Universities have ‘lost sight of responsibility over public money'

Telegraph

10-05-2025

Universities have 'lost sight' of their responsibility over public money, a minister has claimed amid a growing blame game over the financial crisis across higher education.
Baroness Smith, the universities minister, said many institutions were failing to rein in spending despite demanding financial support from the government.
Writing for The Telegraph, Lady Smith said universities must hold up their end of the bargain after the Government announced that it would raise tuition fees next year as long as institutions cut down on 'wasteful spending'.
'We ask students to make a considerable investment in their degrees. Universities have huge revenues and must be more transparent about where this money is going,' she wrote.
'They ask government to do more to support them, but seem to have lost sight of their responsibility to protect public money.'
She also took aim at vice-chancellors for continuing to hand themselves huge salaries despite finances deteriorating across the sector.
Earlier this week, The Telegraph revealed that 43 per cent of UK universities racked up a deficit last year, with the Office for Students (OfS) saying on Thursday that it was now 'preparing for' some to collapse.
But Lady Smith said that 'on the other side of the balance sheet, vice-chancellors' pay bears no relation to graduate outcomes, with those heading the worst-performing universities on huge six-figure salaries'.
It follows reports that Bridget Phillipson, the Education Secretary, is planning to 'name and shame' university chiefs who pay themselves large salaries while delivering poor outcomes for students.
The Government is concerned that some institutions have become unaccountable 'ivory towers' with swelling salaries for vice-chancellors, The Times reported.
The London School of Science and Technology paid its vice-chancellor £248,500 last year when just 40 per cent of its students went on to secure graduate jobs or further education.
Universities neglecting central purpose
Lady Smith also accused universities of neglecting their central purpose of providing higher education to young people in Britain amid concerns that too many had become hooked on foreign money.
She said universities 'must remember what – and who – they are for', adding that institutions should focus on 'the core mission of higher education, which is rooted here in Britain, its young people, its economy and its society'.
The Government is expected to urge universities to shake up their business models to make them less reliant on foreign students, since ministers fear this makes the system vulnerable to both visa abuse and sudden fluctuations in applications from some countries.
The OfS said in its annual report earlier this week that 'the overall higher education financial model… has become reliant on fee income from international students, with a particular vulnerability where recruitment is predominantly from a single country'.
The Telegraph revealed on Thursday that some universities are dependent on tuition fees from Chinese students for as much as a third of their income, despite being told to wean themselves off cash from Beijing amid potential geopolitical concerns.
The universities watchdog also said an over-reliance on foreign money had driven many institutions into the red this year after international student numbers dropped 21 per cent across the board.
But universities have insisted they have had little option but to seek cash from overseas in recent years as tuition fees for domestic students remained frozen.
Lucrative foreign students, whose fees are uncapped, have largely been subsidising higher education for British students over the past decade or so, with the Russell Group claiming it has been losing an average of £2,500 on every domestic student.
Tuition fee tensions
Ms Phillipson said in November that she had listened to the sector and would raise tuition fees in England in line with inflation from September 2025 – the first uplift in eight years. It will mean the annual price of a degree will increase from the current £9,250 to £9,535 from next year.
However, Universities UK (UUK), the lobby group for vice-chancellors, has called on ministers to go further and commit to an annual tuition fee uplift in line with inflation plus long-term funding for the sector.
It threatens to unleash a bitter showdown between the higher education sector and the government, with universities also insisting they have made dramatic changes to help improve their financial sustainability over the past few years.
The OfS report published earlier this week highlighted sweeping changes some institutions have made to slim down costs, including widespread redundancies and course closures.
Vivienne Stern, the chief executive of UUK, told The Telegraph: 'We'd like government to get serious about fixing the issue, working with us.
'We totally get the reform agenda – indeed, we are driving it. There is a huge transformation happening in our university system, as the survey we published last week showed. UUK's transformation and efficiency taskforce is working to help universities go further and faster.
'Now is the time for government to step up to do their bit too. That means increasing per student funding, stabilising international demand, and working with us to sort cost-recovery rates on research.'
