Recommendations & Conclusions
61 items
1
Recommendation
9th Report - Higher Education and Fundi…
Acknowledged
There are widespread economic, social and research benefits from the higher education sector. These benefits are particularly important in less prosperous areas. While Baroness Smith is right to highlight the economic benefits of larger institutions, we found that even smaller universities can have an immense impact, especially when located in …
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There are widespread economic, social and research benefits from the higher education sector. These benefits are particularly important in less prosperous areas. While Baroness Smith is right to highlight the economic benefits of larger institutions, we found that even smaller universities can have an immense impact, especially when located in smaller towns, and can be the largest employers in their area. The Government must take full account of the essential economic anchor role of universities when formulating policies and responding to financial difficulties in the higher education sector. (Conclusion, Paragraph 30) Helping Higher Education institutions avoid insolvency
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Government response AI summary
The government acknowledges the substantial contribution of higher education to the UK economy, society, and local communities, affirming its vital civic role without detailing how it will specifically take account of the anchor role in policy.
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Department for Education
2
Conclusion
9th Report - Higher Education and Fundi…
Accepted
The Office for Students’ TRAC data shows that Government research spending is not funding 80% of full economic costs of research in the way it should. The UKRI is undertaking research into why this is the case. We welcome the Government’s increase in research and development funding over this Parliament, …
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The Office for Students’ TRAC data shows that Government research spending is not funding 80% of full economic costs of research in the way it should. The UKRI is undertaking research into why this is the case. We welcome the Government’s increase in research and development funding over this Parliament, and commitment to retaining the real-terms value of QR-funding. The Department for Science, Innovation and Technology has also announced reforms to how research and development funding will be allocated into three buckets: of curiosity-driven foundational research; strategic government and societal priorities; and innovative companies. (Conclusion, Paragraph 50)
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Government response AI summary
The government maintains its commitment to meeting 80% of research's full economic costs and highlights existing actions by DSIT and UKRI to improve grant cost recovery, but states it cannot commit to a timeline due to institutional autonomy and applicant behavior.
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Department for Education
3
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government should confirm its commitment to meet the 80% full economic costs of research, its timetable for when it expects to meet 80% full economic costs, and its assessment of the long-term sustainability of 109 this model given the reduction in cross-subsidy for home undergraduate students from other sources …
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The Government should confirm its commitment to meet the 80% full economic costs of research, its timetable for when it expects to meet 80% full economic costs, and its assessment of the long-term sustainability of 109 this model given the reduction in cross-subsidy for home undergraduate students from other sources such as fee income from international students. (Recommendation, Paragraph 51)
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Government response AI summary
The government confirms its commitment to meeting 80% of research's full economic costs and believes the model is sustainable, but cannot commit to a timeline for increasing cost recovery due to factors driven by independent institutions and other funders.
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Department for Education
4
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The representative bodies of small institutions, such as Conservatoires UK and Independent Higher Education, have highlighted the high cost of Office for Students regulations for such providers. The Office for Students should review the costs of its regulation to ensure they are fair to institutions of all sizes. (Recommendation, Paragraph …
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The representative bodies of small institutions, such as Conservatoires UK and Independent Higher Education, have highlighted the high cost of Office for Students regulations for such providers. The Office for Students should review the costs of its regulation to ensure they are fair to institutions of all sizes. (Recommendation, Paragraph 56)
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Government response AI summary
The government states it has already launched a public consultation on the Office for Students’ fee charging model, following an independent review that recommended a more proportionate approach. It will consider the committee's recommendation alongside the consultation's findings for future decisions.
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Department for Education
5
Recommendation
9th Report - Higher Education and Fundi…
Rejected
The Government should support universities to address the financial challenges caused by the requirement for some universities to offer membership of the Teachers’ Pension Scheme. The current situation is imposing a high cost on providers in the scheme, whilst incentivising them to outsource staffing to wholly owned subsidiary companies as …
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The Government should support universities to address the financial challenges caused by the requirement for some universities to offer membership of the Teachers’ Pension Scheme. The current situation is imposing a high cost on providers in the scheme, whilst incentivising them to outsource staffing to wholly owned subsidiary companies as a way to get round the requirement to enrol them in the TPS. (Conclusion, Paragraph 68)
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Government response AI summary
The government rejects the recommendation, stating that universities are independent and responsible for managing their own finances. It notes that the significant reduction in the TPS employer contribution rate from April 2027 is expected to ease financial pressures.
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Department for Education
6
Recommendation
9th Report - Higher Education and Fundi…
Rejected
The Government should explore the following options: • Both UCEA and UCU have asked HM Treasury to review the SCAPE discount rate, which was reduced at the last valuation and UCEA stated caused the increase in employer contributions. The previous valuation in 2023 was based on data from 2020. The …
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The Government should explore the following options: • Both UCEA and UCU have asked HM Treasury to review the SCAPE discount rate, which was reduced at the last valuation and UCEA stated caused the increase in employer contributions. The previous valuation in 2023 was based on data from 2020. The valuation of 2027 should take account of these calls. • If contributions remain a burden the Government could consider providing financial support, as it has provided for state schools and FE colleges, and the Scottish Government has provided for Scottish universities. • The Government could prohibit the creation of wholly owned subsidiaries which are being used to avoid the requirement for TPS membership. (Recommendation, Paragraph 69)
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Government response AI summary
The government rejects the recommendations, explaining that HM Treasury sets the SCAPE rate, universities are independent for financial support, and while acknowledging subsidiary models, expects financial pressures to ease from April 2027 due to reduced employer contribution rates.
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Department for Education
7
Conclusion
9th Report - Higher Education and Fundi…
Acknowledged
The high levels of university borrowing and the covenants which are in force are adding to the financial pressures facing some providers in the higher education sector. This expansion followed the removal of borrowing controls in 2018 when the Office for Students was created. Increases in interest rates in the …
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The high levels of university borrowing and the covenants which are in force are adding to the financial pressures facing some providers in the higher education sector. This expansion followed the removal of borrowing controls in 2018 when the Office for Students was created. Increases in interest rates in the last few years have impacted negatively on the cost of loans originally taken out in the 2010s. (Conclusion, Paragraph 74)
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Government response AI summary
The government acknowledges concerns about high university borrowing and states it continues to engage with stakeholders and is keeping under review the feasibility of any Office for Students role in agreeing high levels of borrowing.
