Labour would let universities go bust ‘if necessary’ – minister

Higher education minister Baroness Smith of Malvern has said that the UK’s new Labour government would be prepared to let a university go to the wall but has reiterated that she wants “financial stability” for institutions.

Appearing on Channel 4 News on as students confirmed their university places on A-level results day – amid warnings that some of these providers are on the verge of collapse – the peer was asked by presenter Cathy Newman whether ministers were “willing to see a university go bust”.

“Yes. If it were necessary. Yes, that would have to be the situation,” Baroness Smith replied. “But I don’t want that to be necessary.

“I want us to find a way for there to be financial stability for universities, and most importantly, for the students that they are serving into the future. And that is what we are working on.”

The exchange came as sector leaders warned that the current recruitment round could be “critical” for the survival of some institutions, and as early data from admissions service Ucas showed enrolments at the least-selective universities shrinking further as students opted for expanding high-tariff providers instead.

Gary Davies, deputy vice-chancellor with responsibility for recruitment at London Metropolitan University, told Times Higher Education that the figures – combined with volatility in international student recruitment – suggested to him “that a number of institutions will be in really significant difficulties”.

But education secretary Bridget Phillipson has repeatedly insisted that she has “no plans” to increase tuition fees in England, which have risen by just £250 in the last 12 years and the value of which has now been heavily eroded by inflation.

And the government has so far ignored calls from the sector for the creation of a rescue fund to support struggling universities to restructure and innovate.

In the Channel 4 interview, Baroness Smith reiterated that universities are “independent organisations”.

“They’ve got to make decisions themselves about how they run themselves as effectively as possible, but they also need a bit of understanding and security about what’s coming in the future in terms of their finances,” she said.

Baroness Smith said that Labour had “taken a much more open and welcoming approach to overseas students”, whose uncapped tuition fees are keeping some universities afloat, than the former Conservative administration.

And this was underlined by Ms Phillipson in a video shared online by Universities UK, telling international learners that if they met university entry requirements and visa eligibility rules “then the British government and the British people will welcome you”.

“If you’re joining us this year, then we can’t wait to see you in our university towns and cities soon,” Ms Phillipson said.

“I have such admiration for you. You take a leap of faith, to develop new skills and chase new horizons, and I am enormously proud that you want to take that leap here in the UK.”

Ms Phillipson said that the government would do “everything we can to help [international students] succeed”, emphasising the offer of a two-year post-study work visa on graduation.

“I want students to come from around the world and build bonds with their classmates here in the UK because friendships between students become friendships between countries. That’s what education is all about; not just a force for good in people’s lives, but a force for good in our world,” Ms Phillipson added.

chris.havergal@timeshighereducation.com