Financial Implications for Lancaster University due to Covid-19

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Co-authored by Tom Burgess and Syed Adan Ahmed

As a result of the Covid-19 situation, Lancaster University like all other universities in the UK is currently going through certain financial difficulties. 

A major factor that substantially contributed to this situation is the university’s decision to refund a large portion of the on-campus students’ summer term accommodation fees. In addition to this, due to the pandemic, the university is expected to fall short of the financial target set by the University Council.

Right now, at the institutional level, plans are being drawn and put in place to prepare the university for a variety of scenarios that it may have to face in the upcoming year. These scenarios range from a full lockdown to a situation of business as usual. The reason for this entire exercise is that right now simply nobody knows whether there will be a second wave or not, and if there was one, no one is able to predict what the government’s response would be to it. 

In response to this uncertainty, the University Council is assuming a middle-risk scenario i.e. a 20% decrease in the university’s income in the next year. In addition to this, the newly appointed Vice-Chancellor of Lancaster University, Andy Schofield has come up with several strategies to save money. 

In an interview with the LUSU Vice-President for Education, Bee Morgan mentioned that there will be immediate pausing of the construction of different buildings that were being built around campus. These include the new Engineering building and LUMS Phase 2. This is the first step that has already been taken and will save the university around 22 million pounds in the coming year. But, Bee expressed much more concern over the other two saving plans. 

This is because all the university departments have been asked to make plans on how to meet the savings targets in non-pay spending (spending in departments that is not related to the paying of staff and workers). There has also been a recruitment freeze where any new post ‘is going to the head of HR’ to judge if it is absolutely necessary. Bee thinks that this is ‘slightly alarming’ as many departments were in the process of recruiting potentially important new lecturers for the student experience and now will not be able to. 

The last measure is the most problematic as it asks staff for voluntary pay cuts, a delay of the financial reward of promotions and the purchase of additional annual leave. The senior leadership team are all taking a 10% pay cut initially for three months and the VC is taking a 20% pay cut to lead by example. Bee is concerned that despite the reasonable sounding proposal there is a risk that staff might feel ‘intimidated’ into taking pay cuts and sees these proposals as not as voluntary as they appear. When speculating she raised the issue that some lecturers might not be able to take pay cuts due to their circumstances but the university may need the money and therefore might make them redundant. The policy doesn’t appear to fully appreciate everyone’s varying circumstances and the format of filling out a survey to take a pay cut is ‘really, really impersonal’.

All these measures are judged necessary because of the fear that there will be far fewer international students enrolling next year, all of whom together account for a large portion of the university’s annual income. This fear may be unfounded, but at this stage, the university has no way of knowing what the situation will look like in October and therefore must prepare for all situations.

This uncertainty doesn’t just affect those working at the university. This is because students also have been raising many objections, including the fact that they shouldn’t have to pay full tuition fees if they are going to be taught online next year. The reality is that plans for these kinds of scenarios are in place but may never be used. Plans are also in place for the usual in-person classroom teaching in the event that the current crisis is brought under control.

As of now, the university is following the government’s lead and is unable to speculate or predict what the situation will look like come the next academic year. It is possible that a few modules might not be able to run next year due to this uncertainty and also due to the difficulty in recruiting new staff. 

Currently, the best thing for students to do is to find out which modules are being cancelled by their departments and to make their voices heard if they want the modules to continue. A lot of the handling of this crisis is out of our hands but it’s possible with enough student pushback that certain modules may be saved. 

In conclusion, all this might be a lot to take in for students and staff, so in short, we are living in an extraordinary period and as a result the university’s senior leadership is employing extraordinary measures to stem the institution’s projected losses in order to keep the university well-managed.

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