The government ponders bailing out universities

Basic information
Date of placement
41
0
0

Before the crisis, the government was keen to shrink the university sector. Covid-19 makes it likelier that that will actually happen

Britain | The Economist

Editor’s note: The Economist is making some of its most important coverage of the covid-19 pandemic freely available to readers of The Economist Today, our daily newsletter. To receive it, register here. For our coronavirus tracker and more coverage, see our hub

A QUICK FLICK through a student brochure is all it takes to see why universities are so concerned by the pandemic, and the collapse in international travel it has wrought. A British undergraduate studying classics at Oxford, as the prime minister did, pays £9,250 ($11,500) a year for tuition. A Chinese undergraduate on the same course pays £27,285, almost three times as much. Altogether, foreign students last year provided at least a fifth of the income of 48 higher-education institutions, ranging from the London School of Economics to the University of Sunderland. That is why, as a vice-chancellor puts it, “everyone is nervous as hell.”

International students are not all that Britain’s vice-chancellors have to worry about these days. Any business that brings together crowds of people faces trouble. Universities are likely to have to move either some or all of their teaching online. That may mean fewer domestic students, depending on whether the urge to dodge terrible lectures on Zoom is greater than the desire to avoid a terrible labour market. Even before the crisis, some universities were looking shaky. Large deficits were common among smaller, less prestigious institutions. And the debt taken on by some of the country’s grandest universities now looks more concerning.

Universities UK, a lobby group, has opened the bidding for government help, petitioning for a £2bn bailout. The decision about whether to provide the cash, and if so how to distribute it, will shape higher education for years to come.

Before the crisis, ministers had big ambitions. In his budget on March 11th, Rishi Sunak, the chancellor, promised almost to double research and development spending to £22bn by 2024-25. But the ambition to invest in excellent research coexists with a belief in Downing Street that the sector has grown too big. Dominic Cummings, the prime minister’s chief adviser, has previously questioned the value of “third rate HE [higher-education] institutions”. Alison Wolf, another adviser who is the country’s most influential thinker on tertiary education, has called the expansion of universities “a bad bargain for the taxpayer and for the student”.

Michelle Donelan, the universities minister, has announced that she will tackle the problem of “low-quality” university courses. The government has its sights on universities producing the fifth of graduates, as identified by the Institute for Fiscal Studies (IFS), a think-tank, who would have been financially better off had they not attended university. The earnings of those who left university a decade ago suggest that’s true, on average, of female graduates of Bolton University and UC Falmouth (now Falmouth University), and of male graduates of 39 universities, including Goldsmiths and Manchester Met.

Ministers are not rushing to pony up the cash that Universities UK wants. For the moment, the Office for Students, the higher-education regulator, has demanded a pause in all changes to existing offers until May 4th to prevent a free-for-all in which universities poach each others’ students. Though the eventual impact may be big, higher education is at less immediate risk than other sectors seeking bail-outs, for most universities are relatively insulated at least until the start of the new academic year. The government will wait for the impact on student behaviour to become clearer, allowing it to decide whether to cough up, and if so what it wants in return.

Previous Conservative universities ministers have emphasised that they are not afraid to let universities go bust. The Treasury is said to be inclined not to offer universities a bail-out, allowing them to get access to standard business support and intervening only on a case-by-case basis. The expectation is that, if the government removes restrictions on recruitment on May 4th, higher-ranking universities will suck up students from lower-ranked peers to make up for the fall in those arriving from abroad. Many of the resulting strugglers would be universities producing graduates who earn less than they would have had they not gone to university. Treasury officials would not be sad to see those shrink or disappear altogether.

Yet there are problems with such an approach. Jack Britton of the IFS notes that graduate-earnings data looks at those who left universities in the late 2000s. The post-pandemic labour market may require different skills to the one which preceded it. And letting universities in poorer parts of the country go bust would be difficult to square with Boris Johnson’s desire to “level up” struggling areas. “The preponderance of institutions [which might need saving] that are in the north and Midlands is quite embarrassing,” notes a vice-chancellor.

Universities UK’s bail-out bid carefully balances universities’ competing interests. It asks for a doubling of the main source of research funding, which would mainly benefit high-ranked ones, helping to make up for the expected shortage of foreign students. In return, these institutions would agree to restrictions on recruitment, so that they do not suck up students from lower-ranked ones. It would also include a “transformation fund”, which could be used by the government to help universities merge with other universities or even further-education colleges, thus helping it to rebalance resources from universities to vocational education. In March the government said it would lay out its plans for further education later this year.

