Question to the Department for Education:

To ask the Secretary of State for Education, what steps her Department is taking to support the financial viability of universities.

The department acknowledges the challenging financial environment faced by the higher education (HE) sector. The Office for Students' (OfS) latest report on the HE sector's financial health, which was published in November, stated that the sector's financial context has become more challenging since its previous report in May. Their analysis suggests that up to 72% of providers could face deficit and up to 40% may have low liquidity if they do not take significant mitigating actions.

The report also found that international recruitment is significantly below the sector’s previous expectations. This government has taken a different stand on international students, and we have spoken clearly about it. In my right hon. Friend, the Secretary of State for Education’s first speech in July 2024, and the subsequent video messages addressed to international students, she set out that we welcome international students who make a positive impact on the UK’s HE sector and our economy and society as a whole. That is why international students are offered the opportunity to remain in the UK, and contribute to the society and economy, on a graduate visa for two or three years after their studies come to an end.

Nevertheless, all providers must continue to adapt to uncertainties and financial risks. As autonomous bodies independent of government, it is for providers to decide on effective business models and to how to manage their finances. However, the department is determined to secure the future of our world leading HE sector. That is why we have taken decisive action to support the sector in moving towards a more stable financial footing.

Sir David Behan has been appointed interim Chair of the OfS to oversee the important work of refocusing their role to concentrate on key priorities, including the HE sector’s financial stability. In December, the OfS announced temporary changes to its operations to allow greater focus on financial sustainability. The OfS will work more closely with providers under significant financial pressure in order to protect students’ interests.

Moreover, the government has made the difficult decision to increase tuition fee limits in line with forecast inflation. The maximum fee for a standard full-time undergraduate course in the 2025/26 academic year will increase by 3.1%, from £9,250 to £9,535. The department will set out a long term plan for sector reform this summer.

The department will continue to work closely with the OfS in order to understand the ongoing impacts and changing landscape of financial sustainability in the sector.