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Department for Education
8
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government should outline the measures it and the Office for Students are taking to ensure the sustainability of higher education institutions’ borrowing, to work with creditors to ensure they recognise the benefit of avoiding an institution closing, and measures to support HE institutions that are in particular financial difficulty. …
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The Government should outline the measures it and the Office for Students are taking to ensure the sustainability of higher education institutions’ borrowing, to work with creditors to ensure they recognise the benefit of avoiding an institution closing, and measures to support HE institutions that are in particular financial difficulty. This should include consideration of when tuition fee loans are paid to higher education providers, and 110 whether the Office for Students should have a role in agreeing high levels of borrowing, as occurred with its predecessor, the Higher Education Funding Council for England (HEFCE), and occurs in Scotland and Wales. (Recommendation, Paragraph 75)
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Government response AI summary
The government partially accepts the recommendation, stating it will continue to engage with providers, the Office for Students, and lenders on financial risks, and keep under review a potential role for the OfS in agreeing high borrowing. However, it rejects changing the tuition fee payment …
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Department for Education
9
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We heard concerns that the quality of governance had contributed to HE institutions facing financial difficulties. There is a need to ensure governing bodies have the capabilities and culture to challenge effectively the assumptions of senior leadership in higher education institutions, including on finances, projections of student numbers, and plans …
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We heard concerns that the quality of governance had contributed to HE institutions facing financial difficulties. There is a need to ensure governing bodies have the capabilities and culture to challenge effectively the assumptions of senior leadership in higher education institutions, including on finances, projections of student numbers, and plans for restructuring. (Conclusion, Paragraph 85)
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Government response AI summary
The government states that the Post-16 Education and Skills White Paper and the Higher Education Code of Governance already address the need for stronger governance, and that it will support the Office for Students in strengthening its management and governance conditions of registration.
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Department for Education
10
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The Office for Students should develop a governance improvement programme for higher education institutions to ensure that good practice is disseminated, benchmarking tools are available and direct support to strengthen governance is available to institutions when needed. (Recommendation, Paragraph 86)
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The Office for Students should develop a governance improvement programme for higher education institutions to ensure that good practice is disseminated, benchmarking tools are available and direct support to strengthen governance is available to institutions when needed. (Recommendation, Paragraph 86)
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Government response AI summary
The government states that plans are already in place, referencing the Post-16 Education and Skills White Paper and an existing governance Code, and commits to supporting the Office for Students in strengthening its management and governance conditions of registration.
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Department for Education
11
Recommendation
9th Report - Higher Education and Fundi…
Rejected
As a first step to improve governance, the Government should work with the higher education sector to implement Sir Philip Augar’s proposal to defer some of the financial pay of senior leadership until their term of office is over, as has occurred in the financial services sector. We may also …
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As a first step to improve governance, the Government should work with the higher education sector to implement Sir Philip Augar’s proposal to defer some of the financial pay of senior leadership until their term of office is over, as has occurred in the financial services sector. We may also return to this subject later in the Parliament to ensure that the quality of governance is improving. (Recommendation, Paragraph 87)
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Government response AI summary
The government rejects the recommendation to implement deferred pay for senior leadership, stating that the Office for Students already requires robust governance and acknowledges appropriate remuneration should reflect responsibilities and accountability.
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Department for Education
12
Conclusion
9th Report - Higher Education and Fundi…
Acknowledged
We welcome the Government’s moves to introduce mandatory regulation of franchise providers with 300 or more students and the availability of better data. There remains a major risk for some HE institutions that have become heavily dependent on franchisees that their withdrawal from providing courses could have a shock effect …
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We welcome the Government’s moves to introduce mandatory regulation of franchise providers with 300 or more students and the availability of better data. There remains a major risk for some HE institutions that have become heavily dependent on franchisees that their withdrawal from providing courses could have a shock effect on the institution’s finances. (Conclusion, Paragraph 92)
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Government response AI summary
The government recognizes the Committee’s concerns regarding financial risks from franchising arrangements and welcomes the acknowledgment of steps already taken, but does not commit to new specific actions to address the *remaining* risk.
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Department for Education
13
Recommendation
9th Report - Higher Education and Fundi…
Deferred
The Office for Students should therefore provide guidance to universities seeking to exit or significantly scale back franchising relationships. (Recommendation, Paragraph 93)
Government response AI summary
The government partially accepts the principle that providers need clear expectations but redirects the responsibility for providing specific guidance to universities on exiting or scaling back franchising relationships to the independent Office for Students.
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Department for Education
14
Conclusion
9th Report - Higher Education and Fundi…
Accepted in Part
The Government has been welcoming of transnational education, but in such a tumultuous global situation establishing campuses abroad also carries financial risks. (Recommendation, Paragraph 94)
Government response AI summary
The government partially accepts the conclusion, recognizing providers' responsibility for managing finances. It commits to promoting high-quality transnational education, working with the Office for Students to set clearer expectations for international risk management, raising awareness, and investing £3m to support the sector in managing these …
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Department for Education
15
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government should outline how it and the Office for Students are working with HE institutions and franchisees to monitor this situation and manage the potential impact of a franchisee becoming insolvent. It should also outline what increased measures are being taken to monitor the risks of transnational education on …
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The Government should outline how it and the Office for Students are working with HE institutions and franchisees to monitor this situation and manage the potential impact of a franchisee becoming insolvent. It should also outline what increased measures are being taken to monitor the risks of transnational education on HE institutions. (Recommendation, Paragraph 95) 111
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Government response AI summary
The government partially accepts, outlining existing Office for Students monitoring for financial risks, including franchisees, and committing to further work with the OfS on international risk management for transnational education, including new guidance, a reporting route, and a £3m investment.
