Skip to main content

Higher Education: Coronavirus

Question for Department for Education

UIN 99751, tabled on 6 October 2020

To ask the Secretary of State for Education, what assessment he has made of the potential for (a) higher education institutes to go into insolvency during the covid-19 outbreak and (b) job losses as a result of that insolvency.

Answered on

13 October 2020

The government recognises that the COVID-19 outbreak is bringing significant financial challenges to the higher education (HE) sector and we have been working closely with the sector, including with smaller specialist providers, the Office for Students (OfS), and other government departments to monitor the likely impacts.

The OfS as the independent regulator of HE in England monitors their financial sustainability. The OfS provides targeted allocations for world-leading specialist providers, which was £43 million for 2020/21. The OfS hopes to undertake a review of the current specialist provider funding arrangements later this year and will release further details at the earliest opportunity.

The government has also 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. In the last academic year, we also brought forward £100 million quality-related research funding support for HE providers in England.

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 outbreak. HE providers are eligible 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 HE providers play in regional and local economies by offering 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. Public funds in the form of repayable loans to support restructuring will be as a last resort with strict conditions that align with wider government objectives.