Scotland's universities are facing losses of £132 million as Covid restrictions bite and students choose to axe accommodation contracts, analysis warns.

The findings will spark fresh fears for the country’s globally renowned higher education sector and come on the back of longstanding concerns over the gap between government investment and what it costs to deliver worldleading teaching and research.

Up-to-date Funding Council projections suggest coronavirus lockdowns and related measures will result in universities suffering significant reductions in income from residences, catering and conferencing in 2020/21 compared to the 2018/19 period.

An estimated £32.5 million of the predicted £132.2m loss is due to the decision by institutions to offer students refunds for accommodation they are not using.

Nicola Sturgeon announced earlier this month that university and college teaching would be online for the vast majority until at least the end of February.

It means most will have to stay at home rather than take up term-time accommodation.

John Swinney yesterday sought to alleviate some of the pressure as he announced £30m would be made available to support students and institutions.

The Education Secretary explained that £10m would help colleges and universities make up for lost revenue linked to Covid-19, while the remaining £20m will “provide further hardship support for students”.

He added that the money could be used to help students who are having to pay rent on properties they cannot live in at the moment.

But the cash injection is unlikely to satisfy university bosses, with Finance Secretary Kate Forbes facing calls to provide a boost of more than £200m when she announces her budget tomorrow.

In a briefing paper for MSPs, representative body Universities Scotland said pandemic-related measures had led to students opting to cancel contracts on the expectation that in-person teaching will not resume sufficiently ahead of the end of the academic year.

Director Alastair Sim has called on Ms Forbes to ensure her Scottish Budget underpins the national recovery by investing in higher education.

“Universities are facing losses of £132m this academic year in income from residences, catering and conferencing, compared to pre-pandemic income,” he said.

“This includes £32.5m as a result of offering students refunds for accommodation they are prevented from using by the current lockdown.

“With three quarters of our universities now forecasting deficits this year, it is essential that Thursday’s budget sees the Scottish Government prioritising Scotland’s recovery by investing in its universities.”

HeraldScotland: Most students will be unable to return to campuses before the start of March at the earliest.Most students will be unable to return to campuses before the start of March at the earliest.

US has also stressed that the latest fears are on top of major uncertainty over international student fee income, with some optimism before Christmas now tempered by the emergence of new, more transmissible coronavirus variants and heightened travel restrictions.

These will have particularly affected students who were due to start courses this month.

Its “budget bid” is asking for an increase of £205.9m to “help Scotland’s 19 higher education institutions to address the wide range of impacts institutions face and to help get through this crisis”.

Senior figures in Scotland’s HE sector – which delivers annual economic impact worth around £11bn – have long had concerns about the gap between public investment in universities and the money required to fund their activities adequately.

In information which it provided for MSPs late last year, US highlighted Scottish Funding Council estimates showing that public investment in university teaching during 2018-19 was £157 million per year below the full cost of provision.

The figures also indicated that research was funded at 80 per cent of cost – a deficit of £340 million.

Mr Sim added: “We’re supportive of action to address student hardship.

“More widely, we want this week’s Scottish Budget to support the full range of universities’ contributions to students’ success.

“So we’re seeking sustainable Scottish Government funding of teaching and pastoral support at university, alongside investment in our research and innovation contributions to the recovery.”

In a separate development, the Scottish Liberal Democrats highlighted figures showing a fall of just over 21% in college enrolments between 2010/11 and 2019/20.

HeraldScotland: Covid-19 has caused severe disruption across college and university campuses.Covid-19 has caused severe disruption across college and university campuses.

Jenny Marr, the party’s further and higher education spokeswoman, said the SNP had “decimated” the college sector over the last decade.

“The numbers don’t lie, Scotland’s further education institutions have been under huge stress for the past 10 years,” she added.

Commenting on its latest projections, a spokesman for the Scottish Funding Council said they were “extremely fluid as the sector responds to the changing circumstances and uncertainty created by the pandemic”.

He added: “We will continue to monitor the position in order to present up-to-date snap-shot sector information to the Scottish Government, universities and the wider public.

“This information helps to inform actions such as this afternoon’s announcement from the Deputy First Minister of £10 million for income lost in providing rent rebates and £20 million for student hardship.”

A Scottish Government spokesman said: “Since 2012-13, against a backdrop of financial pressures, we have consistently invested over £1 billion annually in our universities in recognition of their significant contribution to the economy and inclusive growth.

“Many universities have lost accommodation revenue by giving students rent refunds or rebates, so we are providing an additional £10 million this year to institutions that builds on the additional funding of over £100 million we have already provided in direct response to Covid.”

The spokesman added: “We are maximising the resources available to support Scotland’s route through the pandemic and recovery, and universities will play a critical role in that process.”