Jacqui Smith: fix for funding crisis ‘will not happen overnight’

The higher education minister has told vice-chancellors she understands that some universities are in “financial peril” but insisted that a solution for the sector’s funding crisis would “not happen overnight” and would “take time to get right”.

In her first major speech outside Parliament since becoming education minister, Baroness Smith of Malvern told Universities UK’s annual conference that she had been warned about the “real financial peril” that higher education faces within hours of taking office in July.

“I am well aware that higher education providers are under financial strain,” Lady Smith told an audience at the University of Reading on 4 September.

To address that, she had asked the new interim chair of the Office for Students, Sir David Behan, to focus on “key priorities” for the sector, including the “sector’s financial stability”.

The former home secretary said Sir David was now “carefully considering all options for a more robust sector”, including how to put “robust plans in place to mitigate risks as far as possible”.

However, in a hint that the chancellor, Rachel Reeves, is unlikely to provide any financial assistance to the sector in next month’s budget, Lady Smith admitted that reforms to funding “will not happen overnight” and that it “will take time to get it right”, also noting the “difficult fiscal decisions” that the new Labour government is having to make.

However, Lady Smith did not rule out the possibility of the government’s increasing tuition fees above their current level of £9,250 – which the education secretary, Bridget Phillipson, has recently said would be “unpalatable”.

Raising student maintenance loans was another issue, said Lady Smith, who said her department was considering “how we can support students when they have been disproportionately affected by the cost of living crisis” and also “support access” to university.

However, she was warned by David Maguire, vice-chancellor of the University of East Anglia, that the “financial peril” facing the sector has significantly worsened since the summer, caused by lower-than-expected international student recruitment.

“There are people in this room whose business plans have been hit by tens of millions of pounds,” he said in reference to the university leaders gathered, adding that there had been an overall 15 per cent reduction in fees from international taught courses compared with the previous academic year.

“There is a clear and present danger that some universities face at this time,” he said.

In a speech that frequently praised the positive work of UK universities, Lady Smith lauded institutions as “engines for economic growth” and “one of our country’s greatest assets”.

Parliamentarians will frequently lobby for their local universities because “they understand the economic, social and cultural power that universities bring to the communities that they represent”, she said.

On international students, she added that the “UK is outward-looking. It welcomes international students from across the world – they make a huge impact on our economy and society as a whole.”

Praising the economic and geopolitical benefits of having international students, via soft power, Lady Smith said: “I’d like to state as plainly as I can that international students are, and will continue to be, welcome in the UK.’

jack.grove@timeshighereducation.com