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

- Michael Barber Sir Michael Barber is chair of the Office for Students

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.

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