Government announces financial relief for universities

There is some comfort for higher education providers, but a lot less help than the sector had asked for

Universities in England will get some financial relief, the government has announced, but Whitehall’s package of measures to shore up higher education falls considerably short of the sector’s wish list.

The department for education (DfE) will bring forward some tuition fee payments to earlier in the academic year. Higher education providers (HEPs) will receive domestic tuition fee revenue in two instalments in September and May, meaning the usual February payments will be moved forward.

This announcement comes with support for universities to charge students £9,250 in fees.

The cross-department plan also includes £100 million in quality-related research (QR) funding to “protect vital research activities” in the 2019/20 academic year. This money has been brought forward from funds that were due to be allocated next year.

In exchange for this lifeline, the government has said it will cap UK and EU student numbers at a temporary level, which will be based on universities’ recruitment forecasts plus an extra 5%.

The DfE will also temporarily hand the Office for Students (OfS) the power to fine universities £500,000 for practices that “do not serve the interests of students or the public”.

The government’s response to the higher education crisis comes with a warning that universities should take “steps to improve efficiencies and manage their finances in order to avoid cash flow problems further ahead”.

The statement cautioned vice-chancellors that government would only intervene if a provider was at risk of closure, and only then if “there is a case to do so, and only where it believes intervention is possible and appropriate, and as a last resort”.

I know this is an unsettling time for all involved, and we are working tirelessly with the sector to do everything we can to stabilise admissions and protect a vital part of our country’s economy and society
– Gavin Williamson, education secretary

On Friday 10 April, Universities UK (UUK) wrote to the Treasury to request that government double QR funding to nearly £4bn next year to support institutions across England in coping with the anticipated drop in revenue in 2020/21.

The UUK’s paper also suggested government introduce several long-term targeted funds – such as grants for innovation and transformation – to help universities restructure their activities for the future. The body representing universities estimated the sector will lose £790 million this year from accommodation, catering and conference income, and could lose up to £6.9 billion next year if the numbers of international students drops dramatically.

UUK president Prof Julia Buckingham said Whitehall’s response “indicates a welcome recognition from government of the central role that universities will play in the recovery of the economy and communities and the urgent need to provide support for universities to weather the severe financial storm”, and added: “It is clear the government has listened to the concerns raised and has drawn from the suggestions that the sector has made.”

But the UUK president stopped short of praising the government’s response.

“Universities will want to examine and understand more fully the details of today’s announcement and then work with government to ensure that detailed measures are developed to meet both the scale and diversity of pressures that universities are facing – including further support to protect the strength, capacity and quality of the research base and ensure the sector is positioned to support economic and social recovery through research and innovation,” Prof Buckingham said.

“Further work will also be needed by the UK and devolved governments to build on the package to ensure that the necessary support is in place for universities in the devolved nations.”

Government announces financial relief for universities Julia Buckingham
Prof Julia Buckingham said: “Further work will also be needed by the UK and devolved governments to build on the package.”

Along with front-loading tuition fee payments and capping student numbers, the government has also announced that students will benefit from an “enhanced” and “personalised” clearing system from Ucas this summer. The government will also have the discretion to allocate an additional 10,000 places, with 5,000 ring-fenced for nursing, midwifery or allied health courses to support the country’s vital public services.

Related news: Protect and support key public service provision at universities, say MillionPlus and Universities UK

The government asked the OfS in January to prioritise funding through the teaching grant to STEM and specialist subjects. “This move will be of more importance in responding to coronavirus,” the DfE said in its latest message to the regulator.

The latest announcement also includes a decision to allow universities to use the student premium funding received between April and May to boost hardship funds for students in financial difficulty.

The UK “continues to welcome overseas students”, the DfE said, and pledged that ministers from the department would set up a new group with the department for international trade (DIT) to consider how to update the international education strategy. Ministers from DfE and the department for business, environment and industrial strategy (BEIS) will establish a research sustainability taskforce with the devolved administrations to support the UK’s economic recovery.

Government confirmed universities will be eligible to apply for its business loan support and the coronavirus job retention scheme.

Education secretary Gavin Williamson said: “I know this is an unsettling time for all involved, and we are working tirelessly with the sector to do everything we can to stabilise admissions and protect a vital part of our country’s economy and society.

“I am very grateful to universities for their innovation and dedication in their frontline response at this time.”

Following the announcement that the OfS would receive extra powers, the regulator’s chief executive Nicola Dandridge said: “We are alive to the concern that our proposals may overstep the mark in curtailing universities’ autonomy. But in these extraordinary circumstances, it is clear to me that the need to protect students’ interests and the stability of the sector is more important, and our strictly time-limited proposals are a necessary and proportionate means to do this.”

