Pressure is mounting on the incoming UK government to commit to providing ¡°rescue funding¡± for universities in trouble as leaders call for a stopgap solution to deal with a potential post-election financial crunch.

The first few months of the new administration will coincide with a crucial admissions period before institutions must prepare another round of?accounts and show they are a going financial concern.

Labour ¨C widely tipped to win the election ¨C has signalled its?willingness to act to stabilise the sector?and leaders are pushing the party to increase tuition fees in England and provide reassurance to potential international applicants, alongside developing?emergency measures.

¡°An incoming government has two choices; it can do something to start to steady the ship ¨C and then university leaders can do a hell of a lot to sort out their own problems ¨C or it can let the issues drift and allow a much bigger and nastier problem to develop,¡± said Vivienne Stern, the chief executive of Universities UK.

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¡°It is essential we as a sector take some leadership of the issues we face. But if we can do that in a stable environment, I think we might avoid something going really badly wrong.¡±

Ms Stern said that the incoming government should consider introducing a mechanism to ¡°get institutions through what would otherwise be a crunch point¡±.

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¡°In the short term, you might be looking at perfectly viable institutions that have been hit by a very, very rapid deterioration in conditions,¡± she said.

¡°It could be an institution that was viable last year and can be viable next year but between those two points it has got to do a lot of reshaping. Universities can do that, but it can¡¯t be done overnight or without some considerable upfront costs.¡±

She said the government should therefore consider acting as a lender of last resort ¡°where in certain circumstances it can stand behind a university whilst it sorts itself out¡­It isn¡¯t really bailing out a university, it is helping it buy some time.¡±

In the medium term this should be coupled with separate stimulus funding more geared towards encouraging institutions to ¡°do something differently, or to support one institution to step in to help another which is no longer able to operate¡±, Ms Stern said.

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Matthew Atkinson, a former director at the Department for Education who now works as a consultant specialising in finance and restructuring, said that, given how long it would take to instigate funding reform, it seemed ¡°inevitable¡± that a ¡°rescue regime will be required¡±.

Any such fund is likely to come with ¡°strict conditions¡±, he cautioned, which could be tied to an incoming government¡¯s potential priorities, including devolution of skills funding, institutional mergers and more collaboration with the further education sector.

¡°A university just asking for money without a plan to change will be asked to try again,¡± he said.

Matthew Innes, deputy vice-chancellor of Birkbeck, University of London, said the sector should be wary of presenting its wishes too negatively to new ministers.

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Asking for ¡°bailouts¡± or ¡°rescue funds¡± was a high-stakes approach, he said, and it would be better to develop a scheme through which individual universities could receive support to transform their operating model or market positions.

Rapid action to restore confidence among international applicants and alleviate cost-of-living concerns by making tweaks to student finance would go a long way to dealing with many institutions¡¯ immediate financial concerns, especially if better maintenance support could be accompanied by a?small uplift to the home undergraduate fee, he said.

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tom.williams@timeshighereducation.com