She has also cautioned against ministers' plans to place further restrictions on international students, saying this would 'make a difficult financial situation facing the sector considerably worse'.
Sir Keir Starmer is reportedly considering applying new restrictions on student visa applications from countries such as Nigeria and Pakistan, whose students are considered more likely to overstay and claim asylum in the UK.
The visa changes are expected to be announced in the Government's immigration white paper next week, with separate university reforms set to be unveiled this summer.
Ministers are expected to announce a shake-up of the student loan system as part of their package of reforms, after Labour's election manifesto promised to 'create a secure future for higher education and the opportunities it creates'.
Writing in The Telegraph, Lady Smith said: 'We have a clear message to university leaders across the country: you also need to do your bit.
'If we allow you to increase the fees you can charge students, then this – and the salaries you earn – must be backed with a clear commitment to break down barriers to opportunity and support our mission to drive growth.'
Our universities need to change – here's why
By Baroness Smith
Britain still has a global reputation for excellence in higher education. People flock here from all over the world to study, work and conduct cutting-edge research in our universities.
Very soon I will be visiting the Open University's campus in Milton Keynes to reflect on the legacy of Harold Wilson's tenacious arts minister, Jennie Lee. She was determined the Open University would widen access to the highest standards of higher education, offering the chance to study a degree, whatever your background, age or circumstances.
Sadly, that legacy is now under threat. This week's report by the Office for Students shows how the neglect of the previous government has led to a serious financial threat to our universities. We have already started taking action. On top of the increases to fee caps we announced last year, we will be announcing a package of reforms this summer to put things right.
But we have a clear message to university leaders across the country: you also need to do your bit. If we allow you to increase the fees you can charge students, then this – and the salaries you earn – must be backed with a clear commitment to break down barriers to opportunity and support our mission to drive growth.
Universities have excelled in many areas, but this week's report shows many have based financial projections on unrealistic expectations – particularly on international students – and failed to address concerns around governance.
They must remember what – and who – they are for. That means investing in gold standard teaching and facilities for the talented people studying in their institutions, and a focus on the core mission of higher education, which is rooted here in Britain, its young people, its economy and its society.
And they need to ensure that everyone feels included in campus life, where a diverse range of viewpoints and perspectives can flourish, and where students get the high-quality teaching and experience that they're investing in.
This government deeply values higher education's contribution to society, which can be seen locally, nationally, and internationally in its partnerships abroad. We want to get it back on a firm financial footing, which is why we raised tuition fees for the next academic year in line with inflation.
It's also why we refocussed the Office for Students, our regulator for the sector, away from distracting campus culture wars and back to its essential purpose: supporting students while monitoring the financial health of the sector.
The OfS's latest report on the stability of the sector showed that its financial performance is forecast to decline in 2024-25 for the third consecutive year.
Data published this week show that 43 per cent of institutions included in the analysis are expected to be in financial deficit for 2024-25.
On the other side of the balance sheet, vice-chancellors' pay bears no relation to graduate outcomes, with those heading the worst-performing universities on huge six-figure salaries.
This government has pledged to restore our universities as engines of growth and prosperity, and as academic institutions we can all remain proud of – but that is a shared responsibility, and sector leadership needs to grasp the nettle.
In response to these issues, we will publish our plan for higher education reform as part of the Post 16 Skills White Paper this summer.
It will include our expectations of how providers will play their part in a more financially stable, inclusive sector that strives to widen access to university education and help deliver our plan for change.
Universities should focus on what they're best at, so that the whole sector is stronger. As Jennie Lee put it, 'only the best is good enough' for students prepared to sacrifice their time and future earnings to gain a degree from an English university.
We ask students to make a considerable investment in their degrees. Universities have huge revenues and must be more transparent about where this money is going. They ask government to do more to support them, but seem to have lost sight of their responsibility to protect public money.
That responsibility extends to supporting the needs and aspirations of everyone in higher education, just as the Open University did 50 years ago.