England's higher education sector is facing unprecedented financial challenges, with fifty institutions identified as being at risk of exiting the market within the next two to three years, according to evidence presented to MPs.
Immediate Threat to 24 Institutions
The House of Commons education committee heard that twenty-four providers face more immediate danger and may be forced to stop offering degree-awarding courses within the next twelve months. This alarming revelation comes as part of an ongoing inquiry into university funding and the growing threat of insolvency within the sector.
Susan Lapworth, chief executive of the Office for Students (OfS), sought to reassure MPs that this didn't mean the regulator expected any institutions to exit "in a disorderly way." She explained that the risk assessment represented a conservative approach to ensure the OfS remained "on the front foot" in engaging with vulnerable institutions.
Smaller Providers Bear Greatest Risk
The committee learned that smaller institutions are disproportionately affected by the financial turmoil. Of the fifty vulnerable providers identified, thirty were classified as "smaller" institutions, while the remaining twenty each had more than 3,000 students.
Breaking down the twenty-four institutions at most immediate risk reveals an even starker picture: seventeen are small providers, with the remaining seven each having over 3,000 students. This puts the scale of the crisis in context when compared to England's largest universities, which typically host tens of thousands of students.
The pattern generally is that the smaller ones are those that we are more worried about, Lapworth told MPs, highlighting the particular vulnerability of specialist higher education institutions registered with the OfS.
Previous Collapses and Future Warnings
The sector has already witnessed several high-profile exits, including Schumacher College in Devon, which closed its degree-awarding courses with immediate effect last year, and the Academy of Live and Recorded Arts (ALRA), which ceased operations in 2022.
Committee chair Helen Hayes revealed that during a confidential roundtable discussion with universities, MPs were warned that an unnamed provider could collapse before the end of the year. Given that we are in late November now, that was a warning of a potential imminent collapse of a higher education institution, she stated.
However, universities minister Jacqui Smith offered a more measured assessment, stating: "I don't think I would necessarily say before the end of the year that there is an imminent collapse, no." She defended the government's approach, including the proposed introduction of a levy on international student tuition fees to fund maintenance grants for disadvantaged students.
A Department for Education spokesperson acknowledged the inherited challenges, noting: "This government inherited a university sector facing serious financial challenges, with tuition fees frozen for seven years." They pointed to recent actions, including committing to raise the maximum cap on tuition fees annually, as evidence of efforts to stabilise the sector.
