Universities: Financial Sustainability

Lord Watson of Invergowrie Excerpts

Monday 11th February 2019 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, I thank the Minister for repeating the Answer to the UQ in the form of a Statement. Two impending great unknowns have combined to leave many universities feeling vulnerable. The first is, of course, that the Augar review, whose publication date remains shrouded in mystery, seems likely to recommend a significant cut in tuition fees. Can the Minister give a commitment that should that be the case, it will not lead to a reduction in university funding? The more serious problem facing universities is the uncertainty after we leave the EU, particularly if that should happen without a deal, which the Prime Minister has consistently refused to rule out.

Now we learn from media reports that at least four universities have serious financial problems. I hope the Minister will tell noble Lords how many institutions his department understands to be at risk of insolvency. Reading we know of, but it seems the Government do not have a handle on the situation there because when the Urgent Question was heard in another place this afternoon, the Universities Minister suggested that Reading should contact the Office for Students, even though the university has said that it did so last week.

The Minister caused some astonishment in the Urgent Question exchanges when he stated:

“There is an expectation that providers may, in a small number of cases, exit the market altogether as a result of strong competition”.


It was almost a throwaway remark. The Government seem not to have considered that not the least important factor when a university finds itself in financial difficulty is the potential knock-on effects in the local community, because it is a matter of concern not only for students and staff at the institution but for the local area in which it is based.

There also remains some doubt about the fundamental role of the Office for Students in this situation. Is it merely the regulator or is it a player? Last year, its chair, Sir Michael Barber, stated unequivocally that the OfS would not bail out any institutions that found themselves in financial trouble, yet soon after we learned that an unnamed institution had been provided with an emergency loan when it ran out of cash at the start of this academic year. Will the OfS remain a lender of last resort? That question, I fear, may be put to the test in the not-too-distant future. Will the Minister clarify government policy on this?

Finally, last week the Universities Minister said that the DfE was working with the OfS towards establishing student protection plans. Earlier today in another place, the Minister said he hoped to complete reregistration by the end of the year. If that is the case, it is not very reassuring to people who need reassuring at this time. Will the Minister say how many universities and students are currently covered by student protection plans and how many are not? These questions have assumed even greater importance over the past few days.

[Viscount Younger of Leckie]

I thank the noble Lord for multiple questions. I shall first address the Sir Philip Augar review. As the noble Lord would expect, I cannot comment on what might come out of the review, but I say again that it is ongoing and more information on its outcomes will be available in due course. When that happens, the Government will be in a position to respond.

The noble Lord also asked about reports in the papers of some universities with serious financial problems. We are certainly aware of them, but I am not in a position to speak about any universities that have these issues and do not want to do so. The OfS continues to say that it will not bail out providers. That is not its role. The noble Lord asked about student protection plans. I will need to write to him on the number of universities with protection plans in place. The noble Lord raises a very important point. One of the most important aspects of the reforms that we brought forward in the Act was to ensure that students have proper protection plans in the unlikely case that providers do not make any.