Lowering the boom could mean some go bust

Bigger fines for universities recruiting too many students could lead to financial instability and at least one university is likely to fail by 2015, sector experts have warned.

July 12, 2012

Those were among the predictions made at a seminar, "The future of regulation and finance in the higher education sector", held in London on 4 July as part of the Westminster Higher Education Forum series.

Richard Cryer, director of finance and estates at the University of London, told the audience that there were major implications from the increased over-recruitment fines to be introduced for 2012-13, which government ministers outlined in a letter to the Higher Education Funding Council for England in June.

"If we unpick that, maybe there are some issues around financial stability," he said. Such problems might harm a university's "ability to continue their existing level of operations", he added.

David Palfreyman, director of the Oxford Centre for Higher Education Policy Studies, said England was "at the extreme end" of a wider international trend for the transformation of higher education from public good into private good.

Given England's new system of "more extreme stratification" between universities, the "end result was bound to be some insolvencies".

He predicted that a private provider would take over an institution after such an event - naming BPP as one candidate.

But he added: "You won't see the private sector riding to the rescue ... It will be a hard deal for a university that is insolvent."

Carl Lygo, chief executive of BPP, said it was not this government that began opening up the sector to private providers but the last Labour government, which changed the rules on degree-awarding powers in 2005.

The key change made by this government was "making it easier for private-sector providers without degree-awarding powers to get access to student loans money", he added.

Roger King, visiting professor at the School of Management at the University of Bath, called for a single regulator for higher education, monitoring quality, finance and governance, adding: "Who looks after the health and reputation of the sector?"

Meanwhile, Nicky Morgan, parliamentary private secretary to David Willetts, the universities and science minister, rejected notions that taxpayers were no longer funding higher education.

"The Treasury certainly wouldn't agree that the taxpayer has withdrawn from higher education," she said. "I think David [Willetts] would confirm that in the conversations he has with them."

john.morgan@tsleducation.com.

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