Eighth Report - Financial sustainability of the higher education sector in England

Select Committee

Public Accounts Committee HC 257 15 June 2022

Report Status Government responded

Conclusions & Recommendations 26 items (10 recs)

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Government Response (AI assessment · 26 of 26 classified)

Accepted 10

Acknowledged 9

Deferred 1

Not Addressed 6

Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Eighth report from Session 2022-23 · published 2 Sep 2022

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Recommendations & Conclusions

9 results

4 Recommendation Acknowledged

We are concerned that the financial sustainability of some providers is being put at risk...

Recommendation

We are concerned that the financial sustainability of some providers is being put at risk by their heavy dependence on their ability to continue growing overseas student numbers. Many providers are already highly dependent on cross-subsidy to make up deficits … Read more

Government Response Summary

The government agrees with the Committee’s recommendation and states the financial sustainability of the higher education sector depends on the continuing contribution made by income from overseas students.

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6 Recommendation Acknowledged

The Department failed to adequately assess the current and future financial impacts on providers of...

Recommendation

The Department failed to adequately assess the current and future financial impacts on providers of disruption to A-level assessments. The use of locally assessed grades in place of A-level exams during the COVID-19 pandemic led to substantial grade inflation in … Read more

Government Response Summary

The government agrees with the Committee’s recommendation and has undertaken careful monitoring of applications and providers’ offer- making in the 2022 admissions cycle.

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1 Conclusion Acknowledged

On the basis of a report by the Comptroller and Auditor General, we took evidence...

Conclusion

On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Education (the Department) and the Office for Students (the OfS) on the financial sustainability of the higher education sector in England.1

Government Response Summary

The government acknowledges the report and states that the response is the government’s response to the Committee’s report.

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10 Conclusion Acknowledged

In addition to setting higher education policy, the Department is responsible for the overall regulatory...

Conclusion

In addition to setting higher education policy, the Department is responsible for the overall regulatory framework for the sector.19 It holds the OfS to account through quarterly performance reviews with the OfS’s leaders and has regular discussions about the performance … Read more

Government Response Summary

The government agrees with the Committee’s recommendation, with the OfS concluding the review of its key performance measures, with a view to these being published by September 2022.

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14 Conclusion Acknowledged

The medium- and long-term financial sustainability of some providers is heavily dependent on continued growth...

Conclusion

The medium- and long-term financial sustainability of some providers is heavily dependent on continued growth in student numbers, particularly overseas students. In 2018, providers forecasted that the number of non-EU students would grow by 29% between the 2019/20 and 2024/25 … Read more

Government Response Summary

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18 Conclusion Acknowledged

During the COVID-19 pandemic, the government moved to a system of locally- assessed grades in...

Conclusion

During the COVID-19 pandemic, the government moved to a system of locally- assessed grades in place of the usual A-level examinations. This led to significant grade inflation in 2020 and 2021 and meant that many more students than expected were … Read more

Government Response Summary

The government agrees with the Committee’s recommendation and has undertaken careful monitoring of applications and providers’ offer- making in the 2022 admissions cycle.

HM Treasury

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19 Conclusion Acknowledged

As most degree courses last three or four years, there is an ongoing negative impact...

Conclusion

As most degree courses last three or four years, there is an ongoing negative impact on the income of providers who are unable to recruit enough students to match their forecast numbers.35 Oversubscribed providers can also face adverse financial consequences … Read more

Government Response Summary

The government agrees with the Committee’s recommendation and has undertaken careful monitoring of applications and providers’ offer- making in the 2022 admissions cycle.

HM Treasury

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20 Conclusion Acknowledged

The Department told us it had not modelled the impact on providers of grade inflation...

Conclusion

The Department told us it had not modelled the impact on providers of grade inflation in 2020 because nobody had anticipated the last-minute decision to use locally assessed grades. For the 2020/21 academic year, it provided an additional £10 million … Read more The Department told us it had not modelled the impact on providers of grade inflation in 2020 because nobody had anticipated the last-minute decision to use locally assessed grades. For the 2020/21 academic year, it provided an additional £10 million to support oversubscribed providers that were teaching high-cost subjects, and up to £10 million capital funding to help them expand capacity. However, neither the Department nor the OfS modelled in advance whether the changes to A-level grades would, by themselves, lead to some providers becoming undersubscribed and what the financial consequences for those providers could be. The National Audit Office reported that many medium- and low-tariff and specialist providers recruited fewer students in 2021 than they had in 2019, despite a 10.8% overall rise in undergraduate entrant student numbers over the two years, and that this created short-and medium-term financial risk.37 The Department told us that it had been challenging for the, typically middle- and lower-tariff, institutions that had ended up being undersubscribed. It explained that there had been some financial impact on those providers, although that impact had not been uniform because it also depended on the local actions taken and the subject profile of each provider. However, the Department asserted that its priority had being making sure it was doing what it believed to be the right thing for students.38 The OfS told us that it was now seeing universities’ financial forecasts starting to return to normal, but that it remained concerned about the quality of provision where courses had been very heavily oversubscribed. The OfS told us it was now looking at this issue closely and working with the universities to ensure that, notwithstanding increased numbers, quality remained good.39 36 Q 4; FSE0003 The Russell Group, 21 March 2022, paras 15, 19; C&AG’s Report para 4.27 37 Qq 1, 4; C&AG’s Report, paras 4.24–4.26 and Figure 12 38 Qq 2–3; Correspondence from Susa Show less

Government Response Summary

The government agrees with the Committee’s recommendation and has undertaken careful monitoring of applications and providers’ offer- making in the 2022 admissions cycle.

HM Treasury

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21 Conclusion Acknowledged

As a condition of registration, the OfS requires each higher education provider to have in...

Conclusion

As a condition of registration, the OfS requires each higher education provider to have in place and publish a student protection plan setting out what it would do to safeguard students’ interests—such as by making arrangements for continuity of study— … Read more

Government Response Summary

The OfS introduced a new registration condition in April 2021 to strengthen its ability to ensure the rigour of a provider’s plans to protect students against the risk of the provider ceasing to deliver higher education and intends to begin discussions with the sector to update requirements where appropriate.

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