Category: market exit

Student protection is needed in all higher-level learning

With the government’s white paper having a clear policy ambition and focus on higher technical (level 4 and 5) courses, and a pledge to simplify the regulatory framework for higher-level study, gaps in regulatory oversight are still exposing an increasing number of students to risk.

The Office of the Independent Adjudicator has today published public interest case summaries, where we have named the two providers concerned, in order to highlight the impact of differing regulatory systems leaving gaps for individual students.

The recent closure of Applied Business Academy (ABA), as detailed in my previous Wonkhe article, shows an ongoing vulnerability where students cannot seek an independent review of their awarding organisation’s actions. This is the case if they are studying for HE qualifications awarded by an Ofqual-regulated awarding organisations as these, unlike universities, are not required to be OIA members.

While Ofqual regulates the quality and standards of qualifications, it does not oversee student protection, welfare or institutional accountability in the same way the OfS does for registered providers, even where the provider is only validating courses.

In our experience this regulatory fragmentation leaves students vulnerable. All HE students should be afforded the same protection and recourse as well as the ability to complain about both their delivery and awarding organisation whoever their awarding body is.

Highlighting the consequences

In the case of ABA, when the Department for Education instructed the Student Loans Company to suspend tuition fee payments to ABA there were over 2,000 students enrolled on the Diploma in Education and Training (DET) awarded by City and Guilds or the Organisation for Tourism and Hospitality Management. ABA also ran courses through partnerships with two universities which were not subject to any regulatory concern.

Since ABA was registered with the OfS, all eligible students could access public student loan funding including those on the DET course. However, when ABA collapsed their route for complaint and level of redress and support was unclear and very different. The DET students lacked the institutional safety net of an OfS-regulated validator. Despite receiving positive feedback and assurance from ABA during their studies, students were told at the time of the closure that there was insufficient evidence to meet qualification requirements, leaving them with no qualification and a debt they would have to repay.

By contrast, those on courses validated by or franchised from the University of Buckingham or Leeds Trinity University were offered a range of protections and mitigations including, various supported transfer options to localised provision with matched timetabling, transferring to the universities or identified alternative providers. They also benefitted from reimbursements for travel costs to alternative premises or were provided with free transport. Students could also access a record of achievement to support other transfer or exit, webinars and dedicated phone lines with individualised welfare support and guidance sessions. The OIA, to date, has received no complaints from students on these courses.

Equal funding, unequal accountability?

We have also today published a case summary about Brit College which was OfS-registered and only ran courses which were awarded by Ofqual-regulated awarding organisations, prior to its existing higher education courses being de-designated.

Although it has not closed, it has stated on its website that where the OIA has awarded compensation or refunds, “Brit College is currently unable to meet these awards due to financial constraints” and has yet to pay our recommended compensation to any impacted student.

The students we have received complaints from had completed all the work that had been set, and they had not been given any indication by the college during their studies that the work was not sufficient or was not at the required standard. Nine months after completing the course the college told students that they would need to undertake substantial further work. As Brit College remains open but has refused to pay compensation, it has been formally found in non-compliance with our recommendations.

In both cases, since the awarding organisations are not within OIA membership we are unable to review any complaints from students about their acts and/or omissions in the time prior to de-designation, as we would if their courses were awarded by universities.

When the system fails

The fall out is not just administrative; it is deeply personal. Students are often shocked and distressed to be denied compensation, especially when we have found in their favour. They often feel confused about the lack of protection available to them and, having chosen to study at an OfS-registered provider, feel they have been misled.

This is compounded when they hear about students at the same provider studying for different qualifications where expectations of the validators are student focused. The qualifications studied via Ofqual-regulated awarding organisations are often gateways to teaching or a technical profession. When a provider fails and there is no one to turn to, they not only lose their tuition fees and time spent studying, but also their career trajectory, and often they cannot afford to take out further loans to start again.

