Peterborough university viability has been evaluated in light of pandemic

The new university managed by Anglia Ruskin University, called ARU Peterborough, is due to open in 2022 on a site just to the south east of the cathedral and just north of the river.

The Cambridgeshire and Peterborough Combined Authority and Peterborough City Council have committed around £30million to the project.

The university plans to take 2,000 students in 2022, with an ambition for 12,500 students by 2030.

At the Combined Authority’s scrutiny committee on Wednesday (July 29), Peterborough councillor Ed Murphy said a number of universities’ finances are in “jeopardy” owing to both the wider challenges in the sector, and now the impact of the pandemic.

He asked if the Combined Authority was able to “properly re-evaluate” the project in light of the pandemic. He asked: “What are we going to do if the economics don’t stack up?”

“Covid resilience has been examined in detail,” John T Hill, the Combined Authority’s director of business and skills, said.

He described how a combination of factors made the university resilient to potential changes brought on by the pandemic.

He said that owing to the financial limitations around the size of the campus, the plan was always to incorporate a more digital model and the number of students who need to be on campus was already going to be limited.

Mr Hill said: “Unusually, it is a 35 per cent on-site delivery model, that is already well below what many universities are now striving to get down to due to social distancing.”

“That was actually not because of Covid,” he said, it was because they “simply couldn’t afford” to build a larger campus.

He said generally universities make small margins on teaching, make a loss on research and so they rely on commercial work for businesses and higher-paying international students to bolster finances.

ARU “does not suffer from these weaknesses” he said. “Their research volume is very very modest, not requiring them to make lots of profit elsewhere to contribute to their research costs. Their overseas student volume is tiny compared to most other universities so they are not reliant on the profits from that revenue stream either.”

He said across the wider ARU institution, on-site costs across are “very low” owing to the off-site element of its business model, which “makes them resilient as an organisation”.

In addition, he said: “We have negotiated a rent-free 10-year period on the building, and that provides significant resilience.”

ARU has also provisioned as much as £5million for potential losses, he said, “a very prudent use of their reserves that adds more resilience”.

He also said ARU already operates in Peterborough, “giving them around 500 healthcare students to instantly drop into this model and onto this university, giving them a real flying start”.

He said the target market of younger students looking for qualifications without leaving home, and more mature students looking to reskill, will also reduce the disruption caused by the pandemic.

“We’ve had the invidious task of launching a university at a time when a number of universities were saying they were going to go bust, and lots of people were saying it’s completely insane to launch a new university in such a market,” he said. “We knew at the outset we couldn’t offer the same thing as all the other universities were offering, because we would never compete with them. What that is, is a remote-from-your-home-town experience for three years.”

Instead the university is targeting 18 to 24-year-olds living locally. He said 24 per cent of that age bracket in Peterborough are in higher education, compared with a 33 per cent average in the UK. “That gives you nearly 10 per cent of students that would otherwise go to universities that don’t do that in our catchment area. So we would very much focus on them,” he added.

And he said Covid-19 might mean there will be more mature students looking to reskill as a result of the pandemic’s economic fallout.

The authority’s skills strategy manager, Kim Cooke, told the committee: “Covid-19 recovery will be very much key to the success of this university.”

The scrutiny committee’s discussion on the university’s financial viability came to an early and abrupt end when councillor Jocelynne Scutt said she had to leave, which would have taken the committee below the number of members needed to be quorate.

A Combined Authority report says the first phase of the planned university has been subject to “detailed stress testing” in relation to the impact of the pandemic.