Universities: Finance

Department for Education written question – answered on 7th September 2020.

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Photo of Jonathan Gullis Jonathan Gullis Conservative, Stoke-on-Trent North

To ask the Secretary of State for Education, what support his Department is providing to universities to help mitigate financial pressures as a result of the covid-19 pandemic.

Photo of Michelle Donelan Michelle Donelan Minister of State (Education)

The government has announced a package of measures which combines different ways to give further support to providers at this time of financial pressure. We have pulled forward an estimated £2.6 billion worth of forecast tuition fee payments to ease cashflow pressure this autumn. We are also bringing forward quality-related research funding for higher education providers in England in the current academic year by £100 million.

This is on top of the unprecedented package of support for businesses already announced by my right hon. Friend, the Chancellor of the Exchequer, including the Coronavirus Job Retention Scheme and a range of business loan schemes, to help pay wages, keep staff employed and support businesses whose viability is threatened by the COVID-19 outbreak. We have confirmed higher education providers’ eligibility to apply for these schemes.

The government has also announced a further package of support to universities and other research organisations to enable them to continue their research and innovation activities. This includes £280 million of government funding, as well as a package of low-interest loans with long pay-back periods, supplemented by a small amount of government grants. In sharing responsibility for the future of science and research with our world-leading university system, from the autumn, the government will cover up to 80% of a university’s income losses from international students for the academic year 2020-21, up to the value of their non-publicly-funded research activity.

My right hon. Friend, the Secretary of State for Education, announced further information about the Higher Education Restructuring Regime on 16 July. This may be deployed as a last resort, if a decision has been made to support a provider in England, when other steps to preserve a provider’s viability and mitigate the risks of financial failure have not proved sufficient.

The overarching objectives which will guide the department’s assessment of cases will be protecting the welfare of current students, preserving the sector’s internationally outstanding science base and supporting the role that higher education providers play in regional and local economies through providing high quality courses aligned with economic and societal needs.

We will consider providers’ circumstances on a case-by-case basis, supported by expert advice, to ensure there is a robust value-for-money case for intervention, with support for restructuring in the form of repayable loans coming from public funds as a last resort and with strict conditions that align with wider government objectives.

We are working closely with the sector, the Office for Students (OfS) and across the government to understand the financial risks that providers are facing, and help providers access the support on offer. The OfS stated that one of its key priorities during the outbreak is to support the financial sustainability of the sector.

Providers with concerns about their financial viability or sustainability have been encouraged to contact the OfS at the earliest opportunity. Considering the outbreak, the OfS has enhanced its financial sustainability reporting to identify sector and short-term viability risks to individual providers, as well as patterns across the sector.

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