‘It feels like an ultimatum’: Backlash over emergency loan scheme’s conditions for struggling universities

The government is facing a backlash over its emergency loan scheme for struggling universities in England, with unions criticising conditions placed on receiving the money.

The Department for Education (DfE) announced financial support to help higher education providers which have been badly-hit by coronavirus to “restructure”, on Thursday.

Universities “will be required to make changes that meet wider government objectives” to qualify, which will depend on their circumstances, the ministry said, adding this could include making sure they provide “high quality courses with strong graduate outcomes”.

Gavin Williamson, the education secretary, also warned universities that failed to “demonstrate their commitment to academic freedom and free speech” they would be excluded from the new package of loans for those at risk of collapse due to the pandemic.

The measures have caused alarm in some quarters, after the DfE said not all establishments would be saved from bankruptcy if they are not deemed to be providing a valuable education.

The University and College Union (UCU) accused the government of exploiting the loan scheme to impose its own ideology on institutions as they fought for survival.

Jo Grady, its general secretary, said: “Higher education is one of the few things we remain a world leader in, yet the government is prepared to exploit universities’ financial difficulties to impose evidence-free ideology and reduce the diversity and strength in depth of university courses and research.

“What are these so-called low-quality courses? Where is the evidence that cutting the number of people going to university can improve our economy?”

Ms Grady added: ‘We need a proper plan to underwrite the funding that universities are projected to lose to avert a looming crisis.

“All degree study has the potential to increase earnings, but it also brings with it so much more than that as students gain many social and cultural benefits from going to university.”

Hillary Gyebi-Ababio, the vice president for higher education at the National Union of Students (NUS), said: “It is not helpful for the government to insist on focusing on ‘high-value’ courses at a time when students’ futures are at stake and real people will be at the hard edge of these choices.”

The DfE guidance said the scheme’s conditions would help providers “make changes that will enable them to make a strong contribution to the nation’s future”.

Universities should concentrate on courses that provide good job prospects “in areas of economic and societal importance” and look at enhancing their regional focus, the ministry said.

Outlining the new “higher education restructuring regime”, Mr Williamson also told universities they must ensure student union funding was not used for “subsidising niche activism and campaigns”.

Institutions were told the regime was not a bailout and that loan applications would be considered on a “case by case basis”. Bosses were warned they would be expected to cut back dramatically on bureaucracy.

Labour’s Kate Green, the shadow education secretary, said the scheme showed the government “is willing to let cherished institutions fail”.

“Instead of using this crisis as an excuse to centralise control over universities and force through cuts to courses, the government should pledge that no university will be allowed to go bust,” she said.

Mr Williamson’s plan follows reports that a dozen universities could face insolvency without a government bailout, because of Covid-19.

A fall in the number of international students is likely to cause one of the largest financial blows, but universities are also expected to face lockdown-related losses of income from student accommodation and conference operations, according to research from the Institute for Fiscal Studies.

Laura Rettie from Studee, an education consultancy, said the restructuring regime “feels like an ultimatum from the government to universities: do what we say, or go under”.

“There are many hoops universities will have to jump through to be eligible to apply for the bailout, which they’ll have to repay,” she said.

Ms Rettie added she thought it was “incredibly worrying” the government seemed to be targeting “niche campus activism”.

“University should be a safe place where students can express themselves and campaign for what they believe in,” she said. “By stating what student unions can fund will mean that underrepresented unheard students will remain just that.”

The Independent has contacted the DfE for comment on these concerns.

In May, the DfE announced £2.6bn in forecast tuition fee payments would be brought forward, along with £100m in government funding to help protect research activities.

Last month, ministers announced a package of grants and low-interest loans to cover 80 per cent income lost from the decline in international student numbers due to the pandemic.

Announcing the latest scheme on Thursday, Mr Williamson said: “We understand the challenges universities are facing, which is why we have already provided a range of support to ease financial pressures. This new scheme will help those who are still facing financial difficulty as a result of Covid-19.

“As the country recovers from the pandemic we must look to the future, and our world-leading higher education has an important role to play in our success.”

The education secretary added: “We need our universities to achieve great value for money – delivering the skills and a workforce that will drive our economy and nation to thrive in the years ahead. My priority is student welfare, not vice-chancellor salaries.”

Additional reporting by Press Association