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Department for Education
16
Conclusion
9th Report - Higher Education and Fundi…
Acknowledged
The higher education sector is under unprecedented financial pressure, with the Office for Students reporting that 45% of higher education providers could face a deficit in 2025–26 without mitigating action. We have heard that these financial pressures vary amongst different types of HE provider, but stem from the freezing of …
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The higher education sector is under unprecedented financial pressure, with the Office for Students reporting that 45% of higher education providers could face a deficit in 2025–26 without mitigating action. We have heard that these financial pressures vary amongst different types of HE provider, but stem from the freezing of UK undergraduate tuition fees, for some institutions the lifting of the cap on student numbers, reductions in research and teaching grant funding, the impact of higher interest rates on the cost of borrowing, and recent changes in both international student numbers and countries of origins. Concerns were also raised about the quality of governance at some HE institutions, the impact of increases in national insurance employer contributions and Teachers Pension Scheme contributions, and regulatory costs. (Conclusion, Paragraph 102)
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Government response AI summary
The government recognises the financial pressures but notes that the sector's overall financial position has improved compared to previous forecasts due to actions taken by providers, the Office for Students, and the government.
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Department for Education
17
Conclusion
9th Report - Higher Education and Fundi…
Accepted
The Government states that the present £9,535 fees are only worth £5,920 in 2012/13 terms, a reduction of 38%. Future increases in line with inflation will not reverse that historic reduction. We also know that publicly funded teaching for undergraduate home students costs more to deliver than the income received …
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The Government states that the present £9,535 fees are only worth £5,920 in 2012/13 terms, a reduction of 38%. Future increases in line with inflation will not reverse that historic reduction. We also know that publicly funded teaching for undergraduate home students costs more to deliver than the income received by HE providers, leaving them reliant on cross- subsidies. This means some higher education providers will continue to struggle in the next few years. Independent HE and the British Universities Finance Directors Group both highlighted the vulnerability of smaller and specialist institutions that are heavily dependent on tuition fee income. (Conclusion, Paragraph 103)
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Government response AI summary
The government has increased maximum tuition fees for the 2025/26, 2026/27, and 2027/28 academic years and committed to legislate for automatic future increases to provide long-term certainty and address the real-terms reduction.
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Department for Education
18
Conclusion
9th Report - Higher Education and Fundi…
Not Addressed
We welcome the Government’s commitment to ensuring undergraduate tuition fees retain their real-term value by raising fees in line with forecast inflation. However, maintenance loans are tied to forecast inflation and in recent years forecast inflation has repeatedly been lower than actual inflation. The effect of this has been a …
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We welcome the Government’s commitment to ensuring undergraduate tuition fees retain their real-term value by raising fees in line with forecast inflation. However, maintenance loans are tied to forecast inflation and in recent years forecast inflation has repeatedly been lower than actual inflation. The effect of this has been a major real-terms reduction in the value of maintenance loans which have been increased in line with those forecasts. (Conclusion, Paragraph 104)
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Government response AI summary
The government explains that legislative and Student Loans Company timetables prevent 'in-year' changes to address inflation, but does not commit to any action to address the underlying issue of real-terms reduction in maintenance loan value.
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Department for Education
19
Recommendation
9th Report - Higher Education and Fundi…
Rejected
As the Government is now intending also to link increases in the undergraduate tuition fee cap to forecast inflation, the Government should explain the mitigation it will put in place were the previous trend of substantial under-estimation of forecast inflation to be repeated. (Recommendation, Paragraph 105) 112 Support for Higher …
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As the Government is now intending also to link increases in the undergraduate tuition fee cap to forecast inflation, the Government should explain the mitigation it will put in place were the previous trend of substantial under-estimation of forecast inflation to be repeated. (Recommendation, Paragraph 105) 112 Support for Higher Education providers at risk of insolvency
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Government response AI summary
The government rejects the recommendation, stating that legislative and delivery timetables prevent in-year changes to address inflation fluctuations and that HE providers are ultimately responsible for managing their own finances.
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Department for Education
20
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We have heard an early warning system is needed to give better information about the risk of a higher education provider becoming insolvent. Currently there is no clearly understood protocol for how the Government might respond to a situation of a provider at risk of imminent insolvency, which is a …
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We have heard an early warning system is needed to give better information about the risk of a higher education provider becoming insolvent. Currently there is no clearly understood protocol for how the Government might respond to a situation of a provider at risk of imminent insolvency, which is a very serious problem. (Conclusion, Paragraph 119)
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Government response AI summary
The government recognizes the concern and states that the Office for Students already monitors financial sustainability, has bolstered its approach, and is considering earlier intervention levers within the existing regulatory framework, with government support.
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Department for Education
21
Recommendation
9th Report - Higher Education and Fundi…
Accepted
An early warning protocol needs to be established with urgency. This follows calls for improved early warning from the Russell Group, the Institute of Physics and Aston University. A protocol would also address when the Government should intervene and ensure there is a clear process to manage the risk of …
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An early warning protocol needs to be established with urgency. This follows calls for improved early warning from the Russell Group, the Institute of Physics and Aston University. A protocol would also address when the Government should intervene and ensure there is a clear process to manage the risk of institutional insolvency. Such a protocol would be triggered by the Office for Students categorising an institution as being at risk of insolvency. (Recommendation, Paragraph 120)
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Government response AI summary
The government recognizes the need for early risk identification and management, stating that the Office for Students already monitors financial sustainability and has bolstered its approach, and is considering potential levers for earlier intervention within the existing regulatory framework.