Universities hope the bail-out plan would allow them to get through the next few years, before a demographic boom in the number of 18-year-olds comes to their rescue. But recruitment restrictions would mean the government was, in effect, banning students from attending the best institution that would have them, and thus preventing top-rated universities from taking up the slack in the system. And the bailout would give higher education some protection against the government’s desire for radical reform.

On April 29th Gavin Williamson, the education secretary, told MPs that his priorities were protecting research, students and the role universities have in local economies—which sounds like a reference to the need to look after poorer places. Those aims will have to be squared with the Treasury’s pressing need to save money and the government’s ambition to squeeze waste out of the sector. It sounds like universities with poor graduate prospects in richer parts of the country should be worried.

Dig deeper:
For our latest coverage of the covid-19 pandemic, register for The Economist Today, our daily newsletter, or visit our coronavirus tracker and story hub

This article appeared in the Britain section of the print edition under the headline "Time to think small"

Reuse this contentThe Trust Project

(0)
0.0
Dislike 0
ОТН 0
Like 0

News list


15:50 Home prices in NL to increase 4% this year: ABN Amro
15:43 ‘Artefact detectives’ in Iraq aim to end the theft of their history
15:39 Archaeologists & filmmakers dig up the past of UAE’s Shamash temple
15:30 Moderation
15:05 [Ticker] Sweden halts Iran Air flights after crash
15:01 Middle East crisis: EU's delicate balancing act between Washington and Tehran
15:00 Dutch soldiers in Iraq safe, together, Defense Min. says
14:59 Outrage over reports EU-funding linked to forced labour in Eritrea
14:45 Meeting between the College of Commissioners and the Members of the Parliamentary Groups
14:33 [Ticker] Spanish court: EP must end Catalan MEP immunity
14:10 Boy, 10, randomly assaulted by woman on Haarlem street
14:01 Dutch cabinet now in favor of new fireworks limits and regulations
14:00 Girls more likely to be harassed, stalked online
13:51 2nd EU Clean Air Forum (Bratislava, 28-29 November 2019) - Part 2/3
13:49 [Ticker] Orban to offer free IVF in anti-immigrant move
13:27 Hate speech has 'no place' in Austria, says Kurz, after Bosnian-born minister receives abuse
13:20 Dutch car rolls in Belgium; deceased victims discovered hours later
13:00 Trump proposes 'NATOME': NATO expanded to MidEast
12:35 Lack of career prospects leaves care workers to quit, says report
12:35 Singer songwriter Jeangu Macrooy is Dutch Eurovision entry- AD
12:35 Defrosted kingfisher rejoins museum collection of dead animals
12:35 Saba again present at Holiday Fair - Saba News
12:35 Politicians should take responsibility for their own laws, says legal chief
12:35 ChristenUnie calls for firework clubs, backs ban on consumer sales
12:35 Good weather will bring clear views of partial lunar eclipse
12:35 'Explosive' growth in Amsterdam hotels despite stricter limits
12:35 More violent incidents at New Year, but fewer people are arrested
12:30 Number of hotels in Amsterdam region skyrocketing: report
12:05 [Ticker] Von der Leyen: 'Influential' EU means talk and trade
