Navigating the new normal

COVID-19 – Financial implications for the education sector and potential support available


All content on this page is correct as of April 16, 2020

The COVID-19 pandemic has resulted in drastic changes to the education sector which have required phenomenal flexibility and dedication from those who work in it. Schools and colleges have been asked to close their doors (while still operating remotely where possible) except in respect of children who are vulnerable and the children of critical workers who still need to attend. This causes logistical challenges for providers but also puts a strain on financial resources.

Education institutions face difficult questions for current and future operations, and would be advised to engage in careful ongoing cost and risk assessment, as well as seeking out government support or insurance relief where available. Providers may offer a mixture of privately and publicly funded courses (and in some cases a mix of Higher and Further Education courses) so should be mindful of their specific offering and the support or other measures which may be available.

State-funded schools

The Department for Education confirmed that state-funded schools will continue to receive their budgets for the coming year regardless of any periods of closure, which will be of comfort. COVID-19 is causing additional costs, however, including increased premises costs where schools are staying open over holiday periods for vulnerable children and the children of critical workers, and for some schools providing support for free school meals where costs may not be covered by the national voucher scheme.

The Government intends to put in place a process of reimbursements for certain specific exceptional costs and published new guidance on 7 April which confirms additional financial support will be available for all state-funded mainstream and special schools, and alternative provision. A full list of the eligible institutions can be found here, along with guidance on how to claim. Payments will then be made directly to academies or via local authorities to reimburse schools for these additional costs, up to a specified limit. The timing of these payments is unclear, and the guidance states that information as to the process for informing the government of these additional costs will not be published until June.

Given the strict parameters regarding financial support, schools should carefully assess whether their additional expenses are a) eligible for reimbursement; and b) will fall within the specified total limit. Any costs outside of the eligible list should be considered with caution as it is unclear whether they will be reimbursed. In addition, schools should keep very careful records of all additional costs incurred in the period during which the reimbursement process is not yet set out to ensure no complications arise later.

Further Education including apprenticeships, which attracts public funding

In order to help manage the financial implications of the pandemic the ESFA will continue to pay grant funded providers their scheduled monthly profiled payments for the remainder of the 2019 to 2020 funding year. ESFA allocations for 2020 to 2021 have also been confirmed, and payments will be made in line with the national profile. With regard to advanced learner loans, the Student Loans Company (SLC) will continue to make scheduled fee payments to all providers with a loan facility. Further Education providers would be advised to read government guidance (found here) carefully, however, as specific information is provided in respect of funding for various courses/qualifications, including T levels.

Owing to the unique funding model for apprenticeships, specific guidance for apprenticeships has been published to assist with the impact of COVID-19.  The ESFA is taking a range of steps to try to ensure apprentices can complete their apprenticeships wherever possible, despite the disruption. A full list of encouraged measures can be found in the guidance.

Where the COVID-19 outbreak results in loss of income due to ceased or reduced delivery of training, training providers should consider their eligibility and apply for the wide range of financial support that HM Treasury has already announced for businesses.

Higher Education Providers

We understand that universities and others are offering remote education services where possible to enable students to continue with their degrees and equivalent qualifications and currently, there seems to be no indication that fees will be refunded to students who cannot return and have had face-to-face tuition cancelled.

The SLC has confirmed that students will receive the next instalment of their maintenance loan at the planned start of their summer term, regardless of whether their university or provider has made alternative arrangements for teaching. Tuition fee payments to educational providers will, it seems, also be unaffected.

The Office for Students (OfS) has advised that the two coronavirus Business Interruption Loan Schemes and the COVID-19 Corporate Financing Facility may be available to Higher Education providers, however some universities have been calling for additional funding and emergency loans. Whilst conversations with the Department for Education continue, universities should continue to update their business continuity plans regularly as well as ensuring they have clarity on the scope of their insurance policies. Legal advice should also be sought in respect of any staff redundancies which may be considered (please see here for our series of webinars on employment law implications of COVID-19) or in respect of cancelling courses (see here for our advice in respect of COVID-19 and contractual obligations).

Private provision

Providers of independent schools and those who provide qualifications that do not attract public funding are being required to seek a balance between protecting finances, keeping staff on the payroll whilst also allowing for the altered financial situations of learners and/or their families. Some fee-paying schools are offering discounts (including by way of credit for future academic years), refunds on services no longer provided (such as school meals), and allowing greater flexibility over fee payment in an effort to dissuade parents from removing their children from schools. Providers of privately-funded qualifications will undoubtedly be considering equivalent measures. Such concessions are often made at a cost, however, where a considerable number of a provider’s expenses and outgoings are fixed.

In doing so, providers should carefully consider the terms of their contracts with learners/their families (see further here) as well as whether any additional financial burden will be covered by their insurance policies. Again, see here in relation to staffing issues and we recommend that you keep abreast of Government schemes as they are further explained and/or updated. Providers with charitable status may be able to open up reserves to stay financially afloat in the short term, keeping in mind what is permitted by their charitable objects and trustee duties. A quick guide to assist charity trustees to comply with their duties at this time can be found here. More general practical guidance and advice from Bates Wells on a range of issues relating to COVID-19 can be accessed here. As another alternative in these unprecedented times, some private schools may have to consider converting to academy status and becoming part of the state school system.  

Naturally, COVID-19 has brought many more changes to the education sector than financial uncertainty alone. Ofsted has suspended the majority of inspections except for urgent cases and the OfS has committed to reducing regulatory burden where possible. This year’s summer exam series, including A levels and GCSEs, has been cancelled and schools and colleges will be asked to provide centre assessment grades for students instead. Challenges will continue in the months ahead and we would urge all providers to familiarise themselves with the Department of Education’s safeguarding guidance, updated in light of COVID-19 (see here). Providers should be especially mindful of the impact of changes on vulnerable children/students and seek to ensure they are appropriately supported.

If you would like any further advice in relation to the above information then contact the Bates Wells lawyer you work with or more generally, Emma Dowden-Teale [email protected] or Tessa Furnivall [email protected].


This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of April 16, 2020.

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