Scottish universities demand SNP start paying full free tuition cost amid £650 million virus crisis

Scotland’s universities have demanded that SNP ministers urgently find £130 million to fully fund their free tuition policy, after the coronavirus crisis left institutions staring into financial abyss.

In a stark submission to a Holyrood inquiry, Universities Scotland, warned of the “dire” situation facing the higher education sector and claimed that the fall-out from the pandemic “will be an existential threat to some institutions."

An anticipated collapse in international student numbers, whose large tuition fees have been used to subsidise free tuition for Scottish and EU undergraduates, could leave the sector facing a deficit of up to £651 million by 2020-21.

While universities have long been calling on the Scottish Government to close the gap between what it costs to teach a Scottish student and the public funding they receive, senior figures in higher education believe the current predicament means the disparity is no longer tenable.

They have called for £130 million to plug the gap on an annual basis, with every university in Scotland predicted to be plunged into deficit next year.

Universities have already been hit by declines in accommodation income due to the coronavirus, as students move out of halls of residence early.

Other income streams, such as hosting events and renting out sporting facilities or rooms during holidays, have also dried up.

Principals have also reported high numbers of international students who would have started in September seeking to defer for a year, while a “second spike” of the virus would throw the next academic year into turmoil.

But Universities Scotland said higher education institutions north of the Border are more financially exposed than their English competitors, which can charge tuition fees of up to £9,250 per year for domestic students.

Its submission to Holyrood's education committee also predicted a drop in fee-paying students from the rest of the UK, who "may decide to stay close to home" thanks to the virus.

The Scottish Government has said it will make a one-off payment of £75 million to support university research, a move that has been welcomed but is viewed as insufficient given the scale of the crisis.

Universities Scotland said that swift action from both the UK and Scottish governments was needed to address the challenges, despite principals bringing forward their own cost-cutting measures which would mean “exploring territory that was previously unthinkable”.

"It is no exaggeration to say that the situation is dire for our universities,” its submission said. “The metaphorical black holes rapidly opening up in university finances will feel very real, very soon. Without strategic financial intervention, the financial impact of Covid-19 will be an existential threat to some institutions.”

A “fundamental step forward”, it added, would be “for the Scottish Government to make a commitment to funding the public good activities it purchases from universities at their full cost.”

It added: “Most significantly, this would include increasing the teaching unit of resource for Scottish and EU undergraduate places in 2020/21 onwards to match the full costs of teaching Scottish students – so that a ‘free’ place is a fully funded place.

“This would be a significant help to mitigating the impact of the crisis on staff and students. We estimate this to cost in the region of an additional, and baselined, £130 million.”

According to calculations by the Scottish Funding Council (SFC), the sector faces losses of £72 million during the current academic year due to coronavirus.

A mid-range forecast for 2020/21 put the sector’s combined deficit at between £450 million and £500 million.

A scenario that would see a 100 per cent drop in new international student intakes would see the sector operating a deficit of £651 million.

Jamie Greene, the Scottish Tory Shadow Education Minister, said: "For more than a decade Scottish universities have been starved of cash as a direct result of the SNP’s funding model.

“It left them chronically underfunded and heavily reliant on overseas students. Now that revenue has dried up, it’s no huge surprise that some face a fight to survive."

The Scottish Government said it was working closely with Universities Scotland to address the challenges and called on the UK government to “recognise the scale of the crisis and ensure appropriate support is available”.