Universities: Financial Sustainability — House of Lords, 2019-02-11
Topic: Education
James Younger (Conservative, Centre-right): My Lords, with the leave of the House, I will now repeat an Answer to an Urgent Question given by my honourable friend the Minister of State for Universities, Science, Research and Innovation in the other place today: "I thank the honourable Member for the opportunity to discuss the higher education sector today in my first Urgent Question. This Government recognise the importance of the higher education sector and the massive contribution it makes to this country We recognise the multiple challenges the sector is facing and that these will require institutions to adapt to a more competitive and uncertain environment. It is true that the current context presents significant challenges to institutional management, efficiency and financial planning in the HE sector, but it is wrong to characterise the HE provider sector as teetering on the brink of financial collapse. In its final annual report on the financial health of the sector, published in March last year, the Higher Education Funding Council for England, the Office for Students’ predecessor, concluded that the HE sector overall continues to be in a sound position financially. The new regulatory framework under the Office for Students brings a risk-based approach to monitoring financial viability and sustainability in order to protect students’ interests. Financial sustainability is a condition of registration. This means that the OfS, as regulator, will pay greater attention and, importantly, require more specific action where there is greater institutional vulnerability. Where the OfS identifies particular risks to a provider’s financial sustainability, it will indeed take action. This may include enhancing its monitoring or imposing a specific condition of registration on a provider to improve its financial performance. It may also require a provider to strengthen its student protection plan. This will enable action to be taken before a provider faces major financial difficulties The Department for Education would also work closely with the OfS to understand the sector’s wider financial risk in worst-case scenarios. We are also working with the OfS, other departments and other relevant national partners to develop a full contingency plan to deal with unforeseen or major higher education provider failure. This will set out roles, responsibilities, triggers and actions to be associated with instances where an HE provider market exit falls outside the normal "business as usual" approach of the OfS implementing its regulatory framework and requires government action. Ultimately, the financial viability of universities, as autonomous bodies, is a matter for the leadership of the HE providers The post-18 review terms of reference led by Sir Philip Augar include a focus on ensuring choice and competition across a joined-up post-18 education and training sector. The review will look at how it can support a more dynamic market in provision, while maintaining the financial sustainability of a world-class higher education and research sector. We have been clear that the review recognises the need to preserve and protect the existing strengths in the system, and the stability of providers is key to a strong system In conclusion, the HE sector faces challenges, but we are confident that universities will rise to these challenges and will continue to be providers of world-class higher education".