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Department for Education
22
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The protocol should include assessment of viability, quality of provision, size and scale and importance to the local community and economy, accompanied by a review of governance and greater financial reporting requirements. Costed plans would be required for protecting students, staff and the wider community in the event of insolvency. …
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The protocol should include assessment of viability, quality of provision, size and scale and importance to the local community and economy, accompanied by a review of governance and greater financial reporting requirements. Costed plans would be required for protecting students, staff and the wider community in the event of insolvency. A decision could then be made on which of a range of options to implement, including • Restructuring, • Merger or inclusion in a multi-university organisation, • Taken over by another institution, • Direct financial support, or • Orderly exit. (Recommendation, Paragraph 121) When a Higher Education provider becomes insolvent
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Government response AI summary
The government refers to existing arrangements, stating that the Office for Students already monitors financial sustainability, identifies risks, and has strengthened its approach to early intervention to protect students and the public interest.
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Department for Education
23
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We have heard conflicting views about whether a higher education provider can continue to operate when insolvent. The Minister for Skills says that she thinks they can, arguing that institutions entering liquidation can carry on operating whilst being wound up. She stated that the threshold for government intervention in such …
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We have heard conflicting views about whether a higher education provider can continue to operate when insolvent. The Minister for Skills says that she thinks they can, arguing that institutions entering liquidation can carry on operating whilst being wound up. She stated that the threshold for government intervention in such a scenario would be very high. By contrast, the law firm Mills & Reeve LLP and sector stakeholders think an insolvent provider would, depending on their legal structure, potentially have to stop 113 trading and be liquidated immediately, which would have an immediate and devastating impact on students, who would not be able to complete their course. (Conclusion, Paragraph 133)
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Government response AI summary
The government outlines existing efforts where the Office for Students monitors financial sustainability, undertakes risk assessment, and has refocused on early intervention, with government support, to manage risks and protect students.
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Department for Education
24
Recommendation
9th Report - Higher Education and Fundi…
Accepted
Government should legislate to clarify the situation so that higher education providers that become insolvent can continue to operate and avoid a disorderly exit. Its response should also clarify the criteria for the threshold for Government intervention for each of the range of different types of entity that comprise higher …
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Government should legislate to clarify the situation so that higher education providers that become insolvent can continue to operate and avoid a disorderly exit. Its response should also clarify the criteria for the threshold for Government intervention for each of the range of different types of entity that comprise higher education institutions. (Recommendation, Paragraph 134)
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Government response AI summary
The government states that existing plans are in place, with the Office for Students already proactively monitoring financial sustainability, undertaking risk assessment, and engaging with providers. It highlights that the OfS is considering earlier intervention levers within the existing regulatory framework, but does not commit …
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Department for Education
25
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We have heard differing views on whether a special regime would be beneficial to protect the interests of students, staff and other stakeholders, or whether creating a regime would distract from efforts to stave off insolvency. While we respect the concerns voiced by university organisations, the negative impact of a …
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We have heard differing views on whether a special regime would be beneficial to protect the interests of students, staff and other stakeholders, or whether creating a regime would distract from efforts to stave off insolvency. While we respect the concerns voiced by university organisations, the negative impact of a disorderly exit is too great to be left unchecked. (Conclusion, Paragraph 145)
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Government response AI summary
The government recognizes the importance of early risk identification and management, stating that the Office for Students already monitors financial sustainability and has bolstered its approach, and is considering potential levers for earlier intervention to protect students.
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Department for Education
26
Recommendation
9th Report - Higher Education and Fundi…
Accepted
A special regime, building on and learning lessons from the Further Education regime, could ensure an orderly exit. This would include ensuring teach-out processes for current students, protecting the sufficiency of sector-critical courses and allowing for mitigations to avoid geographical cold-spots. (Recommendation, Paragraph 146)
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A special regime, building on and learning lessons from the Further Education regime, could ensure an orderly exit. This would include ensuring teach-out processes for current students, protecting the sufficiency of sector-critical courses and allowing for mitigations to avoid geographical cold-spots. (Recommendation, Paragraph 146)
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Government response AI summary
The government asserts that the Office for Students (OfS) is already monitoring providers' financial sustainability, undertaking risk assessments, and considering earlier intervention levers within the existing regulatory framework to manage risks, rather than committing to a new special regime.
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Department for Education
27
Recommendation
9th Report - Higher Education and Fundi…
Given concerns from Universities UK that a special regime could lead the ONS to reclassify higher education providers as public sector bodies, as has happened with FE colleges, the Government should ask the ONS to lay out clear criteria for when such a reclassification would take place which can be …
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Given concerns from Universities UK that a special regime could lead the ONS to reclassify higher education providers as public sector bodies, as has happened with FE colleges, the Government should ask the ONS to lay out clear criteria for when such a reclassification would take place which can be kept in mind when designing the special regime. (Recommendation, Paragraph 147)
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Department for Education
28
Conclusion
9th Report - Higher Education and Fundi…
The current Student Protection Plans are inadequate. They would not provide sufficient protection were a large provider to become insolvent, something acknowledged by the Office for Students. Moreover, the plans do not cover the interests of staff, the impact on research or harm insolvency would do to the local economy …
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The current Student Protection Plans are inadequate. They would not provide sufficient protection were a large provider to become insolvent, something acknowledged by the Office for Students. Moreover, the plans do not cover the interests of staff, the impact on research or harm insolvency would do to the local economy and community. We therefore welcome the Office for Students’ openness to reform in this area, but believe those changes need to be more far-reaching, to ensure robust protection when a higher education provider is at risk of insolvency and ceasing to operate, and to include the interests of staff, the impact on research, and the harm that insolvency would do to the local economy and community. (Conclusion, Paragraph 156)
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Department for Education
29
Conclusion
9th Report - Higher Education and Fundi…
The Office for Students should apply its strengthened student protection regulation to all higher education providers, not just new providers. The plans proposed above should be the basis for protecting students, staff, and the wider local economy and community. (Recommendation, Paragraph 157) 114
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The Office for Students should apply its strengthened student protection regulation to all higher education providers, not just new providers. The plans proposed above should be the basis for protecting students, staff, and the wider local economy and community. (Recommendation, Paragraph 157) 114
