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Andrew Connors: The Long-Term Impact of COVID-19

  • 5 November 2020
  • By Andrew Connors

This is a written transcript of Andrew Connors’s (Head of Higher Education, Lloyds Bank) introductory remarks at the recent HEPI / Lloyds webinar on ‘The long-term impact of COVID-19 on the higher education sector’. You can now watch the full recording here.

I wrote here back in April that the impact of the Covid-19 pandemic on the higher education sector could be likened to a tsunami. Six months on, the waves are still crashing but the initial shock has passed.

Uncertainty will continue through the medium term as the second and possibly future waves of the virus further affect universities’ ability to operate and students’ decisions on how and where they want to learn. It’s definitely not going to be easy.

Having said that, I believe that there are a number of genuine positives we can take from this hugely challenging period. For example, the accelerated pace of innovative digital adoption and opportunities to reduce carbon emissions.

We work with over two-thirds of the UK’s universities, and as such my team and I have been somewhat uniquely placed to see the scale of the challenges institutions are facing into and how they are meeting these head on.

Relief and worry

Currently, the majority of universities we work with are sitting slightly ahead of or around their base case scenarios on student numbers leading some to breathe a tentative sigh of relief.

The move to teacher predicted grades and the removal of the student numbers cap in August allowed numerous Russell Group universities to recruit record numbers of UK students. Other universities do not seem to be suffering unduly on the back of this either, with appetite from students remaining strong.

This is significant when you consider the backdrop of a continued lack of clarity around international student numbers. This is in part due to the start dates of some post-graduate courses being delayed to January and in part because some international students currently learning remotely are due to arrive in the UK in the New Year. However, as I write, international student numbers sit ahead of plausible worst case scenarios for most institutions.

If that’s the good news, the bad news is the continued uncertainty created by the coronavirus second wave. 

The impact of the pandemic on the student experience is hugely concerning and there is real worry around the decisions students may be making now – or may make over the Christmas holidays – when they have time to pause for breath and reflect.

The key risks are that students will decide that this wasn’t the experience they wanted and leave, or that they are enjoying the online experience so much they opt to enjoy it from the comfort of home rather than in locked down student accommodation. If this happens, the financial impact on lost accommodation fees, and the infrastructure built around the campus experience, may be significant. It will reignite concerns around the viability of some institutions.

Longer term, the continued uncertainty will have a considerable impact on institutions’ ability to invest – particularly in their estates.

Ambitious estates development plans have mostly been mothballed for now and new capital projects undertaken with extreme caution. We expect this lack of investment to have a multi-year impact.

Some silver linings?

In my first blog in April, I shared my experience from the 2008 financial crisis that, even in the toughest of times, there is opportunity. It seems to me that this time around, with UK universities remaining world-leading, there are again some silver linings.

COVID-19 has encouraged a digital transformation in the sector from which there will be no turning back. As universities discover the operational effectiveness and educational benefits of online and blended learning it may be that the days of packed lecture halls have gone forever.

Universities are also increasingly understanding how they can use digital innovation to simplify the way they operate and improve the student experience. We’ve seen this through the adoption of the latest API technology (Application Programming Interface) to make or receive payments or around how they collect and analyse data. Cash-light, and possibly cashless, campuses are very quickly becoming a reality.

The crisis has also accelerated a move in the sector towards more sustainable operating models as universities increasingly focus on the environmental agenda and how their learnings from the pandemic can deliver transformational carbon reduction strategies. For example, we have been working with a number of universities over recent months using a simple but powerful new digital tool that enables institutions to understand their property portfolio in a granular way and identify potential energy-saving and Energy Performance Certificate (EPC) improvement measures at both building and portfolio level.

Ongoing uncertainty

So, there is some good news, but as we look ahead there is no doubt that the sector will continue to face into considerable challenge. The current combination of Brexit and COVID uncertainty remains a potent cocktail and there are potential funding challenges on the horizon.

The Public Bond and Private Placement markets have been significant providers of long-term debt into the sector over recent years, but the pandemic has changed the current funding focus to liquidity and shorter term debt instruments. It is anticipated the debt capital markets will continue to play an important role in university capital structures over time, as liquidity facilities are refinanced and capital expenditure returns. However, we should also remember that these markets have not necessarily been relevant for all universities, and investor appetite can be selective.

The impact of Brexit means that the European Investment Bank stopped funding universities some time ago, but they have lent over £ billion into the higher education sector since 2010. It may be that over time this exposure to a non-EU country is something they look to address. Given all this, there is likely to be a greater responsibility on bank funders to support growth and development in the sector in the future.


When trying to make sense of complexity I often tell myself to say what you see. What I have seen over recent months is a sector moving at great pace to deal with the most challenging scenario faced in living memory and whether the challenges have been closing campuses, opening them, delivering online tuition or blended learning, the sector has delivered for its students. Of course, it’s been bumpy and it will continue to be so but the strength and quality of the UK’s higher education sector has never been clearer.

I have every confidence the sector will flourish in the months and years ahead.

You can watch the full joint HEPI / Lloyds webinar here.

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