Private college ‘fiasco’ could cost £100 million, suggests Hodge

The public cost of the coalition government’s private college “fiasco” could be in the region of £100 million

March 17, 2015

That was the figure put forward by Margaret Hodge, chair of the Public Accounts Committee, who told senior civil servants on 16 March that her experience “does not fill me with confidence that you have the systems in place properly to guard our public money”.

The committee’s follow-up hearing on private colleges also heard further details about the “rapid response” investigation being mounted by the government into St Patrick’s College, which receives more public-backed funding than any other private college and where fee payments have now been suspended.

The PAC had held a hearing on controls over public funding at private colleges in December, after a National Audit Office report raised concerns about dropout rates and “ineligible” students claiming funding.

The latest hearing was another difficult one for Martin Donnelly, the permanent secretary at the Department for Business, Innovation and Skills.

Ms Hodge told Mr Donnelly that the introduction of tougher Quality Assurance Agency reviews for private colleges following the PAC and NAO reports showed that BIS has “been able to do something that you should have done three or four years ago”.

Ms Hodge referred to St Patrick’s and the London School of Business and Finance, which the committee heard are linked and whose students accounted for £180 million of public-backed funding in 2013-14.

“We do have a number of concerns about St Patrick’s which have been investigated,” said Mr Donnelly.

Times Higher Education had previously reported that St Patrick’s is being investigated by BIS and the QAA, while the Home Office had also suspended its licence to recruit overseas students.

Mr Donnelly said a rapid response investigation “is still under way. While it is under way we have suspended the payment of fees until we complete these investigations.”

Meanwhile, Madeleine Atkins, the chief executive of the Higher Education Funding Council for England, said that 600 students had been tracked who claimed funding but were never registered on courses with Pearson, the awarding body for the Higher National courses used by the fastest-growing colleges.

She said that 450 of those students were in “five of the alternative provider colleges”. Ms Hodge said: “Presumably, those colleges include St Patrick’s and London School of Business and Finance.” Professor Atkins replied: “You are correct.”

Ms Hodge went on to refer to figures provided to the committee on claims for maintenance funding by European Union students who were ineligible; on money owed to the Student Loans Company because students “didn’t attend courses”; and on funding for EU students – who are thought to be less likely to repay their loans once they leave the UK.

Ms Hodge said: “So we could be talking about somewhere in the region of £100 million as the cost of this fiasco, could we?”

But Mick Laverty, chief executive of the SLC, rejected that figure and said it would be lowered as more students proved eligibility and the SLC collected money.

Ms Hodge also said that she was “deeply depressed” by a NAO report that found BIS showed “weak oversight” of disability assessments for students at Plymouth University, where a higher-than-average number of students were receiving Disabled Students’ Allowances.

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