In the words of one student impacted:

I completed the DET course as required, maintaining 100% attendance, submitting all coursework and observations on time, and consistently communicating with ABA. In addition to the course fees, I spent money on travel to attend the course, further increasing the financial burden. Despite fulfilling all my responsibilities, I’ve been left without a qualification and have been unable to get a resolution for nearly two years…

What makes this even more distressing is that I have already started repaying the loan to Student Finance from my personal income – for a course that did not result in a qualification. This feels incredibly unfair and adds to the emotional and financial pressure I am under. I am paying for something I did not receive through no fault of my own.

Fixing the fault lines

This is not an isolated incident – it’s a symptom of a sector under strain. With the government’s targets directly referring to higher technical qualifications, backed by the development of the Lifelong Learning Entitlement to give “equal access to student finance for higher level study,” it should now take action to ensure equal access to student protection.

Without this, students on higher technical and other level 4/5 courses will continue to have less access to individual remedies and redress than their counterparts studying for an award from a university.

We note that back in 2020 the DfE expected “all awarding bodies and providers which own an approved Higher Technical Qualification to join the [OIA] scheme” – yet five years on this expectation remains unmet. We have since worked with Ofqual who have confirmed that awarding organisations being in membership of the OIA Scheme is compatible with Ofqual regulation (this was also a recommendation in our recent joint report with SUMS on managing the impact of higher education provider closure).

Without OIA membership, students unable to complain to the OIA about their awarding organisations will not have access to independent remedies and redress, unlike those studying for university-awarded qualifications.

Most importantly, in our experience, this is not made clear to, or understood by, students when they embark on their higher education journey.

We reiterate that this is a student protection gap that urgently needs resolving for students who deserve that same protection. All students – regardless of their awarding organisation – should have access to the same safeguards and redress. That means all awarding organisations in receipt of public money joining the OIA scheme and making student protection, and the obligation to put things right for students, a non-negotiable part of higher education policy.

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November 13, 2025
The network effects of a university collapse
Universities are bound together more tightly than ministers like to admit. They share credit lines, pension schemes, suppliers, and reputations. Contagion, once started, moves faster than policy can catch it.

The question up until recently was the wrong one: could a university fail. The grown-up question is what happens next: to students who haven’t applied yet, to local communities, and to neighbouring universities. We have to begin with the obvious: students come first.

Failure at one institution produces contagion effects, the magnitude of which depends on regional centrality and clustering. Government should focus on keeping that transmission reproduction number (or R number – remember that from Covid?) below one. This piece maps some of those transmission channels – I’ve modelled small changes to the bottom line of an average neighbouring university, based on student spend, pensions, interest rates and group buying.

Our patient zero – that is, the first to fall – is a provider that is OfS-registered and regionally significant, and I have estimated the price shock for its financially average neighbour. Of course, I have to assume no rescue package from government (they have signalled as such).

The calculations below are based on the average university using 2023–24 HESA data, excluding FE colleges with HE provision. Each percentage change is illustrative rather than predictive and actual outcomes will depend on local factors.

Stay at home

Student demand runs on policy signals and vibes as much as price. In 2024 we saw sponsored study visas fall year-on-year and dependants drop sharply, while PGT overseas remained twitchy.

Throw a closure into that salad and you start to see conversion eroding. Bursary spend and fee waivers will rise to keep offers attractive. A percentage point here or there looks insignificant but adds up across multiple providers.

International students will start looking elsewhere: Australia, Canada, Germany. Or they’ll just stay at home. Better to choose a sure thing than risk having your course disrupted halfway through. Home students may be similarly spooked – but have fewer alternatives.

There are a few antidotes: multiple guaranteed transfer corridors, decent student protection plans, and teach-out clarity. And most importantly, comms that make sense to agents and parents.

