Study: Nearly 10% of UK colleges or universities at risk of bankruptcy hit by outbreak

According to the BBC Chinese network reported on the 7th, the global outbreak in the UK higher education industry has a huge impact. About 10 per cent of universities are at risk of bankruptcy unless they receive a government bailout, according to new research. As a developed economy dominated by services, education is an important part of the economy. According to official UK figures for 2019, education is worth a whopping 73.1 billion pounds a year, supporting about 3% of the country’s employed population.

Study: Nearly 10% of UK colleges or universities at risk of bankruptcy hit by outbreak

The Institute for Fiscal Studies (IFS), a British think-tank, says some of the leading universities that rely on international students as a source of income are facing a sharp drop in revenues as a result of the global outbreak.

The study showed that the total loss during the UK education industry remained “highly uncertain” at an estimated cost of between 3 billion and 19 billion pounds, or 7.5 to 50 per cent of the industry’s annual revenues.

Student fight

Experts warn that the impact of the new crown outbreak could also trigger a domino effect, or a vicious cycle of “mutual encroachment” in the UK education industry.

According to the analysis, “brand-name” institutions have a large number of international students, teachers and a large number of pension obligations, they have a certain amount of savings or financial buffer, they can choose to recruit more British students to mitigate the losses. However, this kind of behavior is bound to directly harm the less selective ordinary institutions, compressing the latter’s source of origin and financial resources.

The study warns that the end result of the battle for students is a massive layoff and an impact on the quality of teaching, as universities’ ability to reduce losses by saving costs is limited.

The researchers did not name the universities at risk, but they estimate that at least 13 of the 165 higher education institutions in the UK, or about 10 per cent, will end up at risk of negative equity.

The study therefore concluded that these institutions are unlikely to survive in the long run without government bailouts or debt restructuring.

Elaine Drayton, research economist at the IFS, said targeted financial aid would be by far the lowest-cost option for the government. Because, if the government decides to bail out, the estimated cost of direct aid is only ?40m, and the consequences and losses of a large number of university failures will be many times that.

The Government is facing pressure from all walks of life

The National Union of Students says the crisis has exposed many of the shortcomings of market-based management of education.

A spokesman for the Student Union said: “When funding is so precarious, it is no wonder that the jobs of our universities and thousands of staff are at risk.”

Joe Grady, general secretary of the Association of Universities and Colleges of England, also called on the government to step in. “We need a comprehensive support package that protects jobs, protects our academic abilities, and ensures that all universities survive,” Grady said.

The Department for Education said in a statement that a package of government plans announced in May would allow UK universities to access business support and work retention schemes to ease cash flow problems. In addition, key research institutes across the UK will receive some government funding and additional research funding.