12:00 Pope Francis: "US-Iran tensions threaten rebuilding of Iraq"
11:40 More than 9,300 incidents over New Year's: police
11:30 Friends of plane crash victims mourn loss
11:21 EC Midday press briefing of 10/01/2020
11:20 2nd EU Clean Air Forum (Bratislava, 28-29 November 2019) - Part 1/3
11:18 Croatian Presidency of EU Council: press conference opening remarks by President von der Leyen
11:15 Croatian Presidency of EU Council: opening remarks by Croatian Prime Minister and President of EC
11:00 DUTCH RAILROAD CROSSING - Geldermalsen - Voetakkerweg
11:00 DUTCH RAILROAD CROSSING - Prinsenbeek - Spoorstraat
10:50 Girl, 10, dies after falling from asylum center's window
10:43 Compilatie 24H ‘Ontdek je stad’ 2019
10:32 Ontdek Amerfoort #Citytrip
10:26 UK accused of 'behaving like cowboys' over EU database copying
10:26 Men in west London have highest male life expectancy in EU - Life expectancy
10:24 Ursula Von Der Leyen and Croatian PM Andrej Plenkovic talk to the press | LIVE
10:00 Car with possible explosives found in Gelderland town; link with ATM bombing investigated
09:40 Viktor Orbán threatens new Europe grouping to rival 'weaker' EPP
09:39 Stockpiling for the New Year
09:37 European ministers meet to salvage Iran nuclear deal
09:35 President von der Leyen meets with Andrej Plenkovic, Croatian Prime Minister
09:30 Dutch Listening Practice - Talking About a School Trip in the Netherlands
09:28 [Ticker] Johnson suggests Iran crash was 'unintentional' missile
09:22 In Myanmar Armys Corner, Aung San Suu Kyi Will Defend It in Rohingya Genocide Case
09:16 Trudeau: Canadians deserve answers on plane crash
09:10 Man, 68, arrested for taping jerry can to Leeuwarden train
09:09 Iran denies that it brought down Ukrainian plane with a missile
08:49 Ask Our Astronaut | What's next in space exploration?
08:18 8 teams who saw their seasons ruined by international breaks
08:17 Judiciary Council calls politicians to stop blaming judges for unpleasant rulings
07:45 Iranian missile caused crash of Ukrainian Boeing 737: Officials
07:39 House of Commons passes Brexit bill for UK departure from EU on January 31
07:37 Gay, bisexual young people over twice as likely to be harassed, stalked online
07:01 Canadian PM called PM Rutte about MH17 after Tehran plane crash
06:37 Only let specialized clubs light fireworks, coalition party says
06:27 [Ticker] Swiss afraid of EU wage dumping
06:25 [Ticker] Orban to start new EU movement if kicked out of EPP
06:24 [Ticker] EU blasts Israeli settlements on 'occupied' land
06:15 Croatian PM Optimistic About EU Talks For North Macedonia, Albania
06:10 ABN Amro names PwC's former Dutch chairman as new CEO
06:07 South Mississippi Strong- Mag Holland is an angel devoted to helping others
06:04 MEPs slam UK for violating EU police database
06:03 EU regions: don’t touch cohesion funds for Green Deal
06:02 [Opinion] Europe, Scotland and Brexit - what next?
06:02 [Ticker] Brexit back on EU presidency agenda next week
06:01 [Ticker] President of European Court of Justice lambasts Poland
06:01 [Ticker] Athens asks for US help in east Mediterranean
06:01 [Ticker] Ukraine investigators want to search Iran plane crash site
04:32 How polluted is the air where you live?
04:14 Poisonous caterpillar to strike earlier than usual this year