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Department for Education
30
Conclusion
9th Report - Higher Education and Fundi…
Protection for students should ensure a teach-out process and options for transfer to other suitable higher education providers, and ensuring international students can continue their studies until completion. Each institution should be required to undertake an assessment and develop a plan for the teach out and transfer of their undergraduate, …
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Protection for students should ensure a teach-out process and options for transfer to other suitable higher education providers, and ensuring international students can continue their studies until completion. Each institution should be required to undertake an assessment and develop a plan for the teach out and transfer of their undergraduate, post-graduate and research students in the event of insolvency. (Recommendation, Paragraph 158)
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Department for Education
31
Conclusion
9th Report - Higher Education and Fundi…
Protection for staff should include a clear and orderly process of insolvency. There should be consideration of how to ensure continuity of research and protecting pension schemes against the financial shock. (Recommendation, Paragraph 159)
Department for Education
32
Recommendation
9th Report - Higher Education and Fundi…
The Government should develop a strategic plan to avoid cold-spots and protect the local economy and public services in the event of an HE institution becoming insolvent, in order to protect the wider community. (Recommendation, Paragraph 160) Alternatives to insolvency
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The Government should develop a strategic plan to avoid cold-spots and protect the local economy and public services in the event of an HE institution becoming insolvent, in order to protect the wider community. (Recommendation, Paragraph 160) Alternatives to insolvency
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Department for Education
33
Conclusion
9th Report - Higher Education and Fundi…
Accepted
There was strong support amongst our evidence from HE providers for the positive benefits of sharing services between higher education providers, but we have heard that a significant barrier to this is VAT on shared services for HE. Its removal would increase efficiency and enhance collaboration between providers. It is …
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There was strong support amongst our evidence from HE providers for the positive benefits of sharing services between higher education providers, but we have heard that a significant barrier to this is VAT on shared services for HE. Its removal would increase efficiency and enhance collaboration between providers. It is disappointing that HM Treasury was unable to provide us with details of the VAT receipts it receives from higher education providers that currently are sharing services and not benefiting from the Cost Sharing Group VAT exemption. (Conclusion, Paragraph 175)
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Government response AI summary
The government states it is already working across departments to explore how VAT rules constrain collaboration and is engaging with the sector on non-legislative measures, such as targeted guidance, to improve efficiency and foster more collaboration.
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Department for Education
34
Recommendation
9th Report - Higher Education and Fundi…
Accepted
Given the considerable financial pressures on higher education institutions and the potential cost saving benefits of sharing services, we recommend that the Department for Education works with the Treasury and the higher education sector to gather the necessary data to progress an exploration of removing VAT on shared services. (Recommendation, …
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Given the considerable financial pressures on higher education institutions and the potential cost saving benefits of sharing services, we recommend that the Department for Education works with the Treasury and the higher education sector to gather the necessary data to progress an exploration of removing VAT on shared services. (Recommendation, Paragraph 176)
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Government response AI summary
The government states it is already working across government to explore how VAT rules constrain collaboration and is engaging with the sector on non-legislative measures like guidance and best practice.
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Department for Education
35
Conclusion
9th Report - Higher Education and Fundi…
Accepted
Evidence from the higher education sector supported greater collaboration between providers. We welcome the CMA’s recent update about when collaboration with other higher education providers is permissible. We will monitor any future developments in this space, especially were a situation to arise in which competition law proved a barrier to …
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Evidence from the higher education sector supported greater collaboration between providers. We welcome the CMA’s recent update about when collaboration with other higher education providers is permissible. We will monitor any future developments in this space, especially were a situation to arise in which competition law proved a barrier to necessary and desirable collaboration between higher education providers. (Conclusion, Paragraph 181)
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Government response AI summary
The government acknowledges the need for competition law to allow collaboration and details existing engagement with the CMA, the provision of guidance, and an ongoing commitment to monitor and review the framework for potential future needs.
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Department for Education
36
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government and the CMA should continue to monitor the impact of competition law on the higher education sector, including whether it is deterring necessary conversations and moves towards closer 115 collaboration and mergers. The Government should also launch a consultation looking at whether any changes needed to be made …
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The Government and the CMA should continue to monitor the impact of competition law on the higher education sector, including whether it is deterring necessary conversations and moves towards closer 115 collaboration and mergers. The Government should also launch a consultation looking at whether any changes needed to be made to the operation of competition law in the higher education sector in the future. (Recommendation, Paragraph 182)
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Government response AI summary
The government accepts the recommendation to continue monitoring the impact of competition law and engaging with the CMA, but only commits to considering launching a consultation if needed, rather than initiating one as explicitly recommended.
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Department for Education
37
Conclusion
9th Report - Higher Education and Fundi…
Acknowledged
There are risks of cold-spots developing in geographical areas, heightened because more students are living at home whilst studying; in specific subjects such as music, physics, chemistry and modern languages; and where courses feed into local provision of important professions, such as nursing courses that support local pipelines into nursing. …
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There are risks of cold-spots developing in geographical areas, heightened because more students are living at home whilst studying; in specific subjects such as music, physics, chemistry and modern languages; and where courses feed into local provision of important professions, such as nursing courses that support local pipelines into nursing. (Conclusion, Paragraph 199)
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Government response AI summary
The government recognises the risk of cold-spots emerging across geographies, subjects, and key public service pipelines, especially with more students studying locally.
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Department for Education
38
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
There should be greater coordination between local higher education providers, with further education colleges (many of which offer higher education courses) and with metro-mayors and combined authorities. Following the proposal of Lincoln University, there could be a role for regional skills bodies and devolved and local authorities in co-designing and …
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There should be greater coordination between local higher education providers, with further education colleges (many of which offer higher education courses) and with metro-mayors and combined authorities. Following the proposal of Lincoln University, there could be a role for regional skills bodies and devolved and local authorities in co-designing and commissioning higher education provision to meet the need for skills in the public and private sectors in that region. (Recommendation, Paragraph 200)
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Government response AI summary
The government agrees on stronger local coordination and highlights existing initiatives to promote collaboration, but explicitly rejects formal co-design or commissioning of higher education provision by local or regional bodies, stating that providers are autonomous.
