Government intervenes to bail out universities at risk of going bust due to coronavirus

Struggling institutions can apply for emergency loans, Gavin Williamson announces

The government has announced it will bail out universities at risk of going bust due to the Covid-19 pandemic.

Universities in England hardest hit by the coronavirus crisis can apply for emergency loans to help them “restructure”, under plans outlined by education secretary Gavin Williamson.

It comes after a recent report by the Institute for Fiscal Studies (IFS) warned that 13 unnamed institutions were at risk of insolvency if they did not get state help.

“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,” Mr Williamson said in a statement on Thursday.

“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.”

Loans given to struggling universities would come with conditions attached, such as reduced pay for vice-chancellors and senior staff, according to the plans.

Higher education providers will only receive assistance “as a last resort” and would be required to focus more on subjects that result in better job prospects for graduates.

There is no guarantee of support, the plans state, and universities will also be encouraged put more resources into research-intensive courses.

Universities across the UK are facing unprecedented challenges as a result of the Covid-19 pandemic.

Many have seen a huge drop in the number of international students enrolling on their courses.

International students typically pay much higher fees than UK students and are therefore a vital source of income at many institutions.

According to the IFS analysis, the 13 universities faced “a very real prospect” of going bust, while the sector could see between £3bn and £19bn losses more broadly.

Alistair Jarvis, chief executive of Universities UK, called for the government to provide more clarity on how the loan scheme would work.

“This announcement is further recognition of the severe financial challenges facing UK universities as a result of Covid-19 and the need to support institutions as they continue to play an important role in the UK’s post-pandemic economic recovery, and we continue to speak with policy makers on how best they can support the sector.

“However, we would encourage the 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.”