The Daily Telegraph
Universities told they will not receive bail-outs
Public money will not be used to bail out struggling colleges, but fee-paying students mustn’t lose out
Failing universities will not be bailed out, the university regulator has warned. Sir Michael Barber, chairman of the Office for Students, will today tell vice-chancellors that universities must reform to survive. He writes in today’s Telegraph that bail-outs would only “delay the inevitable”.
Reports of some universities facing financial difficulties have led to calls for taxpayer bailouts. Universities make a huge contribution to students and the wider economy. Nobody wants to see them fail. However, bailouts would neither be good for students nor fair for taxpayers. It would just delay the inevitable. Instead, we need all universities and colleges to become much better at managing their affairs.
As the English higher education regulator, our primary concern is in our name: the Office for Students is here to protect students’ interests. Success depends on creating the right circumstances, and on autonomous universities making the most of them to provide great courses, undertake cutting-edge research and innovate in how they reach and teach students.
More people are going to university than ever, and students are increasingly in the driving seat with fees repaid after graduation. Not surprisingly, they choose some universities and courses over others. With more information at their disposal on the quality of courses and associated salary outcomes, they will rightly be thinking carefully about such choices.
That places an onus on universities to plan realistically and respond quickly where demand is higher – or lower – than expected. We have heard from several vice-chancellors that if they misjudge decisions about student numbers, courses offered and facilities built, and get into financial trouble, “ultimately it will be OK because the Office for Students will bail them out”. This is not the case. We will not bail out universities or other course providers in financial difficulty.
This kind of thinking is reminiscent of the “too big to fail” idea among the banks that caused the 2008 crash. It will lead to poor decision-making and a lack of financial discipline. It is inconsistent with the principle of university autonomy and is not in students’ longer-term interests. Indeed it would be irresponsible to give more public money to people who are demonstrably unable to manage their institution in a sustainable way.
Nor would it be responsible to sit and wait for institutions to run into difficulty, or to leave students in the lurch once it occurs. We are compiling the first ever regulatory register of higher education providers. By law, every university, college or other higher education provider that wishes its students to access student loans must join this register. In establishing it, we have set strict conditions intended to create the circumstances for providers to thrive. One is that they should be financially sustainable. It would undermine our impartiality to bail out one provider and then deem it viable while expecting others to meet our conditions with no such assistance.
This doesn’t mean that we would do nothing if a university failed. We’ve designed a system to protect students in the event that a provider winds down. Where failure is a possibility, we will work to protect the student interest. As a condition of registration, everyone delivering higher education must have a student protection plan approved by us.
These set out how a university will protect all its students if they are threatened by course, campus or provider failure. Our core principle is that students should be able to continue and complete their studies where they want. If this is not possible, they should be compensated. Their academic achievement to date should be recognised, and they should never be transferred to another course or university without their agreement.
Our primary responsibility is to students and taxpayers, reassuring them that their investment of time and money is well spent. While student choice should drive innovation, diversity and improvement, we recognise this won’t always be enough. So where market mechanisms are not sufficient, we will regulate.
Recent media coverage has focused on the possible failure of a few universities. But there are many more success stories: world-class institutions that are hugely in demand not just from Uk-based students but from across the world. We have much to celebrate and, as a regulator, we are determined to ensure our universities and colleges maintain and build on that reputation, so that every student receives the education they deserve.