Regulator of Universities Seeks Contractor to Assist with Possible Closures

August 5, 2024 TruthUSA

Last month, the government instructed the Office for Students to focus on monitoring the financial viability of higher education institutions.

The universities regulator has announced a £4 million tender to hire consultants for assessing financial risk at higher education institutions, amid sector-wide challenges.

According to the bid opened by the Office for Students (OfS) last week, contractors will help the watchdog ensure that students’ interests are protected during any changes or transitions, “including potential market exits.”

The contract is anticipated to last three years.

The Office for Students (OfS) shared with The Epoch Times on Monday that it opened the tender to acquire additional expertise and resources to assist with their financial monitoring responsibilities, which the government recently prioritized in the watchdog’s operations.

“The selected contractors will collaborate with us to comprehend the financial position of individual higher education providers and the strategies they have in place as they deal with the broader financial challenges, as outlined in our latest annual financial report,” stated an OfS spokesperson.

“The financial sustainability of the sector remains a top priority for the OfS,” the spokesperson added.

HE Funding Models Must Change

Monitoring the financial sustainability of universities by the OfS was part of the government’s response to the growing financial challenges in the sector.

Susan Lapworth, the OfS’s chief executive, issued a dire warning that an increasing number of institutions “will need to make significant changes to their funding model in the near future to avoid facing a material risk of closure.”

According to the Universities and Colleges Union, 67 universities in the UK are undergoing restructuring, redundancies and course closures, with the union recently urging the government to provide emergency rescue packages to institutions struggling financially.

The current stance from the new Labour government regarding potential bailouts seems to align with that of its Conservative predecessor, with Education Secretary Bridget Phillipson stating that universities are autonomous and are expected to manage their own budgets, “and I would expect them to do that without seeking any calls on the taxpayer.”

A review on the OfS—“Fit for Future”—released last month alongside the reshuffling of the watchdog’s priorities heard concerns from HE sector leaders about institutional finances. Report authors acknowledged these concerns, but advised HE institutions that “trade-offs will need to be made” for the sector to stay viable.

“Not every provider will be able to grow their way out of this period of financial contraction. Many will need to review current operating models, and some will need to plan to deliver their offer with more limited resources, as income declines in the future,” the report stated.

Fears of ‘Disorderly’ Closures

The OfS’s restructuring follows a report from the University of Warwick and consultancy firm Public First recommending the government establish a £2.5 billion fund to assist universities at risk of closure, advocating for a proactive risk management approach due to numerous HE institutions facing financial challenges.

If a restructuring is not feasible and closure is inevitable, the report proposed the introduction of a special administration regime to oversee institutions for a “more orderly exit.”

The report warned that if institutions were allowed to close “disorderly,” there was a “risk of contagion” that could impact the entire HE sector. Lenders could become more cautious about lending to other institutions, and current students and applicants may lose trust in the sector.

The report did not suggest increasing tuition fees or maintaining the status quo, but instead emphasized that changes need to be managed strategically amid the recognition that the education sector will not always expand.

Re-Examining Higher Education

Similarly, others have argued that post-18 education as a whole needs to be restructured to better address skills demands in the labor market.

Last month, education think tank EDSK released a report calling for all tertiary education streams to be overseen by one body, giving equal weight to university degrees and other forms of adult education, both vocational and academic.

EDSK Director Tom Richmond stated that the current HE education system is “heavily focused on three-year residential full-time undergraduate degrees, which is an expensive and rigid way of upskilling and reskilling both young people and adults.”

“It would be more cost-effective for the government and more beneficial for learners if more flexible pathways were available to achieve the same goal of a more skilled workforce. This would require rethinking how, when, and where the government invests in all aspects of tertiary education,” he added.

The Epoch Times reached out to the Department for Education for a response.

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