Challenges present ‘grave risk’ to financial viability of universities, MPs say

Serious challenges facing the universities sector present a “grave risk” to the financial viability of some institutions and courses if left unchecked, MPs have warned.

A cross-party group of MPs has written to Education Secretary Bridget Phillipson calling for more information about work the Government is undertaking to support the higher education sector.

The education select committee’s letter comes after it spoke to university sector leaders last month after a number of institutions announced redundancies as a result of growing financial pressures.

It warned of a risk to the “breadth and diversity of opportunities” available at UK universities and to the local economy in places where a university is a key employer, as well as the country’s international reputation.

The consequences of a university becoming insolvent would be severely damaging for the health of the local economy, for student choice and wellbeing, and research

A survey by Universities UK (UUK), of 60 institutions, suggested that almost half have been forced to close courses for students in order to reduce costs.

On Tuesday, Vivienne Stern, chief executive of UUK, suggested that more mergers between universities could be on the cards, and vice-chancellors are considering forming higher education groups similar to multi-academy trusts.

University leaders across the country have been warning of significant financial concerns as a result of frozen tuition fees paid by domestic students and a fall in the number of international students.

The Government is due to set out its plan for higher education reform in the summer.

The letter to Ms Phillipson said: “The committee is clear from our evidence session that there are currently a number of very serious challenges facing the higher education sector which, if left unchecked, present a grave risk to the financial viability of some institutions and courses, to the breadth and diversity of opportunities available at UK universities, to the local economy in places where a university is an anchor institution and major employer, and ultimately to the international reputation and standing of the UK.”

The group of MPs has called on the Government to set out what it would do if one or more universities “cease to be able to operate”.

Labour chairwoman of the education select committee, Helen Hayes, said: “A number of headwinds have been pushing universities into crisis for over a decade.

“The consequences of a university becoming insolvent would be severely damaging for the health of the local economy, for student choice and wellbeing, and research.

“Even if such a worst-case scenario doesn’t come to pass, many in the sector are concerned about the overlooked harms that cuts to courses and staff are already having.

“Whilst ministers have made promising statements that planned reforms are being drawn up, we are calling for more information on what activity the Government has been undertaking, and asking when we will see results.”

An analysis by the Office for Students (OfS) in November suggested that nearly three-quarters (72%) of higher education providers in England could be in deficit by the next academic year (2025-26).

It came after the Government announced that undergraduate tuition fees in England, which have been frozen at £9,250 since 2017, would rise to £9,535 for the 2025-26 academic year.

A Department for Education (DfE) spokesman said: “This Government inherited a sector facing serious financial risk and has taken tough decisions to fix the foundations of higher education to deliver change for students.

“Whilst institutions are autonomous, we remain committed to boosting the sector’s long-term financial sustainability and restoring universities as engines of opportunity, aspiration and growth.”