Illustrative hits to an average university elsewhere:
- Additional bursary spend on international: £80m × 0.5% = £400k
- Reduced international demand: £80m × 0.5% = £400k
Protect the USS

Multi-employer pension schemes, like USS and LGPS, can go very squiffy when a member exits. In that case, the rules force the member to pay a large exit bill called “Section 75”, and the sums can be eye-watering. It’s a standard expectation of a “last man standing” scheme.

Trinity College, Cambridge wrote a cheque for about £30m to leave USS in 2019. USS has suggested that, for a sample of employers (mainly Oxbridge colleges), a crystallised bill could represent anywhere from 4 to 97 per cent of their cash and long-term investment balances, averaging around 26 per cent.

In practice, an insolvent provider wouldn’t cough up, so other universities would absorb the orphan liability. But there isn’t a mechanical “spread the S75 bill this year” formula; it would show up, if at all, via the valuation and rate-setting process. The scheme is currently in surplus, so additional contribution costs are uncertain. Of course, not all universities are enrolled in USS, but the vast majority are enrolled in multi-employer schemes.

Illustrative hit to a USS-enrolled university elsewhere:
- Salary base: £181m × 72% = £130m
- USS proportion: £130m × 70% (say) = £91m
- 1 pp rate bump: £91m × 1% = £910k
Save livelihoods

Universities drive jobs, rents, transport and culture. Liverpool estimates £2.2bn GVA and 26,630 jobs supported nationwide, roughly one in fifty locally. Northampton reports £823m GVA and 10,610 jobs. National estimates put the sector above £116bn.

Remove the local provider and the GVA virtuous circle turns vicious. Cafés lose footfall, landlords lose tenants (poor them), and pubs are no longer full of students. The extent depends on how rooted the provider is in its community.

Government will find itself paying anyway. Either pre-emptively with small civic grants to keep key services alive, or retrospectively with bigger cheques after the rot sets in. Maybe it will finally put a stop to town and gown tensions.

Illustrative hit to an average university elsewhere:
- No direct cost to other universities
- Material GDP and tax impacts for government
- Likely need for community grants.
Flatten the yield curve

Lenders rarely treat a closure as an isolated blip; being hawkish, they would probably reprice the entire university category.

Add 50 basis points to a £90m facility and you’ve created a recurring £450k drag until you refinance. All in all, that’s not a huge bite out of your cash flow, but it will certainly make you more cautious.

To fix this, listen to your finance directors: stagger your maturities and fix your rates well in advance. Or, radical thought – stop yanking at your credit lines and make do with what you have.

Illustrative hit to an average university elsewhere:
- Additional interest costs: £90m × 0.50% = £450k
Herd immunity

Group buying is one of the few places with cash on the table. In 2023–24, the UK Universities Procurement Consortia (UKUPC) members put about £2.4bn through frameworks and reported roughly £116.1m (4.84%) in cashable savings. The Southern Universities Procurement Consortium (SUPC) talks about £575m of member spend and average levy rebates of around £30,000 per full member.

If fewer universities use those routes, frameworks lose clout, and with that, discounts and rebates. The more volume that stays in the collective pot, the better the prices – but for critical services, it’s still wise to have a backup supplier in case one fails.

Another group issue is shared services. Up until recently, they were seen as a poisoned chalice, but are now growing out of necessity. The usual worries are well-rehearsed: loss of control, infighting and VAT jitters. Still, some experiments, like Janet and UCAS, have been tremendously successful, although pricing relies on throughput.

Shared IT, payroll, procurement or estates often come with joint and several obligations. If one partner hits trouble, you start to see real governance friction.

The practical fixes are contractual. Ringfence any arrears so they do not spill onto everyone else, and rebalance charges on a published, defensible formula.