11:18 Croatian Presidency of EU Council: press conference opening remarks by President von der Leyen
10:50 Girl, 10, dies after falling from asylum center's window
10:43 Compilatie 24H ‘Ontdek je stad’ 2019
09:35 President von der Leyen meets with Andrej Plenkovic, Croatian Prime Minister
09:28 [Ticker] Johnson suggests Iran crash was 'unintentional' missile
07:45 Iranian missile caused crash of Ukrainian Boeing 737: Officials
07:37 Gay, bisexual young people over twice as likely to be harassed, stalked online
06:24 [Ticker] EU blasts Israeli settlements on 'occupied' land
04:14 Poisonous caterpillar to strike earlier than usual this year
14:10 Boy, 10, randomly assaulted by woman on Haarlem street
13:51 2nd EU Clean Air Forum (Bratislava, 28-29 November 2019) - Part 2/3
13:20 Dutch car rolls in Belgium; deceased victims discovered hours later
11:40 More than 9,300 incidents over New Year's: police
11:20 2nd EU Clean Air Forum (Bratislava, 28-29 November 2019) - Part 1/3
10:32 Ontdek Amerfoort #Citytrip
09:40 Viktor Orbán threatens new Europe grouping to rival 'weaker' EPP
09:16 Trudeau: Canadians deserve answers on plane crash
09:10 Man, 68, arrested for taping jerry can to Leeuwarden train
09:09 Iran denies that it brought down Ukrainian plane with a missile
07:01 Canadian PM called PM Rutte about MH17 after Tehran plane crash
06:37 Only let specialized clubs light fireworks, coalition party says
06:15 Croatian PM Optimistic About EU Talks For North Macedonia, Albania
06:01 [Ticker] President of European Court of Justice lambasts Poland
06:01 [Ticker] Ukraine investigators want to search Iran plane crash site
15:50 Home prices in NL to increase 4% this year: ABN Amro
15:43 ‘Artefact detectives’ in Iraq aim to end the theft of their history
15:39 Archaeologists & filmmakers dig up the past of UAE’s Shamash temple
15:30 Moderation
15:05 [Ticker] Sweden halts Iran Air flights after crash
15:01 Middle East crisis: EU's delicate balancing act between Washington and Tehran
15:00 Dutch soldiers in Iraq safe, together, Defense Min. says
14:59 Outrage over reports EU-funding linked to forced labour in Eritrea
14:45 Meeting between the College of Commissioners and the Members of the Parliamentary Groups
14:33 [Ticker] Spanish court: EP must end Catalan MEP immunity
14:01 Dutch cabinet now in favor of new fireworks limits and regulations
14:00 Girls more likely to be harassed, stalked online
13:49 [Ticker] Orban to offer free IVF in anti-immigrant move
13:27 Hate speech has 'no place' in Austria, says Kurz, after Bosnian-born minister receives abuse
13:00 Trump proposes 'NATOME': NATO expanded to MidEast
12:35 Lack of career prospects leaves care workers to quit, says report
12:35 Singer songwriter Jeangu Macrooy is Dutch Eurovision entry- AD
12:35 Defrosted kingfisher rejoins museum collection of dead animals
12:35 Saba again present at Holiday Fair - Saba News
12:35 Politicians should take responsibility for their own laws, says legal chief
12:35 ChristenUnie calls for firework clubs, backs ban on consumer sales
12:35 Good weather will bring clear views of partial lunar eclipse
12:35 'Explosive' growth in Amsterdam hotels despite stricter limits
12:35 More violent incidents at New Year, but fewer people are arrested
12:30 Number of hotels in Amsterdam region skyrocketing: report
12:05 [Ticker] Von der Leyen: 'Influential' EU means talk and trade
12:00 Pope Francis: "US-Iran tensions threaten rebuilding of Iraq"
11:30 Friends of plane crash victims mourn loss
11:21 EC Midday press briefing of 10/01/2020
11:15 Croatian Presidency of EU Council: opening remarks by Croatian Prime Minister and President of EC
11:00 DUTCH RAILROAD CROSSING - Geldermalsen - Voetakkerweg
11:00 DUTCH RAILROAD CROSSING - Prinsenbeek - Spoorstraat
10:26 UK accused of 'behaving like cowboys' over EU database copying
10:26 Men in west London have highest male life expectancy in EU - Life expectancy
10:24 Ursula Von Der Leyen and Croatian PM Andrej Plenkovic talk to the press | LIVE
10:00 Car with possible explosives found in Gelderland town; link with ATM bombing investigated
09:39 Stockpiling for the New Year
09:37 European ministers meet to salvage Iran nuclear deal
09:30 Dutch Listening Practice - Talking About a School Trip in the Netherlands
09:22 In Myanmar Armys Corner, Aung San Suu Kyi Will Defend It in Rohingya Genocide Case
08:49 Ask Our Astronaut | What's next in space exploration?
08:18 8 teams who saw their seasons ruined by international breaks
08:17 Judiciary Council calls politicians to stop blaming judges for unpleasant rulings
07:39 House of Commons passes Brexit bill for UK departure from EU on January 31
06:27 [Ticker] Swiss afraid of EU wage dumping
06:25 [Ticker] Orban to start new EU movement if kicked out of EPP
06:10 ABN Amro names PwC's former Dutch chairman as new CEO
06:07 South Mississippi Strong- Mag Holland is an angel devoted to helping others
06:04 MEPs slam UK for violating EU police database
06:03 EU regions: don’t touch cohesion funds for Green Deal
06:02 [Opinion] Europe, Scotland and Brexit - what next?
06:02 [Ticker] Brexit back on EU presidency agenda next week
06:01 [Ticker] Athens asks for US help in east Mediterranean
04:32 How polluted is the air where you live?

