At the University of Sunderland, the coronavirus lockdown has brought an opportunity.

Responding to a potential fall in student numbers and rising unemployment because of the pandemic, it has launched a “skills boost” scheme, giving local people who have lost their jobs or been furloughed a 20 per cent discount on courses.

“The question we were asking ourselves internally was ‘How do we carve out a place as a particular university?’” said vice-chancellor David Bell. “We’re not a research-intensive university. We’re much more locally focused. This seemed like a logical thing to do.”

Universities such as Sunderland are facing their biggest crisis in a generation and are being forced to innovate to secure their future. Student numbers and revenues are set to drop in September, leaving some at risk of insolvency. And while the government has offered a bailout, it has made clear that state support will be conditional on institutions meeting stringent conditions — and warned that some may not survive.

According to the Institute for Fiscal Studies think-tank, between 7.5 and almost 50 per cent of the higher education sector’s overall annual income could be lost as a result of the pandemic. It said the crisis had also left 13 unnamed universities at serious risk of insolvency.

The government has offered a lifeline with a restructuring package revealed this month. But signing up would mean the Department for Education could intervene to ensure courses meet what it believes are the “economic and societal needs of the nation”.

That could mean providing more technical education or apprenticeships, strengthening science and technology offerings, dropping “low-quality courses”, or reorientating “toward the needs of the local and regional economy”.

And while the government believes most universities will not need additional support, it has suggested they should pay attention to its “vision” and said that institutions would only be saved if they offer “value for money”. The University College Union, which represents the sector, has accused ministers of using a crisis to “impose severe restrictions” on the basis of “evidence-free ideology”.

The education department said it understood the challenges universities were facing, which was why it had already provided a range of support to ease financial pressures. “Intended as a last resort measure, this new scheme will help those who are still facing financial difficulty as a result of Covid-19,” a spokesperson said.

“We need our universities to achieve great value for money — delivering the skills and a workforce that will drive our economy and nation to thrive in the years ahead.”

Because of the conditions attached to the government’s offer, universities would be reluctant to accept any assistance, said Nick Hillman, director of the Higher Education Policy Institute, a think-tank.

“The strings that the government wants to apply won’t be acceptable to most,” he said. “They’ll do everything they can to avoid going in the government restructuring scheme — and there are a lot of things they can do before they face that.”

Most have already scaled back capital expenditure and cut the pay of senior staff. There have also been job losses, often of casualised fixed-term workers who form the backbone of much teaching and learning provision.

But universities have also renewed their focus on local business and potential students in their area. Greg Walker, the CEO of Million Plus, which represents post-1992 universities — a group of former vocational colleges, or polytechnics, which converted to universities under John Major’s government — said that although many of his members did not enjoy the large cash reserves of older institutions, the small number of international students made them less vulnerable to the shocks of the pandemic.

“Universities with a higher proportion of locally based or “commuter” students are finding that applicants for entry in September are intending to turn up,” he said.

Small interventions to nudge local take-up range from commuter bursaries to discounts for students who live nearby and alumni. The University of Greenwich is offering £1,000 a year towards the cost of travel for local students, who make up around half its intake. It is also experimenting with providing counselling and wellbeing support for all those offered places, in what it said is a response to Covid-19 mental health concerns.

Vice-chancellor Jane Harrington said the university had fast-tracked the design of a new syllabus, holding consultations with the chamber of commerce and local businesses about what skills to give priority. This includes a group of classes in entrepreneurship and collaboration on digital skills with Ravensbourne, a local media and arts university. “We’ve been offering courses that are targeted toward business growth, that we need for people to reskill and upskill,” she said.

At South Bank University in London, vice-chancellor Dave Phoenix hopes to offer more “modular” courses for part-time vocational qualifications and is working with further education colleges and schools in the local area.

He welcomed the government’s rescue package but said it had come with unhelpfully divisive rhetoric. “It’s not based on fact,” Prof Phoenix said, adding that an approach based on local needs would be more effective. “If you have it too directed from the centre, you might have something that ticks a lot of boxes now, but doesn’t have a lot of buy-in locally.”

But Sir David at Sunderland said the government’s vision was for each institution to be clear about its mission in a sector that has “always made room for diversity”.

“We have always comfortably accommodated universities that are in the top 3 or 4 in the world, huge intensive research institutions — but we’ve also had a modern sector, working with regional economies and making a high impact there,” he said.

“My line is don’t write universities off yet.