Impact of the Covid-19 pandemic on university finances – April 2020

Practice area: Education and Labour Markets
Client: University and College Union
Published: 23 April, 2020
Keywords: impact assessment quantitative analysis 2020

London Economics were commissioned by the University and College Union to consider the potential impact of the Covid-19 pandemic on UK higher education institutions’ enrolments and finances.

  • Combining the impact of the economic downturn with the expected deferral rate due to the uncertainty caused by the pandemic, compared to 2018-19 first year enrolments, approximately 232,000 students will no longer enrol in higher education in 2020-21 – equivalent to a 24% decline compared to the baseline (2018-19) cohort.
  • In terms of the financial impact associated with this loss in first-year students, the total decline in just tuition fee and teaching grant income experienced across the sector was estimated to be £2.472 billion.
  • Although the average loss in income per higher education institution stands at approximately £20 million, given the differences in the reliance on international students by different institutions, this varies significantly. Some institutions might expect to lose more than £100 million.
  • If university expenditure declines to the same extent as the expected decline in income, this would result in approximately 30,000 job losses across the higher education sector.
  • Combining the direct reduction in university income and expenditure with the subsequent indirect and induced ‘ripple effects’ throughout university supply chains and the wider economy, the pandemic would be expected to result in a decline in UK economic output of approximately £6.1 billion, as well as a total of 63,000 job losses.

The full report is available through the link above.


Media coverage of the report:

FE News: “Huge financial shortfall for universities as foreign students shun UK”

Times Higher Education: “‘No university should be allowed to go bust,’ says Labour shadow minister”,

BBC Wales: “Coronavirus: Universities ‘may lose £98m’ due to pandemic”

The Guardian: “Loss of international student fees could decimate UK research”

The Telegraph: “Universities face toughest challenge as pandemic puts £2.5bn black hole in their finances”

Times Higher Education: “Help students more to win £2 billion bailout, says ex-HE minister”

FE News: “Our universities need proper support in the months ahead”

The Times: “Universities face meltdown without a proper rescue package”

The Times: “Mergers may be the price of bailout cash for universities”

The PIE News: “UK unis face £2.5bn “black hole”, those relying on int’l students hit hardest”

BBC Northern Ireland: “Northern Ireland universities face losing ”more than £140m'”

BBC Wales: “Cardiff University ‘could lose £110m in income'”

The Mancunion: “UCU respond to plans for staff pay cuts and terminations at UoM”

Brinkwire: “Universities are expecting 230,000 fewer students – that’s serious financial pain”

France 24: “UK universities hit by virus outbreak fallout”

Le Monde: “La pandemie due au coronavirus fragilise les universites Britanniques”

Yorkshire Post: “Universities fighting virus need Government support as 60,000 job losses feared”

FE News : “The Government has announced £2.6bn support to protect students and the higher education sector from the impact of coronavirus”

Times Higher Education: “Government support package could ‘negatively impact’ English sector”

Chartered Management Institute: “GROW: How universities and students can transform and thrive in COVID-19″

Glasgow Times: “‘Unacceptable’ for Glasgow University to sack teaching staff, says Labour MSP”

Chronicle Live: “North East universities predicted to lose £118m to coronavirus, costing nearly 1,500 jobs”

Wales Online: “The enormous financial threat facing Welsh universities because of coronavirus”

Chronicle Live: “Durham University warns of further action to reduce impact of coronavirus on business”

Nature: “Universities will never be the same after the coronavirus crisis”