SCOTLAND’S universities could lose more than £700 million during the Covid-19 pandemic as Nicola Sturgeon ruled out tuition fees being introduced for Scottish students to plug any funding gaps.

The First Minister has called on the UK Government to provide funding for universities, amid warnings that Scotland’s most historic institutions are more at risk of being hit hardest by the shutdown.

Karen Watt, chief executive of the Scottish Funding Council, which is responsible for funding universities, told Holyrood’s education committee that universities face “cumulative multi-year impacts”.

She added: “In the university sector we could estimate that even this academic year, losses of around £72 million. Going into the next academic year, our estimates are in the range of between £400 million to £650 million – depending on what happens with international student intakes.

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“We have a very diverse higher education system – we have brilliant, small, specialist institutions, we have chartered institutions and we have ancient institutions. What we now find is that the more research intensive, internationally-open, big ancient universities are the ones that are much more exposed in this particular crisis – those are the institutions that we are having more conversations with about their strategies and about their scenarios.

Ms Watt also told MSPs that it was likely that Scotland’s colleges could lose around £25 million in the 2020/21 financial year.

She said that her organisation has not received a flurry of demands for refunds from students, but stressed it could become an issue if institutions struggled to offer tuition digitally.

She said: “If for example, an institution was really struggling to keep going with tuition, particularly making sure that they have adequate online provision, then I think there may well be a case for students to look at what they are being provided.

“Every institution, as far as we are seeing it, is very, very quickly pivoted into providing support and online provision – and therefore, I think, we are seeing less requirement for refunds and less of a demand for it.”

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Labour education spokesperson, Iain Gray, told MSPs he has previously quizzed Education Secretary John Swinney over its funding model for Scottish students going to university without paying fees – claiming “it does not pay 100 per cent of the costs”.

He added: “When I have put that to him, and asked him to justify that, he’s always done so on the basis that universities are able to raise income otherwise through commercial means but significantly through fees received from international students .

“Everyone looking at the situation believes that there is going to be an enormous decline in those fees for our universities. A way the government could help the sector would be to actually pay for the learning and teaching for those students that are supported from the Scottish Government – Scottish and EU students.”

Many of Scotland's universities rely on funding from fee-paying international students – but it is not known how that business model will work in the future.

Ms Watt confirmed that the council is “looking at all possible options" and that "I don’t think that anything is off the table”.

She added: “We are unlikely to get through this crisis without some form of either reshaping businesses or looking again at the funding models we have in place.”

Conservative education spokesperson, Jamie Greene, asked whether fundamental change to how universities are funded is being considered.

He said: “Some people have described the current model of funding for the higher sector as, in a sense, a house of cards – it has been built upon a reliance on UK fee-paying and overseas students for their revenues. You take away that foundation, as has unexpectedly happened with the Covid crisis, and the rest of it could topple.

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“Many in the sector have been quite forthcoming with warnings about their finances for quite some time and long before the current crisis.

“The reality is that we don’t know what’s going to happen in the future and I would expect the SFC to be modelling different scenarios, the best and the worst case – but the worst case could be that no-one is able to return.”

Labour MSP Daniel Johnson asked Ms Watt whether the Scottish Government has asked them to look at the situation if Scottish students were asked to pay tuition fees.

She said: “At the minute, it isn’t government policy.

“This administration has not asked the funding council to model charging – so that would not be one of the options that the government has asked us to model at this point in time.”

Nicola Sturgeon has refuted any suggestion of introducing fees for Scottish students.

She said: "I think my views on the importance  of access to education being based on your ability to learn, not your ability to pay, is really important – I think it's a principle coming out of a crisis, I would want to work hard to protect.

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"We are also working very closely with universities and will continue to do so. Universities are not alone in this predicament – so many different areas of our economy and society are finding the impact of this virus extremely hard.

"Universities are being very significantly hit with a very big financial implication. We have already given some immediate additional funding to universities, a £75 million increase in funding for research to help them protect what they are doing right now."

The First Minister stressed that institutions will need to overhaul how they operate as we emerge from the lockdown.

She added: "We will continue to have close discussions with universities about what is required in the future. 

"Of course, they will be expected to use their own assets and to adapt and try, as all businesses generally will have to do, to help get through this crisis.

"Universities are critical to our success as a country. The importance of our universities is hard to over-state."