Office for Students

Baroness Stedman-Scott Excerpts

Thursday 30th January 2025 Grand Committee

[Baroness Stedman-Scott (Con)]

My Lords, I congratulate my noble friend Lord Willetts on securing this debate. His two brains have been working on overtime. I add my Benches’ congratulations to the Minister on her engagement. It is good to see her so happy.

I speak in this debate on the recent report published by the Office for Students that identifies three key priority areas for the next five years: quality assurance, wider student interest and sector resilience. The Office for Students is focusing its efforts on monitoring financial sustainability to help create a secure future for our world-leading universities. This is in response to growing concerns about declining student recruitment, increasing operational costs and wider economic uncertainty. I want to explore the significant changes proposed by the Office for Students in its strategy for 2025-30, particularly its decision to close the register for new higher education providers and pause granting degree-awarding powers until August 2025. While these changes are framed as necessary to strengthen the financial sustainability of higher education, they also raise important questions about their impact on innovation, access and diversity in the sector.

The Office for Students has decided to pause new entries in the register of higher education providers and temporarily halt the granting of degree-awarding powers. This decision is in direct response to the severe financial pressures facing many universities, particularly small, medium and specialist providers. New analysis suggests that up to 72% of higher education providers could be in financial deficit by the 2025-26 academic year, prompting the Office for Students to focus its resources on stabilising existing institutions rather than admitting new ones.

I confess today that, unlike others in this Committee, I was not educated in a university. Instead, I attended the Salvation Army’s William Booth College, an international college at Denmark Hill. It is a great building, and I congratulate the Salvation Army on not selling it to some big developer to develop “Denmark Hill Village” but investing heavily in the college and its educational achievements.

William Booth started the Salvation Army—I have time, I will do it—in 1865 as he was absolutely distraught at the poor educational attainment of the people, particularly in the East End, and their attraction to alcohol. They could not work because they could not keep their feet on the floor all the time. The first thing he did was get them off alcohol, off the grog, as he called it. The second thing was to find them a job. He persuaded somebody to buy a farm near Epping Forest, and people went to live there with their families, they were educated, they worked on the farm, and they got a life together. He even went as far as to buy land in Australia, and people, if they really did well, were able to have that land as a gift and develop their own business. He really was a social entrepreneur very early on in the whole setup. The college educates Salvation Army cadets, as they are called—officers—and it has now been an international college for some time. People come from all over the world to train there, and the impact that the Salvation Army has on people’s lives can never be underestimated. I guess that it also has great plans for the place. If noble Lords want to visit, I am happy to fix that up. It would be a travesty if something such as that that is managed well, has good people and does not have government money were not allowed to start today. Let us bear that in mind.

Can the Minister explain how the Office for Students intends to balance the need for financial stability with the need for ongoing innovation in higher education, particularly in industries such as health, engineering and the creative arts, given that smaller specialist providers often cater for niche demands? Does the Office for Students risk limiting innovation and diversity of provision by closing the register to new providers? Will doing so have an impact on the economy growing? Furthermore, we must acknowledge the broader context of this financial instability, which is the growing student recruitment crisis in the face of declining recruitment numbers and rising operational costs. British universities are grappling with the challenge of attracting students. How does the Minister plan to address the issue of declining student recruitment, particularly considering the financial pressures many universities face? While stabilising the sector is necessary, what is being done to ensure that institutions are still able to offer the courses and opportunities that will meet future demand in student and workforce markets and in wider society?

In conclusion, while the Office for Students’ strategy is designed to safeguard the financial sustainability of the sector and prevent further closures or disruptions, we must remain vigilant about the potential longer-term consequences. As we move forward, it is crucial that the Office for Students balances its financial oversight with a commitment to innovation, student access and diversity. The sector needs to be able to adapt to changing demands, and a robust plan to tackle the student recruitment crisis must be a central part of that strategy.