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Department for Education
39
Recommendation
9th Report - Higher Education and Fundi…
Accepted
There should be greater coordination by the Office for Students and UKRI with the Department for Education, the Department for Science, Innovation and Technology and other relevant Government departments and agencies, as called for by the Russell Group. This would build on the recent mapping of cold-spots published by HESA. …
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There should be greater coordination by the Office for Students and UKRI with the Department for Education, the Department for Science, Innovation and Technology and other relevant Government departments and agencies, as called for by the Russell Group. This would build on the recent mapping of cold-spots published by HESA. This could support greater collaboration between higher education providers once the CMA has clarified the law. (Recommendation, Paragraph 201)
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Government response AI summary
The government states that greater coordination is already embedded in the system through existing legislation, formal collaboration agreements, and close working between departments and agencies, noting ongoing efforts to enhance data sharing and analysis.
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Department for Education
40
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government’s reforms to the Strategic Priorities Grant should consider whether to reintroduce the Strategically Important and Vulnerable Subjects programme that existed in the 1990s and 2000s and as proposed by the Royal Astronomical Society and Universities UK. Funding through the grant could cover both high-cost subjects (which the Government …
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The Government’s reforms to the Strategic Priorities Grant should consider whether to reintroduce the Strategically Important and Vulnerable Subjects programme that existed in the 1990s and 2000s and as proposed by the Royal Astronomical Society and Universities UK. Funding through the grant could cover both high-cost subjects (which the Government has said it wants to prioritise) and strategically important subjects not currently eligible for teaching grants (e.g. modern languages). The diversity of the higher education sector should be reflected by targeting such grants at areas or types of institution where cold-spots are at risk of developing, to ensure the provision of high-cost and strategically important subjects across the country and at institutions with varying entry standards. (Recommendation, Paragraph 202) 116 International Students: Impact of the Government’s reforms
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Government response AI summary
The government partially accepts the recommendation, stating it is reforming the Strategic Priorities Grant to target high-cost and strategically important subjects. It will consider regional provision and collaborate with the Office for Students on access improvements, though it does not commit to reintroducing the specific …
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Department for Education
41
Recommendation
9th Report - Higher Education and Fundi…
Deferred
The financial pressures on the higher education sector have driven the sector’s reliance on international students. This reliance has been directly driven by decisions of the Government. Immigration policies have a very significant effect on the higher education sector, and the Government must consider the consequences of its decisions in …
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The financial pressures on the higher education sector have driven the sector’s reliance on international students. This reliance has been directly driven by decisions of the Government. Immigration policies have a very significant effect on the higher education sector, and the Government must consider the consequences of its decisions in a joined-up way. If the aim is to have fewer international students, the Government must set out how it will support the financial sustainability of higher education institutions. (Conclusion, Paragraph 213)
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Government response AI summary
The government does not commit to setting out how it will support higher education institutions if international student numbers decline, instead stating that providers are responsible for managing their own financial health.
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Department for Education
42
Conclusion
9th Report - Higher Education and Fundi…
Rejected
The Home Office plays a significant, even preeminent, role in the financial health of the higher education sector. This is because international students are heavily affected by changes in immigration rules. This influence came in for some strong criticism in written evidence, and we heard differing views on whether to …
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The Home Office plays a significant, even preeminent, role in the financial health of the higher education sector. This is because international students are heavily affected by changes in immigration rules. This influence came in for some strong criticism in written evidence, and we heard differing views on whether to include international students in the net migration target. We regret that the Home Office was not a co-owner of the Government’s recently published International Education Strategy, though the strategy did include a focus on sustainable international recruitment that linked to the approach pursued in the Immigration White Paper. The lack of a direct role for the Home Office reflects a wider issue of coordination between the Office for Students, UKRI, Skills England, and the different government departments that directly and indirectly affect higher education. (Conclusion, Paragraph 223)
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Government response AI summary
The government rejected the committee's regret about the Home Office not being a co-owner of the International Education Strategy, explaining that they collaborated as a department and that co-ownership lies with other departments. It outlined existing and ongoing close working relationships between DfE and Home …
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Department for Education
43
Recommendation
9th Report - Higher Education and Fundi…
Rejected
The Home Office should be made a co-owner of the International Education Strategy and commit to adhering to it in future immigration policy that affects international students. This should be alongside stronger coordination across the Government on higher education policy. (Recommendation, Paragraph 224)
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The Home Office should be made a co-owner of the International Education Strategy and commit to adhering to it in future immigration policy that affects international students. This should be alongside stronger coordination across the Government on higher education policy. (Recommendation, Paragraph 224)
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Government response AI summary
The government explicitly rejects making the Home Office a co-owner of the International Education Strategy, stating it is co-owned by DfE, DBT, and FCDO, while affirming close working relationships and Home Office representation on the Education Sector Action Group.
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Department for Education
44
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We heard concerns about changes to the Graduate Visa under the previous and present governments. The graduate visa was one factor in the increase in international student numbers after 2021, and the changes since 2023 have been a factor in the subsequent reduction in the number of international students in …
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We heard concerns about changes to the Graduate Visa under the previous and present governments. The graduate visa was one factor in the increase in international student numbers after 2021, and the changes since 2023 have been a factor in the subsequent reduction in the number of international students in the last three years. These changes also mean the UK compares unfavourably to major competitor markets in Australia and Canada. (Conclusion, Paragraph 230)
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Government response AI summary
The government states that the independent Migration Advisory Committee has already conducted a review of the Graduate route and that the Home Office and DfE will continue to monitor the impact of changes and keep policies under regular review.
