Responding to the new report by the Institute for Fiscal
Studies (IfS) on Will universities need a bailout to
survive the COVID-19 crisis?, , the Director of the Higher
Education Policy Institute (www.hepi.ac.uk),
said:
‘The IfS report is as lucid and clear as we have come to
expect from them. They are right that universities with more
international students and bigger pension liabilities are more
directly affected by Covid than others and also that institutions
which were financially weak before the pandemic are the ones most
at risk of actual insolvency. They are also right that the
arguments for extra support for universities in the crisis are
strong. But that doesn’t mean they’re right overall.
‘There are three important points to note.
‘First, the range of projected short-term financial losses
for universities, which the IfS calculates at between £3 billion
and £19 billion, is so enormous that it’s pretty meaningless in
terms of planning ahead. It’s such a huge fan of uncertainty that
it doesn’t help either universities or policymakers know where
they stand.
‘Secondly, there are too many reports around at the moment
that take old opinion polls of how students might behave as the
gospel truth. We know from when tuition fees in England went to
£9k that polls which ask students how they might behave are a
woeful guide to the future, and the IfS’s figures on student
numbers should therefore be taken with a lorry load of
salt.
‘For example, the IfS are assuming there will be 10% fewer
UK students, yet the latest
UCAS figures show the opposite trend. Who would choose to
have a gap year at the moment, when travel and job opportunities
are so limited? The IfS are also predicting a 50% drop in EU
students as a result of the pandemic, even though 2020 is the
last year when they will be treated like home students. Unless
there is a major second wave of Covid-19, the IfS’s “central”
estimate for the short-term financial losses would be better
labelled “pessimistic” and their “pessimistic” estimate would be
better labelled “extreme”.
‘Thirdly, the oddest feature of the IfS report is how very
little it has to say on university research. When universities
have less income and face big deficits, they can opt to stem the
financial losses by doing less research as research generally
loses money. Less research would be terrible for the UK as it
would hamper the post-pandemic recovery. So the quantity of
research that institutions can afford must be a bigger part of
the wider conversation about university financing.’
