Fifty higher education providers at risk of exiting market in England, MPs told | Universities
Fifty higher education providers in England are at risk of exiting the market in the next two to three years, MPs on the House of Commons education committee have been told as part of an inquiry into university funding and the threat of insolvency.
The evidence follows last week’s gloomy forecast from England’s higher education regulator, the Office for Students (OfS); The forecast warns that three in four universities are likely to be in the red next year as financial turmoil continues in the sector.
MPs were told on Tuesday that 24 of the 50 institutions identified as vulnerable are at immediate risk and may have to stop delivering degree-leading courses within the next 12 months.
Susan Lapworth, chief executive of the OfS, sought to allay fears by reassuring MPs that this did not mean the OfS expected a “disorderly” exit from any agency.
“Risk assessment requires us to be quite conservative and engage with every agency and a broader range of stakeholders and have all the right conversations to make sure we’re at the forefront. We’re not saying we expect any of them to leave in a disorderly manner anytime soon,” he said.
The committee heard smaller institutions were at greater risk. Of the 50 identified, 30 were described as “smaller,” while the remainder had more than 3,000 students each. “So in that context we think they are big,” Lapworth said.
As well as universities, a number of smaller higher education institutions, often specialist providers, are also registered with the OfS. “The general trend is that the younger ones are more worried about us,” Lapworth added.
The committee heard a number of providers are exiting the market, including Schumacher College in Devon, which closed its degree-granting courses with immediate effect last year, and the Academy of Live and Recorded Arts (ALRA), which closes in 2022.
Of the 24 institutions found to be at risk of exiting the market within 12 months, 17 were described as small and the remaining seven institutions each had more than 3,000 students. For context, Britain’s largest universities have tens of thousands of students.
Committee chair Helen Hayes said MPs were told at a confidential roundtable with universities that an unnamed provider could collapse before the end of the year. “Given that we are now in late November, this was a warning of the potential for an imminent collapse of an institution of higher education.”
Giving evidence, universities minister Jacqui Smith was asked whether she understood the urgency of the situation facing some universities. Smith replied: “I don’t think I would say there is an imminent collapse before the end of the year, no.”
However, he acknowledged that the government needed to bring financial sustainability to the sector and therefore agreed to allow domestic tuition fees to increase in line with inflation.
Smith defended a proposed tax on international student tuition fees; Details of this will be set out in Wednesday’s budget and he said it would fund maintenance grants for disadvantaged students.
A Department for Education spokesman said: “This government inherited a university sector that faced serious financial difficulties and had tuition fees frozen for seven years.
They added: “We have taken action to put the sector on a secure financial footing, including pledging to increase the annual tuition fee cap and refocusing the OfS on supporting universities to face the challenges of the future.”