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Department for Education
45
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The Government should carefully monitor the impact of its graduate visa changes, and publish an independent evaluation of the changes one year after the reduction to 18 months for undergraduate and taught postgraduate students takes effect. (Recommendation, Paragraph 231) 117
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The Government should carefully monitor the impact of its graduate visa changes, and publish an independent evaluation of the changes one year after the reduction to 18 months for undergraduate and taught postgraduate students takes effect. (Recommendation, Paragraph 231) 117
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Government response AI summary
The government states that the independent Migration Advisory Committee has already reviewed the Graduate route and that the Home Office and DfE will continue to monitor the impact of changes, but does not commit to a new independent evaluation one year after the 18-month reduction.
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Department for Education
46
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We understand the Government’s wish to crackdown on abuse of the student visa system. The Government has decided to pursue this objective through reforming the BCA requirements. We have heard concerns from higher education providers and stakeholders about the implementation of the tougher BCA requirements, particularly how they would be …
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We understand the Government’s wish to crackdown on abuse of the student visa system. The Government has decided to pursue this objective through reforming the BCA requirements. We have heard concerns from higher education providers and stakeholders about the implementation of the tougher BCA requirements, particularly how they would be measured and publicised. We heard that the international student market is changing with demand from China expected to decline. This makes it vital that HE institutions can diversify the countries which they recruit from. However, the BCA reforms appear to be deterring HE institutions from diversifying where they recruit from, despite this being an objective supported by the Government’s International Education Strategy. (Conclusion, Paragraph 244)
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Government response AI summary
The government states that BCA changes are being phased in with transitional measures and discretion, and that UKVI is already enhancing data sharing mechanisms with institutions.
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Department for Education
47
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government should address the concerns raised by higher education providers about how they will monitor the tougher BCA targets for institutions. It should commit to using real-time data, avoid using unreliable international ranking metrics, consider phasing in the changes, and ensuring the metrics do not treat smaller providers unfairly. …
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The Government should address the concerns raised by higher education providers about how they will monitor the tougher BCA targets for institutions. It should commit to using real-time data, avoid using unreliable international ranking metrics, consider phasing in the changes, and ensuring the metrics do not treat smaller providers unfairly. (Recommendation, Paragraph 245)
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Government response AI summary
The government is phasing in BCA changes, with tightened metrics taking effect in June 2026 and June 2027, and transitional measures in place. It will offer discretionary assessments for smaller institutions and has enhanced data sharing mechanisms, addressing concerns about monitoring and fairness.
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Department for Education
48
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The Government response should also outline how its approach on BCA will help rather than harm attempts to diversify where higher education providers recruit international students from. (Recommendation, Paragraph 246)
Government response AI summary
The government outlined its approach to the BCA framework, explaining that it does not restrict recruitment sources and is expected to encourage diversification by prompting sponsors to adopt risk-aware strategies and reduce over-reliance on specific markets.
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Department for Education
49
Conclusion
9th Report - Higher Education and Fundi…
Acknowledged
We join with the higher education sector in welcoming that the UK will be associating with the Erasmus+ programme from 2027. (Conclusion, Paragraph 249)
Government response AI summary
The government acknowledged the committee's welcome for the UK joining Erasmus+ from 2027, reiterating the positive opportunities it will bring.
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Department for Education
50
Recommendation
9th Report - Higher Education and Fundi…
Deferred
In its response to this report the Government should publish its impact assessment of association with the Erasmus+ programme and support higher education providers in maximising the benefits of our association. (Recommendation, Paragraph 250)
Government response AI summary
The government stated that the UK will join Erasmus+ from 2027 and will continue to assess its participation at a sector level as data becomes available. A review of the UK's participation by the UK-EU Specialised Committee is expected to be published in early 2028, …
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Department for Education
51
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The Government should clarify whether it intends to continue with the Turing Scheme. It should also outline what lessons it has taken from the Turing Scheme, for instance around provision for students from disadvantaged backgrounds, the geographical range of institutions linked to, and how beneficial aspects will be built into …
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The Government should clarify whether it intends to continue with the Turing Scheme. It should also outline what lessons it has taken from the Turing Scheme, for instance around provision for students from disadvantaged backgrounds, the geographical range of institutions linked to, and how beneficial aspects will be built into association with Erasmus+. (Recommendation, Paragraph 251) 118 The International Student Levy and Maintenance Grants
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Government response AI summary
The government accepts the recommendation, confirming the Turing Scheme budget for 2026/27 and its transition to an expanded Erasmus+ in 2027/28. It outlines lessons learned from the Turing Scheme regarding disadvantaged students and inclusion, confirming these will be built into the new Erasmus+ program.
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Department for Education
52
Conclusion
9th Report - Higher Education and Fundi…
Accepted in Part
We heard strong opposition from the higher education sector to the International Student Levy. They are concerned they may not be able to pass on the extra cost to students through higher fees and will struggle to absorb the additional financial cost given the sector’s wider financial difficulties. We were …
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We heard strong opposition from the higher education sector to the International Student Levy. They are concerned they may not be able to pass on the extra cost to students through higher fees and will struggle to absorb the additional financial cost given the sector’s wider financial difficulties. We were told by the Chair of the Migration Advisory Committee that he expects in the long run the cost will be passed on to international students. The Government told us that the funding of maintenance grants through the levy would tangibly demonstrate the benefits that international students bring to the UK higher education system, particularly through benefiting disadvantaged students in England. (Conclusion, Paragraph 275)
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Government response AI summary
The government states it has listened to the sector's concerns regarding the International Student Levy and has introduced measures such as delaying implementation until 2028/29, allowing payment in arrears, and providing an allowance for smaller providers, alongside a technical consultation and continued engagement.
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Department for Education
53
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
The Government has decided to proceed with the international student levy, despite the evidence which we received expressing concerns about its impact on the higher education sector. We urge the Government to engage with and take on board the concerns of the higher education sector about the risks of the …
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The Government has decided to proceed with the international student levy, despite the evidence which we received expressing concerns about its impact on the higher education sector. We urge the Government to engage with and take on board the concerns of the higher education sector about the risks of the levy given the financial precariousness of different providers. (Recommendation, Paragraph 276)
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Government response AI summary
The government states it has listened to concerns and introduced mitigations for the international student levy, including delaying its introduction until 2028/29, allowing payment in arrears, providing an allowance for smaller providers, and launching a technical consultation for continued engagement.
