Universities, as I have already written, have proved their worth in the COVID-19 crisis, responding at speed not simply to their own students and research partners’ changed demands, but to the communities and the national effort. But there is a clear sense that the skies will darken once the immediate crisis abates. The concerns include a precipitous fall in international students and constrained local mobility, student retention and progression to university, and the impact of a prolonged economic recession on research and development budgets. These concerns led Universities UK – the umbrella body for the country’s 137 universities, of which I am a Board member, to develop a proposal to government for a systematic programme of support.
Universities UK sought a package which addressed four concerns: the severe loss of income to the sector as a result of the rapid decline of international student enrolments; the stabilisation of the UK undergraduate admissions market; the ability of universities to support communities through economic recovery, and a government transformation fund to support any local restructuring of provision which might be necessary. The proposals were submitted to government in early April and for many institutions, it has been an uncomfortable wait.
At the core of the UUK package is a proposal that government should double the research money – the so-called ‘Quality-Related’ or ‘QR’ stream into universities for 2020/1 which would cost about £2bn. The aim was less to double research funding in its own right as to achieve two different policy goals: first, to use QR as a mechanism to pump liquidity into the sector and second to compensate those universities who are highly dependent on surpluses from international students to subsidise research. This approach was not without its critics. Given the current distribution of QR, one consequence of this UUK proposal would have been to pump large amounts of resource into some of the richest universities in some of the wealthiest parts of the UK.
Government has now responded. The first thing to say is that government has approached the question of the future sustainability of the sector in a different way. The government concern has been to address short term cash flow, and they have achieved this in some ingenious, if relatively low-cost ways for themselves: they have re-profiled the 2020/21 student loan payment arrangements which will bring forward £2.6bn of payments to institutions which would have been due later in the year. They have shifted the rules on student support funds to allow universities greater leeway in supporting students. On research funding, they have brought forward £100m of QR money from 2020/21 into the current academic year, a far cry from the £2bn requested, and have established a ministerial task force on the sustainability of research.
These are undoubtedly short-term cash stabilisation measures. They don’t – any of them – solve the longer-term problems but they should prevent more immediate cash flow problems. The sector, and especially the most research-intensive universities with the largest exposure to international student income, is disappointed by this, and for obvious reasons.
Alongside this, the government’s package includes an intervention in the home student undergraduate recruitment market. Here, they have by and large accepted the sector proposal which is to limit each institution’s ability to recruit students. New enrolments would be restricted to the numbers each institution predicted it would recruit in the July 2019 OfS budget forecast, plus a margin of 5%. The purpose of this is to prevent predatory behaviour from universities seeking to vacuum up large numbers of UK students to fill the gap created by the loss of overseas students. It’s not uncontroversial: free student choice and an open market in student recruitment has been a policy principle for the last five years. In a declining market – there are about 2% fewer eighteen-year olds this year than last – the 5% margin will still create considerable volatility, but it is probably sensible, and it is buttressed by a new margin of an additional 10,000 student places to be allocated by OfS, as a buffer against too great a swing in enrolments. The fear from universities is two-fold: first, that this approach to limiting student numbers is something government will retain long after the crisis has passed with significant implications as we come out of the demographic dip, and secondly that the particular device to do it – a complicated retrospective change in regulations – creates an unfortunate precedent.
The government package is not what UUK asked for. It is mostly achieved by re-profiling planned spending: the sector wanted new money, and new money quickly. There is a widespread view that these are immediate measures and that more will need to follow. But the package probably stabilises institutions in the short term. It then leaves open the really tough policy questions which COVID-19 has opened up: is it sensible to run the nation’s research on the back of overseas student surpluses? What sort of role do we need universities to play in the economic recovery? How do universities play their part in addressing the deep regional inequalities? Government has decided that these are tough questions, and questions for another day. Our job now is focused on making sure that day definitely comes, and proactively thinking about what role universities could and should play in the post-COVID recovery. Universities have received some relief this week, but we aren’t out of the woods yet.