Universities expected to manage budgets without calling on taxpayer – Phillipson

Universities are expected to manage their own budgets before seeking help from the taxpayer, the Education Secretary has said.

Bridget Phillipson said a “sharper focus” was needed on regulating the higher education sector to ensure that universities were “on a firm footing” financially.

It comes after the University and College Union (UCU) called on the Government to take action to help universities across the country who were struggling with their finances.

In a letter sent to Labour on Friday, Jo Grady, general secretary of the UCU, warned: “Anything short of an emergency rescue package for the sector will be insufficient to stave off catastrophe.”

Ms Phillipson told BBC Radio 4’s Today programme that the Government would set out its “initial steps” about regulation and England’s higher education watchdog, the Office for Students (OfS), this week.

It comes after Conservative peer Lord Wharton resigned as chairman of the OfS following the election.

When asked whether the Government would help universities struggling financially, the Education Secretary said: “Universities are autonomous and there are expectations around how they manage their budgets, and I would expect them to do that without seeking any calls on the taxpayer.”

Speaking on the Today programme, Ms Phillipson said: “I’ve been going through a process of, with officials, urgently understanding what we need to do in order to shore up the sector because I am determined to deliver a brighter future for our universities, to secure them in terms of their finances into the future.”

She added: “We need to see a sharper focus on the regulation of our sector to make sure that universities are on a firm footing.”

Susan Lapworth, chief executive of the OfS, said the watchdog’s recent analysis showed “increasing financial risks” facing the higher education sector.

She said: “These risks include the decline in the real-terms value of tuition fees, an over-reliance by some institutions on international students, and misplaced and unrealistic optimism about student recruitment.

“Many universities are well placed to weather these financial challenges. Some have strong cash positions.

“Others have already taken steps to address these risks, for example by taking difficult but necessary decisions about the courses they run, or working collaboratively with other institutions to pool services.

“We are not expecting an increase in the number of institutions exiting the market in the short-term. But all universities should carefully consider the sector-wide risks, and ensure they are taking steps to secure their long-term futures.”

Vivienne Stern, chief executive of Universities UK (UUK), said the financial position for universities has deteriorated “very fast” in the past year as a result of factors outside of their control.

She told the PA news agency: “So what we’ve said is if a university is viable, most of them are, but needs a bit of help to get through a rapid deterioration of their financial position, that Government should be ready to stand as a kind of lender of last resort to enable them to get through that.

“Now it might be a short-term measure, but it would allow an institution to do the restructuring that it needs to do to remain afloat.

“I think it would be unfortunate if the Government categorically ruled out the possibility of doing something like that.”

Ms Stern warned that the situation will “keep getting worse year after year” if the government does not restore the link between the tuition fee and inflation as she added that the sector “can’t go on like this”.

On Ms Phillipson’s comments, she said: “Universities are taking responsibility for their own finances. They are autonomous organisations. That’s why they’re cutting very, very large amounts of expenditure right across the sector.”