Universities going bust face ‘restructuring’

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Universities in England at risk of going bust could be offered a financial safety net under plans expected to be announced by the government.

But any rescue would come with conditions and require the “restructuring” of universities in financial danger.

This could mean cuts to senior pay or mergers with other institutions.

A report from the Institute for Fiscal Studies warned of 13 universities facing insolvency.

Universities have warned of cash problems from the coronavirus pandemic – particularly if overseas students cancel plans to study in the UK next term.

The recent analysis from the Institute for Fiscal Studies warned of a “significant financial threat” to the UK’s higher education system from the pandemic – with losses that could be between £3bn and £19bn.

To avoid the collapse of a university and disruption to students, it is expected that the government will put forward plans for how it might intervene.

Universities Minister Michelle Donelan, speaking to the Education Select Committee on Wednesday, said such proposals for a “restructuring regime” would soon be published.

This would only be used after universities had “accessed all the other help available,” she told MPs.

“It will be a last resort and there will be conditions attached to that funding,” she told the committee.

But the minister said: “It’s undeniable that the pandemic has affected the higher education sector, like any other sector.”

‘Salary reductions?’

Universities are autonomous organisations – but it is expected that in exchange for financial assistance they would have to accept changes to how they operate.

This could mean mergers with other higher education institutions, or working more closely with further education colleges.

Universities might be expected to align more closely with the government’s aims – such as offering degree apprenticeships or vocational qualifications.

There could also be calls for reductions in salaries, such as for vice chancellors and senior staff.

The government has offered measures to support universities – including bringing forward tuition fee income and promising that “research-intensive” universities could receive loans and grants to cover 80% of losses from cancellations from international students.

Higher education is meant to operate as a marketplace, and its watchdog, the Office for Students, has argued that it would not bail out universities which faced financial problems.