Financial Crisis Grips English Higher Education
England's university sector is confronting a severe financial crisis, with fifty higher education providers identified as being at risk of exiting the market within the next two to three years. This alarming revelation was delivered to MPs on the House of Commons education committee during their ongoing inquiry into university funding and the looming threat of institutional insolvency.
Immediate Threat to Two Dozen Institutions
The situation appears most critical for 24 institutions, which regulators have flagged as being at more immediate risk. These providers could be forced to stop offering degree-awarding courses within the next 12 months. This follows a recent gloomy forecast from England's higher education regulator, the Office for Students (OfS), which warned that a staggering three in four universities are likely to be operating at a loss next year.
Susan Lapworth, the chief executive of the OfS, sought to reassure MPs, stating that the risk assessment was a conservative measure to ensure the regulator was "on the front foot." She emphasised, "We are not saying that we're expecting any of those to exit in a disorderly way imminently." Her comments aimed to allay fears of sudden, chaotic collapses within the sector.
Smaller Providers Bear the Brunt
The committee heard that smaller institutions are disproportionately vulnerable. Of the fifty providers identified as being at risk, thirty were described as "smaller." Furthermore, of the 24 facing the most immediate threat, 17 are small institutions. The remaining seven each have more than 3,000 students, a figure considered "large in this context," according to Lapworth. This highlights the intense pressure on specialist and smaller higher education providers registered with the OfS.
The sector has already witnessed precedents. The committee was reminded that several providers have already exited the market, including Schumacher College in Devon, which closed its degree-awarding courses last year, and the Academy of Live and Recorded Arts (ALRA), which ceased operations in 2022.
Adding to the sense of urgency, committee chair Helen Hayes disclosed that during a confidential roundtable, universities warned that an unnamed provider could collapse before the end of the year. However, Universities Minister Jacqui Smith offered a slightly less dire immediate prognosis, stating, "I don't think I would necessarily say before the end of the year that there is an imminent collapse, no."
Minister Smith defended government actions, including the proposed introduction of a levy on international student tuition fees—details of which are expected in the budget—saying it would fund maintenance grants for disadvantaged students. A Department for Education spokesperson pointed to the government's inheritance of a sector with frozen tuition fees and cited action to raise the tuition fee cap and refocus the OfS.
