Universities in England at risk of collapse can apply to the DfE for an emergency loan but will be overhauled under the direction of ministers, it was revealed today.
New emergency loans form part of the government’s Higher Education Restructuring Regime, which sets out how it will respond to the financial challenges the university sector faces due to the Covid-19 pandemic.
Publicly-funded loans from the DfE will be used only as “a last resort” to support institutions at risk of “market exit”, but they do not represent “a taxpayer-funded bail-out” or a guarantee that every provider will be saved.
If new loans are agreed, it would allow the government to dictate operations in previously autonomous organisations.
What is the Higher Education Restructuring Regime?
The DfE said it would consider applications for support under the Higher Education Restructuring Regime “on a case-by-case basis” and prioritise preserving “strategically important or unique” courses, particularly those in STEM disciplines.
“[The new regime] is not a guarantee that no organisation will fail – though current students would be supported to complete their studies, either at that institution or another,” the plans warn, adding that ministers would only sign off loans if the “failure of the provider would cause significant harm to the national or local economy or society”.
Universities are to use the other government business support schemes before requesting helping from the DfE, which will only intervene “after all other finance options have been exhausted” and only if there is “a clear and sustainable model for future provision”.
To be approved, universities would need to fulfil several conditions, such as reducing administrative activities and senior leaders’ pay and demonstrating “commitment to academic freedom and free speech” under section 43 Education (No.2) Act 1986. The exact terms and conditions of the loans would be set out by ministers after an independently chaired Restructuring Regime Board had commissioned a review of the university’s operations.
The independent reviews will consider whether the university is offering “high-quality courses” and “internationally excellent” research that are not duplicated by another provider. In some cases, courses that would be better offered by a local FE college will be transferred. The board will also consider student protection plans, governance issues and efficiency savings, before submitting recommendations to the secretary of state to consider.
The board’s members will have experience in “HE business management, insolvency matters and real estate”.
All universities should review their operations, the DfE suggests
More broadly, the DfE said it wanted all universities to take note of its priorities for the sector and encouraged them to adopt “a much more strongly applied mission, firmly embedded in the economic fabric of their local area”.
“The majority of providers will not need additional support from the Restructuring Regime, but will nevertheless be looking to undergo their own restructuring to ensure they are better suited for the post-COVID world,” the ministerial forward explains. “In every case this must involve a much stronger alignment of the courses delivered with the economic and societal needs of the nation, in a way that ensures all graduates benefit from their studies. Further information on how the Government intends to support this, and to deliver on our manifesto commitment to tackle low quality courses, will be set out alongside our conclusion of the Post-18 Review at the next Spending Review.”
The plans suggested universities reduce “administrative activities that do not demonstrably add value” and focus student union funding “on serving the needs of the wider student population rather than subsidising niche activism and campaigns”.
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
– Jo Grady, UCU
In response to the UK government’s higher education restructuring scheme, Alistair Jarvis, chief executive of Universities UK (UUK), said the organisation “would encourage government to be more ambitious, to go beyond a small number of universities in financial need, and to use this as an opportunity to help universities to undertake innovative changes to maximise their contributions to the economy and meet the needs of students and employers”.
“We are seeking further clarification about the scheme’s accessibility to universities in all four nations, the process of applying to the restructuring regime and what conditions might be attached to any support offered,” Mr Jarvis added.
The University and College Union (UCU) today accused ministers of using a looming financial crisis to try and impose severe restrictions on universities. Its general secretary, Dr Jo Grady, said the government “would rather use [the crisis] to try and impose severe restrictions on universities than ensure their survival”.
“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?” Dr Grady continued.
“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,” she added.
The new package will operate in tandem with the university research support package, announced by the Department for Business, Energy and Industrial Strategy (BEIS) on 27 June.