publication of the higher education restructuring regime, said:

“Covid-19 has had a devastating impact on universities, but they continue to provide the research and skills our country needs to move past the crisis. 

“Today’s announcement shows that the Government is willing to let cherished institutions fail, with catastrophic consequences for local and regional economies. 

“Instead of using this crisis as an excuse to centralise control over universities and force through cuts to courses, the Government should pledge that no university will be allowed to go bust.” 

UCU general secretary Jo Grady said: “This third so-called bailout in a matter of months suggests the government has recognised there is a serious crisis, but would rather use it to try and impose severe restrictions on universities than ensure their survival.

“Higher education is one of the few things we remain a world leader in, yet the government is prepared to exploit universities’ financial difficulties to impose evidence-free ideology and reduce the diversity and strength in depth of university courses and research. What are these so-called low-quality courses? Where is the evidence that cutting the number of people going to university can improve our economy?

“The government’s obsession with graduate earnings as a sole measure of quality exposes its refusal to engage with the real issues behind inequality. Graduate salaries are heavily determined by pre-existing factors such as gender, race, social background, contacts and previous education.

“We need a proper plan to underwrite the funding that universities are projected to lose to avert a looming crisis. All degree study has the potential to increase earnings, but it also brings with it so much more than that as students gain many social and cultural benefits from going to university.”