The UK’s higher education sector is in trouble. Dozens of universities are making redundancies and cuts to courses, trying to stay afloat amid uncertainty over where their money is coming from. The Education Committee will look under the bonnet at what is going on. In a focused single evidence session on 8 April, the Committee …
| Title | HC No. | Published | Items | Response |
|---|---|---|---|---|
| 9th Report - Higher Education and Funding: Threat of Insolv… | HC 807 | 12 May 2026 | 61 | Pending |
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 …
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, …
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 …
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 …
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 …
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 …
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 …
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. …
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 …
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)
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 …
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 …
The Office for Students should therefore provide guidance to universities seeking to exit or significantly scale back franchising relationships. (Recommendation, Paragraph 93)
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)
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 …
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 …
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 …
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 …
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 …
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 …
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 …
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. …
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 …
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 …
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 …
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)
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 …
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 …
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
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, …
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)
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
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 …
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, …
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 …
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 …
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. …
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 …
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. …
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 …
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 …
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 …
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)
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 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
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 …
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. …
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)
We join with the higher education sector in welcoming that the UK will be associating with the Erasmus+ programme from 2027. (Conclusion, Paragraph 249)
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)
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 …
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 …
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 …
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 …
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)
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 …
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 …
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 …
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)
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)
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 …
| Date | Witnesses | |
|---|---|---|
| 25 Nov 2025 | Patrick Curry · Department for Education, Susan Lapworth · Office for Students, The Rt Hon. the Baroness Smith of Malvern · The Department for Education | View ↗ |
| 21 Oct 2025 | Adam Leach · Civic University Network, Carol Prokopyszyn · British Universities Finance Directors Group, Dr David Pilsbury · International Higher Education Commission, Mr Neil Smyth · Mills and Reeve LLP, Mrs Dani Payne · Social Market Foundation, Professor Brian Bell · Migration Advisory Committee, Rachel MacSween · IDP Education UK and Ireland, Vivienne Stern MBE · Universities UK | View ↗ |
| 8 Apr 2025 | Alex Stanley · National Union of Students, Andrew Bird · British Universities' International Liaison Association, Dr Hollie Chandler · The Russell Group, Jo Grady · University College Union (UCU), Mr Raj Jethwa · Universities and Colleges Employers Association (UCEA), Professor Dame Jessica Corner · UK Research and Innovation, Professor Malcolm Press CBE · Universities UK, Rachel Hewitt · MillionPlus, The Association for Modern Universities, Sir Philip Augar · Post-18 Education and Funding Review | View ↗ |
| Date | Direction | Title |
|---|---|---|
| 14 Apr 2026 | To cttee | Joint letter from UCEA and UUK on Higher Education and Funding: Threat of Insol… |
| 24 Mar 2026 | — | Correspondence with HM Treasury on Higher Education and Funding: Threat of Inso… |
| 13 Jan 2026 | To cttee | Letter from Minister for Skills on Higher Education and Funding, dated 19.12.25 |
| 9 Dec 2025 | From cttee | Letter to Minister for Skills on Higher Education and Funding dated 09.12.25 |
| 3 Jun 2025 | To cttee | Letter from Professor Malcolm Press CBE on Higher Education and Funding: Threat… |
| 3 Jun 2025 | To cttee | Letter from NUS on follow up evidence from Higher Education and Funding: Threat… |
| 20 May 2025 | To cttee | Letter from Secretary of State on Higher Education 14.05.25 |
| 7 May 2025 | From cttee | Letter to Rt Hon Bridget Phillipson MP, Secretary of State for Education on Hig… |
| 6 May 2025 | To cttee | Letter from Provost, The University of Edinburgh on Higher Education 25.04.25 |
| 29 Apr 2025 | To cttee | Letter from BUILA on Higher Education dated 23.04.25 |
| 23 Apr 2025 | To cttee | Letter from the Russell Group of Universities on Higher Education and Funding d… |