Illustrative hit to an average university elsewhere:
- Frameworked spend: £131m (total non-staff) × 60% (frameworked, say) x 4.84% (cashable savings) x 10% (diminution) = £380k.
- Shared services: impossible to quantify.
What ministers can do without a podium

I’ve modelled small changes to the bottom line (again, illustratively) – in this example one university going under could cost others £2.5m, or 50 per cent of the average university’s 2023–24 surplus. This number isn’t rigorous or comprehensive, but serves as an interesting thought experiment.

The rational response is a resolution regime that protects students and research, temporary liquidity for solvent neighbours, clear transfer routes when the worst happens, and deployment of short, targeted grants for civic programmes.

A single collapse could probably be absorbed; a string of them could set off an irreversible domino effect with far-reaching consequences. Ministers need to plan for this now – or else risk a very hefty civic bailout.
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October 31, 2025
The white paper kept quiet on market exit

The Department for Science, Innovation and Technology’s annual report in early July said that the government was working on a legislative programme to “ensure higher education sector access to an insolvency regime.”

Yet for all that Monday’s post-16 white paper compiled together much of the ongoing work that had been trickling out of Whitehall for the previous 12 months, such plans were notable by their absence.

Similarly, the Office for Students’ 2025–26 business plan said it was putting together proposals for a system whereby a “validator of last resort” for the English sector, which would protect students if the provider that validates their degree exits the market, as well as a possible “bespoke clearing system” for students in the event that their institution closes.

Again, neither of these ideas got airtime in the white paper, despite skills minister Jacqui Smith having given her endorsement to the latter in comments to the media.

The white paper in fact steers wholly clear of policy thinking around what would happen in the (ever more likely) event that a large English higher education provider finds itself in severe financial distress threatening its very viability. This omission is even more stark even against a background where we know that this risk has been scored “critical” and “very likely” on the DfE risk register, and the Office for Students has told the Commons education committee that it would be unlikely that it could “secure reasonable outcomes” for students if a large multi-faculty university closed, reeling off a list of all the ensuing risks ranging from students losing access to their academic records to PGRs whose work is tied to a particular supervisor finding transfer “difficult or impossible.”

Perhaps the government simply wanted to steer clear of any negative news as it seeks to pat itself on the back for putting higher education on a “firm financial footing”, by way of keeping tuition fees at the same level in real terms (as long as inflation forecasts do not prove to be underestimates) while piling on additional costs to universities in areas including national insurance, pensions and a future fee levy. But – especially given that the white paper rounded up almost every policy initiative that is currently underway elsewhere in government, OfS and UKRI – it does feel, rather, that the idea of making legislative change to pre-empt issues around “market exit” has disappeared from the government’s to-do list.

Pros and cons

The education committee’s ongoing inquiry into higher education funding, which has the risks around insolvency as one of its central concerns, is shedding some light on the issues involved, both in the written evidence that has come the committee’s way and the first hearing which took place on Tuesday this week.

Neil Smyth of lawyers Mills & Reeve told the committee that the fundamental answer to the question of what happens to an insolvent university which is not incorporated as a company – a large slice of the sector – is that “no-one quite knows”. He emphasised that there is debate about what the law entails, noting:

At the moment, it is believed that the only insolvency process that would be available for a royal chartered entity or non-corporate entity would be to be wound up by the court as an unregistered company. That is a terminal process, it is a shutdown process, it is not a process that allows you to continue to trade.

This uncertainty complicates what advice can be given to university governors about their responsibilities and liabilities – and also makes it difficult to see how student protection can be regulated for in such a situation. Mills & Reeve’s evidence to the committee adds that the unclear dispensations for unsecured creditors has, in their experience, led to something of a “land grab” among creditors:

Key creditors, including pension providers, have sought to improve their position by demanding legal mortgages over land as these confer the contractual remedy of fixed charge receivership. This leads to highly expensive and time-consuming legal due diligence at just the point where the HEI can ill-afford those costs.

