On top of school closures, online learning and delayed or cancelled exams, educational institutions are also having to consider the financial implications of the lockdown.
The UK government has announced that funding for schools and academies in 2020/21 will be issued as usual, stating: “We have already confirmed that schools will continue to receive their core funding allocations – as determined by the local authority for maintained schools and through the general annual grant (GAG) for academies – for the 2020 to 2021 financial year.” This funding will be available despite closure, and is meant to ensure that schools can “continue to pay staff and meet other regular financial commitments”.
This funding, however, does not account for “additional expenditures” schools currently face, says Jane Gibson, product manager at Access Education. “For instance,” says Gibson, “many schools will have been open for vulnerable children and the children of key workers over the Easter holidays and this will have added to utility bills and created extra losses for caretakers and caterers compared to the same time last year.”
On a practical level, the technology that allows schools to work remotely is now more important than ever, Gibson adds. “While working from home presents challenges for finance teams, using education software to collaborate with colleagues means that payments can be approved and made quickly and easily to support local, and often smaller, suppliers,” she says.
So how will this affect schools long-term? It’s not certain right now, says Gibson:
“It may be some time before the real impact of the pandemic is known, so for now it’s important that schools continue to monitor their financial situation closely and ensure that they’re in a position to make changes if they are required.”
Avoiding ‘structural collapse’
The change in approach to learning is also having a financial impact on colleges, says Julian Gravat, deputy chief executive of the Association of Colleges (AoC). He believes: “The change in approach required a rapid shift by colleges towards remote learning in which colleges have had to scramble to ensure they have enough kit, devices and software licences available for a different approach.” Although many colleges already had extensive virtual learning environments (VLEs), there was very little time to prepare for the shutdown, he adds.
And planning for the future is likely to be just as uncertain. Although many colleges are currently planning to return to in-person teaching for September 2020, there are no guarantees to how things will play out. Gravat says: “Student and employer demand may shift and, while the DfE has guaranteed the grant-funded part of college funding for 2020/21, there’s much more income at risk so we are working with government on the implications. Colleges are planning now for the changes.”
A somewhat glum silver lining is that the resilience of the FE sector has been highlighted through the coronavirus pandemic. Gravat says: “Colleges have managed their finances as independent organisations for several decades and have got used to dealing with lots of turbulence, including short-notice funding changes, policy U-turns and conflicting demands on their budgets.
“The current crisis is shaping up to be the worst yet but the sector is showing it can deal with things.”
But the financial strain has been felt across the entire sector. Members of the City and Guilds Industry Board wrote to education secretary Gavin Williamson and apprenticeships and skills minister Gillian Keegan on 8 April, warning that the apprenticeship system is at risk. This is largely because around 70% of apprenticeships are delivered by independent training providers (ITPs), which are not entitled to receive the full funding that has been promised to schools and state-funded colleges. The letter, published in full by Tes, also notes the potential for more widespread damage, saying: “Unless the funding agreed for ITPs and FE [further education] colleges also flows throughout the whole value chain through to the assessment and awarding organisations, we may see wider structural collapse.”
It may be some time before the impact of the pandemic is known – Jane Gibson
This letter follows a similar plea from AoC chief executive David Hughes, which called for the DfE to focus on issues such as “clarity on the job retention scheme” and “setting up a simpler emergency financial support scheme” for FE.
Areas that are of particular financial concern for colleges, says Gravat, include “apprenticeships, summer term enrolments, international students, catering and a range of other commercial activities”. Although every college is different, says Gravat, “many will need to reforecast their budget and cash flow over the next four months and carry out early stress-tests on 2020/21 budget plans”.
Keeping HE going
Similar financial worries are plaguing the higher education sector. In a recent op-ed for The Guardian, Alistair Jarvis, chief executive of Universities UK (UUK), said: “In the current financial year (2019–20) UK universities are facing losses in the region of £790m from accommodation, catering and conference income, as well as additional spend to support students learning online as a result of the virus.”
There is also a worry within higher education regarding possible lost income from tuition fees for the next academic year. As well as fees paid by UK-domiciled students, UK HE receives a significant income from international students. Statistics from the British Council show that China is the largest source of international students in the UK, with 115,014 study visas issued to Chinese students in 2019. However, due to health concerns driven by COVID-19, 22% of students who responded to a British Council survey said they are likely or very likely to cancel their study plans. A further 39% say they are undecided.
This will likely contribute to HE money worries. A briefing from the Institute for Fiscal Studies (IFS) in April 2020, stated that a big drop in international student numbers could “spell major financial problems for UK universities.” The fee income from international students last year was nearly £7bn, 37% of total fee income, and 17% of the overall sector income.
However, international student intake is only one element of the financial impact on universities. UUK have produced a paper calling on government to help fund universities through this crisis. The paper states: “Universities need investment from government to protect the student interest, to maintain research capacity, to prevent institutions failing and to ensure that universities are able to play a central role in the UK’s economic and social recovery following the crisis.”
Nick Hillman, director of Hepi, also points out that not all universities are facing the same issues. For example, larger, more established universities are much less likely to shut down due to financial worries.
He told ET: “The diversity of the sector is important here. Some are very, very robust, resilient and wealthy institutions, and many of them are not. Some, particularly smaller, more specialist institutions, were struggling financially even before the crisis, but Oxford and Cambridge are not going to go bust.”
In terms of moving forward, says Hillman, “it would be naive to think the whole world will go back to normal”. Although the sector is experiencing big shifts, some of which will be permanent, Hillman thinks that “people will still want to go on learning face-to-face once the crisis is over,” possibly alongside more online delivery. “I think what will be left at the end,” he adds, “may be a little more blended learning, rather than wholly online learning.”
But is online delivery cheaper? In real terms, Hillman says, “good” online delivery is not much cheaper than face-to-face teaching. However, the one cost-saving exercise that may be carried forward beyond lockdown is academics reducing the amount of travel they do for conferences, both at home and internationally. “Some organisations are realising that some of the travel may not be as essential as they thought it was,” says Hillman.
The added benefit here? Reducing carbon footprints. Maybe there are some positives to be gleaned from this situation, after all.