15:50 Home prices in NL to increase 4% this year: ABN Amro
15:43 ‘Artefact detectives’ in Iraq aim to end the theft of their history
15:39 Archaeologists & filmmakers dig up the past of UAE’s Shamash temple
15:30 Moderation
15:05 [Ticker] Sweden halts Iran Air flights after crash
15:01 Middle East crisis: EU's delicate balancing act between Washington and Tehran
15:00 Dutch soldiers in Iraq safe, together, Defense Min. says
14:59 Outrage over reports EU-funding linked to forced labour in Eritrea
14:45 Meeting between the College of Commissioners and the Members of the Parliamentary Groups
14:33 [Ticker] Spanish court: EP must end Catalan MEP immunity
14:10 Boy, 10, randomly assaulted by woman on Haarlem street
14:01 Dutch cabinet now in favor of new fireworks limits and regulations
14:00 Girls more likely to be harassed, stalked online
13:51 2nd EU Clean Air Forum (Bratislava, 28-29 November 2019) - Part 2/3
13:49 [Ticker] Orban to offer free IVF in anti-immigrant move
13:27 Hate speech has 'no place' in Austria, says Kurz, after Bosnian-born minister receives abuse
13:20 Dutch car rolls in Belgium; deceased victims discovered hours later
13:00 Trump proposes 'NATOME': NATO expanded to MidEast
12:35 Lack of career prospects leaves care workers to quit, says report
12:35 Singer songwriter Jeangu Macrooy is Dutch Eurovision entry- AD
12:35 Defrosted kingfisher rejoins museum collection of dead animals
12:35 Saba again present at Holiday Fair - Saba News
12:35 Politicians should take responsibility for their own laws, says legal chief
12:35 ChristenUnie calls for firework clubs, backs ban on consumer sales
12:35 Good weather will bring clear views of partial lunar eclipse
12:35 'Explosive' growth in Amsterdam hotels despite stricter limits
12:35 More violent incidents at New Year, but fewer people are arrested
12:30 Number of hotels in Amsterdam region skyrocketing: report
12:05 [Ticker] Von der Leyen: 'Influential' EU means talk and trade
12:00 Pope Francis: "US-Iran tensions threaten rebuilding of Iraq"
11:40 More than 9,300 incidents over New Year's: police
11:30 Friends of plane crash victims mourn loss
11:21 EC Midday press briefing of 10/01/2020
11:20 2nd EU Clean Air Forum (Bratislava, 28-29 November 2019) - Part 1/3
11:18 Croatian Presidency of EU Council: press conference opening remarks by President von der Leyen
11:15 Croatian Presidency of EU Council: opening remarks by Croatian Prime Minister and President of EC
11:00 DUTCH RAILROAD CROSSING - Geldermalsen - Voetakkerweg
11:00 DUTCH RAILROAD CROSSING - Prinsenbeek - Spoorstraat
10:50 Girl, 10, dies after falling from asylum center's window
10:43 Compilatie 24H ‘Ontdek je stad’ 2019
10:32 Ontdek Amerfoort #Citytrip
10:26 UK accused of 'behaving like cowboys' over EU database copying
10:26 Men in west London have highest male life expectancy in EU - Life expectancy
10:24 Ursula Von Der Leyen and Croatian PM Andrej Plenkovic talk to the press | LIVE
10:00 Car with possible explosives found in Gelderland town; link with ATM bombing investigated
09:40 Viktor Orbán threatens new Europe grouping to rival 'weaker' EPP
09:39 Stockpiling for the New Year
09:37 European ministers meet to salvage Iran nuclear deal
09:35 President von der Leyen meets with Andrej Plenkovic, Croatian Prime Minister
09:30 Dutch Listening Practice - Talking About a School Trip in the Netherlands
09:28 [Ticker] Johnson suggests Iran crash was 'unintentional' missile
09:22 In Myanmar Armys Corner, Aung San Suu Kyi Will Defend It in Rohingya Genocide Case
09:16 Trudeau: Canadians deserve answers on plane crash
09:10 Man, 68, arrested for taping jerry can to Leeuwarden train
09:09 Iran denies that it brought down Ukrainian plane with a missile
08:49 Ask Our Astronaut | What's next in space exploration?
08:18 8 teams who saw their seasons ruined by international breaks
08:17 Judiciary Council calls politicians to stop blaming judges for unpleasant rulings
07:45 Iranian missile caused crash of Ukrainian Boeing 737: Officials
07:39 House of Commons passes Brexit bill for UK departure from EU on January 31
07:37 Gay, bisexual young people over twice as likely to be harassed, stalked online
07:01 Canadian PM called PM Rutte about MH17 after Tehran plane crash
06:37 Only let specialized clubs light fireworks, coalition party says
06:27 [Ticker] Swiss afraid of EU wage dumping
06:25 [Ticker] Orban to start new EU movement if kicked out of EPP
06:24 [Ticker] EU blasts Israeli settlements on 'occupied' land
06:15 Croatian PM Optimistic About EU Talks For North Macedonia, Albania
06:10 ABN Amro names PwC's former Dutch chairman as new CEO
06:07 South Mississippi Strong- Mag Holland is an angel devoted to helping others
06:04 MEPs slam UK for violating EU police database
06:03 EU regions: don’t touch cohesion funds for Green Deal
06:02 [Opinion] Europe, Scotland and Brexit - what next?
06:02 [Ticker] Brexit back on EU presidency agenda next week
06:01 [Ticker] President of European Court of Justice lambasts Poland
06:01 [Ticker] Athens asks for US help in east Mediterranean
06:01 [Ticker] Ukraine investigators want to search Iran plane crash site
04:32 How polluted is the air where you live?
04:14 Poisonous caterpillar to strike earlier than usual this year
I agree and close
x Cookies text