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Department for Education
54
Recommendation
9th Report - Higher Education and Fundi…
Accepted
In particular, we have heard there are concerns that the levy will disproportionately affect institutions with high numbers of local students and students from disadvantaged backgrounds, the very same students who the Government intends will benefit from maintenance grants. In its response, the Government needs to provide a more detailed …
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In particular, we have heard there are concerns that the levy will disproportionately affect institutions with high numbers of local students and students from disadvantaged backgrounds, the very same students who the Government intends will benefit from maintenance grants. In its response, the Government needs to provide a more detailed analysis than the Impact Analysis published at the November 2025 Budget. Specifically, it should provide further details of the impact on different types of providers, and the wider ramification on the local economy and community where those providers are located. (Recommendation, Paragraph 277)
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Government response AI summary
The government states that updates and refinements will be made to the International Student Levy’s impact analysis before its introduction, to consider the latest available evidence and data.
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Department for Education
55
Recommendation
9th Report - Higher Education and Fundi…
Accepted
In its Immigration White Paper the Government said the levy would be reinvested in the higher education and skills system. It should confirm whether it expects revenue from the levy to pay for other areas of the skills system in addition to higher education maintenance grants. (Recommendation, Paragraph 278)
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In its Immigration White Paper the Government said the levy would be reinvested in the higher education and skills system. It should confirm whether it expects revenue from the levy to pay for other areas of the skills system in addition to higher education maintenance grants. (Recommendation, Paragraph 278)
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Government response AI summary
The government confirms that the revenue from the International Student Levy will be reinvested into other areas of the skills system, in addition to higher education maintenance grants, as previously stated in its technical consultation document.
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Department for Education
56
Recommendation
9th Report - Higher Education and Fundi…
Accepted in Part
During our visit to Warwick University we heard that the increased graduate unemployment in China and a currency shock in Nigeria have made students from those countries more price sensitive. There is also increasing competition with a growing number of countries seeking to attract international students. Therefore, the Government should …
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During our visit to Warwick University we heard that the increased graduate unemployment in China and a currency shock in Nigeria have made students from those countries more price sensitive. There is also increasing competition with a growing number of countries seeking to attract international students. Therefore, the Government should also research and publish how price elasticity differs among students by countries of origins. (Recommendation, Paragraph 279) 119
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Government response AI summary
The government states it is already conducting and expects to publish research on the price elasticity of EU and non-EU students by Autumn 2026. However, it will not assess price elasticity by country of origin, deeming such detailed analysis as not providing robust conclusions.
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Department for Education
57
Recommendation
9th Report - Higher Education and Fundi…
Not Addressed
We were told by Universities UK that were HE institutions able to charge higher fees they would do so. However, we also appreciate there are considerable differences in the fees charged to international students between providers. In addition, a flat-rate £925 per student levy with an exemption for the first …
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We were told by Universities UK that were HE institutions able to charge higher fees they would do so. However, we also appreciate there are considerable differences in the fees charged to international students between providers. In addition, a flat-rate £925 per student levy with an exemption for the first 220 international students per year differs from the original Government proposal. Therefore, the higher education sector should clarify whether they agree with the Government’s own analysis of price elasticities by different types of HE institutions, and if not, offer their own analysis. (Recommendation, Paragraph 280)
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Government response AI summary
The government states it will continue to engage with providers on the implementation of the levy but does not specifically commit to facilitating the requested clarification from the higher education sector regarding price elasticities or their own analysis.
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Department for Education
58
Recommendation
9th Report - Higher Education and Fundi…
Accepted
The Government should establish monitoring and evaluation of the impact of the levy, which could be undertaken by the Office for Students, in terms of the impact on the financial sustainability of HE institutions. It should also evaluate the impact on international and domestic students and the wider local economy …
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The Government should establish monitoring and evaluation of the impact of the levy, which could be undertaken by the Office for Students, in terms of the impact on the financial sustainability of HE institutions. It should also evaluate the impact on international and domestic students and the wider local economy and community. This should be published each year. (Recommendation, Paragraph 281)
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Government response AI summary
The government commits to monitoring and assessing the impact of the International Student Levy as it is implemented.
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Department for Education
59
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We heard support for reinstating maintenance grants and calls for better maintenance provision, given that the value of maintenance loans have fallen in real terms in recent years. (Conclusion, Paragraph 282)
Government response AI summary
The government is reintroducing targeted, means-tested maintenance grants of up to £1,000 per year for disadvantaged students, starting from academic year 2028/2029, to be funded by a levy on international students.
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Department for Education
60
Conclusion
9th Report - Higher Education and Fundi…
Accepted
We welcome the new maintenance grants as part of support for UK students. The Committee may well examine student funding as part of wider work into student wellbeing later in this Parliament. (Recommendation, Paragraph 283)
Government response AI summary
The government is reintroducing targeted, means-tested maintenance grants of up to £1,000 per year for disadvantaged students, starting from academic year 2028/2029, to be funded by a levy on international students.
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Department for Education
61
Recommendation
9th Report - Higher Education and Fundi…
Deferred
In its response to this report, the Government should clarify how much it anticipates it will spend on maintenance grants in 2028–29 and 2029–30 (as the Budget 2025 documents were ambiguous), the rationale for the different subjects that could be eligible, and how the grant will operate alongside maintenance loans …
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In its response to this report, the Government should clarify how much it anticipates it will spend on maintenance grants in 2028–29 and 2029–30 (as the Budget 2025 documents were ambiguous), the rationale for the different subjects that could be eligible, and how the grant will operate alongside maintenance loans and the forthcoming Lifelong Learning Entitlement. (Recommendation, Paragraph 284) 120
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Government response AI summary
The government clarified the grants will be funded by the international student levy and that information on their interaction with other funding is published. However, specific spending amounts will be set out in the next Spending Review, and eligible subjects confirmed closer to 2028/29.
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Department for Education