Covid-19: Higher Education Restructuring Regime

(Limited Text - Ministerial Extracts only)

Thursday 16th July 2020 Written Statements

[The Secretary of State for Education (Gavin Williamson)]

The establishment of the higher education restructuring regime in response to covid-19 has been announced today.

On 4 May, I put forward a higher education (HE) stabilisation package which reprofiled public funding and introduced measures to stabilise admissions with a view to mitigating the impact of covid-19 on HE providers’ finances. This package, along with the Government-backed business support schemes, provided substantial support to the HE sector. On 27 June, the Department for Business, Energy and Industrial Strategy announced further support to preserve research capacity and capability in the research stabilisation package.

Many providers may continue to be affected by income losses across teaching, research, commercial and other activities resulting from covid-19. There remains significant uncertainty around the extent of financial challenge providers will face and the full picture of this will not become clear until the autumn term.

I recognised at the time of my announcement in May that there may be a case for Government intervention to support an otherwise sustainable provider’s efforts to restructure its business and overcome ongoing financial threats caused by covid-19.

That is why I am announcing today the establishment of the higher education restructuring regime to support, in the right circumstances, individual HE providers in England at risk of market exit as a result of covid-19 and to intervene where there is a case to do so.

Providers in scope for consideration for support through this regime are those on the Office for Students register in the approved (fee cap) category.

The Government’s intention is not to provide a blanket bail-out to the sector. It is not a guarantee that no organisation will fail. Instead, the Government will consider supporting restructuring of providers as a last resort and provided there is an economic case to do so. Restructuring plans will need to combine financial rigour and business efficiency with a strong focus on emerging from the challenges of covid-19 to deliver higher-quality provision to meet the needs of our economy and society.

The regime will take into account the following overarching policy objectives which will guide my Department’s assessment of cases:

Protecting the welfare of current students.

Preserving the sector’s internationally outstanding science base.

Supporting the role that HE providers play in regional and local economies through the provision of high-quality courses aligned with economic and societal needs.

Providers facing financial difficulties should continue to engage with the Office for Students as the regulator for HE in England. They may choose to approach the new DFE restructuring unit to begin discussion about potentially becoming engaged in the HE restructuring regime.

I will receive advice to support my decision on whether the Government should intervene in the case of an individual provider and the nature of the intervention from an independent restructuring regime board. This board will include experts on restructuring and the HE sector. Any financial support will be in the form of a repayable loan with clear conditions that support Government objectives. An assessment of the individual provider’s business model and restructuring plan will determine the precise terms and conditions to be attached to any public funding.

I have deposited a copy of the announcement document in the Libraries of both Houses.

[HCWS382]