We are alive to the concern that our proposals may overstep the mark in curtailing universities’ autonomy
– Nicola Dandridge, Office for Students

The list of prohibited practices includes converting existing conditional offers to unconditional, lowering academic or language requirements for international applicants, offering incentives for students to accept offers, and engaging in aggressive marketing activity designed to attract students away from other choices.

The regulator will also fine universities for “making decisions that do not demonstrate high standards of good governance and could undermine public trust and confidence in higher education, for example by using government financial assistance for purposes that do not serve the interests of students or the public”.

Smita Jamdar, head of education at law firm Shakespeare Martineau, warned that the new OfS regime could lead to legal challenges.

“From a legal perspective, the obligations imposed by the condition appear broad and onerous and attach to a very wide range of decisions that providers are making at a time of unprecedented disruption and uncertainty,” Ms Jamdar explained in her blog.

“Providers will need to second guess the impact of their decisions on the sector as a whole and what view the OfS will take of each decision. Broad, unspecific obligations such as this create risks of unfairness and oppressive behaviour by regulators, and could lead to legal challenges.”

Ms Jamdar criticised the OfS guidelines because they can be applied retrospectively to conduct since 11 March 2020.

She also criticised the new powers because the “OfS will judge the material negative effect not only by looking at the direct consequences of the individual provider’s actions, but also what might happen if lots of providers did the same thing”. Ms Jamdar explained that that was a difficult area to regulate properly or fairly.

Labour wrote to the government on Wednesday 22nd April calling on the Treasury to underwrite higher education funding.

Shadow universities minister Emma Hardy described the government’s announcement today as a “disappointing package [that] offers no long-term security to our universities”.

In particular, Ms Hardy condemned the announcement that Student Premium Funding could be used to boost Student Hardship Funds.

“Using the student premium funding on student hardship today could further reduce the opportunities for disadvantaged students tomorrow,” she said, adding: “The government must urgently produce a plan to safeguard the future of our universities and ensure that across the UK everyone has the same opportunity to study at university regardless of where they live.”

Government announces financial relief for universities Emma Hardy
Emma Hardy warned that disadvantaged students in the future could lose out if funding intended for them is used by universities now.

Related news: University hardship funds: campaigns raise thousands for struggling students

Workers’ and students’ unions offered a damning assessment of the government’s program.

University and College Union (UCU) general secretary Jo Grady said the “package does not deliver the protection or stability that students, staff and the communities they serve so desperately need”.

A London Economics report commissioned by UCU warned that universities risk facing a £2.5bn black hole that will cost the economy £6bn and 60,000 jobs.

Ms Grady labelled the student number cap a “misnomer”, which would “enable the wealthiest universities to substantially grow their domestic student base at the expense of other more locally-focussed institutions”

“We cannot afford to let this dog-eat-dog approach risk substantial damage both to our country’s academic capacity and local economies which universities are such an important part of,” she added.

Claire Sosienski Smith, NUS vice-president (Higher Education) said: “We need to ensure students’ interests are safeguarded in this challenging time, and understand why these changes have been proposed by the Office fof Students (OfS) – but the language used is very broad and OfS must take great care and provide clear guidance to ensure universities and colleges are not deterred from working together to make changes that support students for fear of regulatory action.”

But Ms Sosienski Smith said the OfS’s announcement “proves yet again that the marketisation of higher education has failed students and created perverse incentives for institutions” and called for support for the NUS’s proposal for a £60m national student hardship fund.

“Students are ultimately still stuck in a system which threatens their education by leaving it to the whims of the market,” she said. “Regulation alone will not address student concerns, and students are suffering in the here and now with uncertainty over their qualifications, disrupted placements and financial hardship.”

Government announces financial relief for universities student number cap
UCU general secretary Jo Grady said the student number cap would unfairly advantage the wealthiest universities.

Professor Rama Thirunamachandran, chair of MillionPlus and vice-chancellor of Canterbury Christ Church University, welcomed the government’s announcement and said: “Rebuilding Britain after the Covid-19 crisis will require fresh investment to expand the university infrastructure to support these crucial subject areas. I hope that in due course further proposals by government will set out an ambitious agenda along these lines.”

Nick Hillman, director of the Higher Education Policy Institute, said: “While we need time to digest the finer details, this seems like a carefully-calibrated package that delivers much of what the higher education sector called for without over-exposing taxpayers.

“The positive elements include some easing of cashflow challenges, a reprofiling of fee and research income and a renewed focus on students as well as institutions.

“Some research-intensive universities will doubtless wish there was more money specifically for research now, but some of the more routine elements of the announcement – like a working group for research sustainability – could end up as meaningful.

“Overall, the measures should give managers and governors the time they need to reset their institutions for the post-Corona world.

“The package does not obviate the need for tough decisions. Any institution that faced serious financial challenges before the pandemic will still face them and, even with this new support, the structure of our higher education system is likely to change.”

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