MPs have called for enhanced government protections for students if a university in England becomes insolvent and unable to meet its financial obligations.
The Education Select Committee's report highlights that 24 institutions are currently considered at risk of insolvency within the next 12 months. Many of these universities have already initiated job reductions, course closures, and the sale of property or land.
Helen Hayes MP, chair of the committee, emphasized the importance of safeguarding students who have invested significant time, money, and effort into their education.
"Developing an early warning system is essential. The government and the Office for Students should be ready to step in when the lights are turning amber, not when they are already flashing red."
A spokesperson from the Department for Education (DfE) stated that the government remains committed to ensuring a secure future for universities to benefit students, taxpayers, and the economy.
Hayes, the Labour MP for Dulwich and West Norwood, described the risk of a major UK university becoming insolvent as a "real possibility, not a theoretical warning."
The report recommends establishing a protocol with detailed, costed plans to protect students and staff. Proposed measures include options such as merging with another institution, restructuring, or an orderly exit strategy where a university closes but arrangements are made for students, staff, and courses to continue appropriately.
'Ambitious reforms'
The report notes that the higher education regulator, the Office for Students, identifies 24 providers — including seven with over 3,000 students — at risk of insolvency and potential market exit within the next year.
Additionally, 26 more institutions are considered at risk of exit within two to three years. Many of these are smaller, with only about half having more than 3,000 students.
The DfE highlighted actions taken to stabilize the sector financially, including raising the maximum tuition fee cap and refocusing the Office for Students on supporting universities' financial health.
"Through our ambitious reforms announced in the post-16 education and skills white paper we will restore universities as engines of growth, aspiration and opportunity."
However, the report points out that the undergraduate fee freeze has negatively affected university finances, prompting institutions to increase revenue from postgraduate and international student fees.
International students represent a quarter of all students but contribute over 45% of fee income.
"These fees represent a financial surplus used to cross-subsidise research and domestic teaching,"
Hayes further stated that if the government intends to reduce international student numbers, it must clarify how it plans to stabilize university finances.
'Financial cliff edge'
In response, the University and College Union (UCU) criticized the government for being "asleep at the wheel" amid universities facing a "financial cliff edge."
UCU General Secretary Jo Grady called for the establishment of an emergency higher education taskforce to oversee ministerial intervention and the implementation of the report's recommendations.
Vivienne Stern, chief executive of Universities UK, representing 141 universities, expressed gratitude for the government’s decision to increase fees in line with inflation in England.
However, she noted that changes to visa policies have reduced international enrolments and that a longstanding failure of research grants to cover costs has placed significant pressure on universities.
Alex Stanley, National Union of Students (NUS) vice president, described the report as "scary reading" and emphasized that students should not bear the consequences of underinvestment in higher education.
