Financial pressures

Five Scottish universities on Covid ‘at risk’ list

On the list: Heriot-Watt at Edinburgh

Five universities in Scotland – three in Edinburgh – are listed as among the most financially at risk as a result of the impact of coronavirus.

Heriot-Watt in Edinburgh is one of three across the UK which is heavily dependent on overseas fees and “even more likely to struggle”, according to new research.

However, the majority of the at-risk universities have a disproportionately high number of undergraduate students who previously studied at state schools or colleges.

The universities most financially at risk from Covid-19, therefore, are institutions that are actively promoting social mobility and contributing to government higher education objectives, according to Frontier Economics, one of the largest economic consultancies in Europe.

“A potential failure of these universities would be damaging to the government’s ‘levelling up’ agenda – especially given the chancellor’s recent budget commitment to increase R&D spending outside the ‘golden triangle’ of London, Oxford and Cambridge,” it says.

Follow Daily Business on Facebook

The four other ‘at-risk’ Scottish universities are Dundee, Edinburgh Napier, Queen Margaret University and the University of the West of Scotland.

Student fees as a whole have become an increasingly large source of money for higher education institutions over the last decade. In the last academic year, tuition fees and education contracts accounted for almost half of all university income (£20 billion).

At £6.5 billion, fees from overseas students make up more than one-third of all tuition fees. Such students therefore represent a large portion – 17% – of overall income. Many institutions rely on international fees to ‘underpin vital work that otherwise goes under-funded,’ as Tim Bradshaw, Chief Executive of the Russell Group, has explained.

While plans were announced last month for UK government grant extensions and low-interest loans “these would lead to higher costs in the future – and some institutions already struggling may not be able to bear the additional financial burden, if they are even able to access it.”

The Institute for Fiscal Studies found recently that the likelihood of insolvency due to Covid-19 for higher education institutions depends more on their financial situation before the crisis, rather than on predicted losses from Covid-19. 

The Frontier Economics analysis says universities contribute substantially to their local communities – not only through education but also through employment. Universities have been shown to increase GDP per capita in “close neighbouring regions” through direct spending (employment) and spillover effects.

Some of the at-risk institutions are located in areas ranking among the most deprived in England – such as Bradford and Sunderland – according to the Index of Multiple Deprivation. The loss of a significant local institution would be particularly damaging for these communities.

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.