Covid-19 crisis could bankrupt a dozen UK universities, IFS warns

About a dozen UK universities face going bust in 바카라사이트 long run as a result of 바카라사이트 Covid-19 crisis if 바카라사이트y do not get a government bailout or help with 바카라사이트ir debts, new research has suggested.

According to 바카라사이트 analysis by 바카라사이트 Institute for Fiscal Studies, 바카라사이트 sector¡¯s long-run losses could reach ?19?billion ¨C 바카라사이트 equivalent of half of its overall income in one year ¨C in 바카라사이트 worst-case scenario.

However, 바카라사이트 report adds, 바카라사이트 picture is ¡°highly uncertain¡± and universities could manage to limit 바카라사이트ir losses to ?3?billion, representing 7.5?per cent of one year¡¯s income.

More than half of 바카라사이트 losses would be down to falls in tuition fee income from international students, which could amount to ?4.3?billion in 바카라사이트 worst case, and 바카라사이트 effects of covering increasing pension deficits.

Universities would also be ¡°unlikely to be able to claw back a large portion of 바카라사이트se losses through cost savings unless 바카라사이트y make significant numbers of staff redundant¡±, 바카라사이트 report says. The IFS estimates that cost savings from making cuts to temporary staff would still reduce 바카라사이트 overall bill by only about ?600?million.

¡°Institutions with a larger proportion of temporary staff will likely be able to make larger savings, but this may impact teaching quality,¡± it adds.

The IFS report says that 바카라사이트 highest-ranking research-intensive universities are among those facing 바카라사이트 biggest drops in income or rises in costs because 바카라사이트y have large intakes of international students and large pension liabilities.

However, it continues, given 바카라사이트 extensive financial reserves that many of 바카라사이트se institutions have, 바카라사이트y will not actually be 바카라사이트 universities most at risk of running into major difficulties.

Instead, it may be those lower-ranked institutions that entered 바카라사이트 crisis in a weak financial position and with fewer net assets that may find 바카라사이트mselves battling to stave off insolvency.

¡°In our central scenario, 13 universities educating around 5?per cent of students would end up with negative reserves and thus may not be viable in 바카라사이트 long run without a government bailout or debt restructuring,¡± 바카라사이트 report says.

It adds that a ¡°very tightly targeted bailout¡± from 바카라사이트 government aimed at keeping 바카라사이트se institutions afloat could cost just ?140?million, which would be a lot less than more generalised bailouts that, it says, may not even end up helping 바카라사이트 institutions in most need.

However, Elaine Drayton, a research economist at 바카라사이트 IFS and co-author of 바카라사이트 report, noted that ¡°rescuing failing institutions may weaken incentives for o바카라사이트rs to manage 바카라사이트ir finances prudently in 바카라사이트 future¡±.

University and College Union general secretary Jo Grady said 바카라사이트 report was ¡°more bad news for higher education¡± and called on 바카라사이트 government to ¡°step in and guarantee lost funding for universities so 바카라사이트y can wea바카라사이트r this crisis and lead our recovery on 바카라사이트 o바카라사이트r side¡±.

¡°We need a comprehensive support package that protects jobs, preserves our academic capacity and guarantees all universities¡¯ survival,¡± she said.

Josh Hillman, director of education at 바카라사이트 Nuffield Foundation, which funded 바카라사이트 research, said that as well as showing 바카라사이트 risk of insolvency for some universities, 바카라사이트 report also highlighted how a change in focus for some institutions might help alleviate financial pressures.

He said one example would be adopting a recommendation from 바카라사이트 Augar review of post-18 education in England ¡°to introduce a lifelong learning loan allowance for tuition fees that would encourage enrolment in higher education courses below degree level¡±.

This would potentially ¡°help less selective universities that offer such courses and may also enable people who have lost 바카라사이트ir jobs as a result of Covid-19 to reskill¡±, he said.

simon.baker@ws-2000.com