Smyth, as he has previously argued on Wonkhe, told the committee that the advantages of some kind of restructuring regime being introduced included clarity for governors, confidence for lenders, and – as exists in the relatively new further education special administration regime – the potential for legal protections for students’ academic interests. That said, he warned that he couldn’t see a university coming out intact from such a process, given that student demand would inevitably collapse once the institution went into administration.

However, Universities UK – represented at the committee hearing by chief executive Vivienne Stern – has moved away from advocating for a special administration regime. As the representative body’s evidence to the committee puts it:

Universities UK’s current view is that it would be preferable to work with government, regulators and other sector bodies to clarify how existing arrangements can apply to higher education institutions, supported by stronger contingency planning at institutional level, and at the level of government, regulators and funders.

The consequences of a large scale institutional failure would be so significant that policy effort should be primarily focussed on averting this outcome, rather than on mitigating its impact after the event.

Stern highlighted the risk that a formal administrative process could be drawn out and expensive, and might even make it more likely that an institution collapses once entry into regime had taken place.

The committee’s report will make a recommendation – it could be that Universities UK’s line of thinking has already swayed the government away from such a move. Committee chair Helen Hayes hinted that the committee will conclude that formal systems are needed, via her question to the effect of what would happen if there were a slew of insolvencies in short succession which compromised governmental and regulatory capacity to thrash out suitable arrangements behind the scenes.

Fuzzy logic

Keeping the threat of market exit – and the massive and unpopular clean-up job that would accompany it – hanging over the government’s head rather than handing off responsibility to a predetermined legal and fiduciary process is, sad to say, probably one of the few trump cards the sector still has to play around advocating for greater government investment.

The lessons from FE, where a special administration regime has been in place for a few years now, are that the government seems reluctant to let things go as far as formal processes. In higher education, while it would depend on geography and circumstances, the smart money is probably still on Labour stepping in before push came to shove in a similar way to how the SNP felt forced to in Dundee.

But there won’t be a Labour government forever. Future ministers who were relaxed (on paper) about universities going bankrupt would almost certainly be less keen to have to step in and make the final decisions in the places affected – while perhaps not being so worried if it ended up being purely a matter for the courts and the banks – and so keeping things fuzzy might end up being a sensible long-term strategy for the sector with an eye beyond 2029.

That said, the apparent move away from government interest in legislating for a higher education insolvency regime doesn’t really explain why the white paper was quite so silent on other mitigating actions and the whole question of student protection (especially given its inclination towards “consolidation”). Is it really betting the house on the magical healing properties of holding tuition fees stable in real terms?

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October 21, 2025
Student protection through market exit is not a compliance exercise

As financial and regulatory pressures on higher education intensify, the once-hypothetical risk of a large-scale provider exiting the market is becoming increasingly likely.

For government, regulators, providers, and students alike, the implications are far-reaching – and the sector needs to be better prepared.

The risk is growing

Following our previous reflections on this issue we received many messages of interest and support for doing some further work in this area. We also felt there was an opportunity to bring together the experiences of colleagues we have worked with on closures and mergers, and to capture the perspectives of receiving providers and learn from their experiences.

SUMS Consulting reached out to us, offering to support a new project on a pro bono basis. Their expertise in supporting student services and change management, combined with the OIA’s experience of student complaints during provider exits, created a unique opportunity to look at the problem from both a practical and student-centred perspective. We also asked the Committee of University Chairs (CUC) to join the project’s steering group, ensuring governance perspectives were built into the work from the outset.

The risks we highlighted last year have only intensified for students. At the OIA we have seen further complaints from students at smaller providers which have closed in recent months. In these scenarios we see staff working quickly to try to support students at both closing and receiving providers, but there is little legal scaffolding to protect students caught in these situations often leaving them with limited redress.

Lessons from experience

Whilst we recognise that there has been significant positive engagement, discussion and reports in this space, the SUMS and OIA report – Putting Students First – Managing the impact of higher education provider closure – focuses on mitigating the impact on students and specifically learning from the closures and cases the OIA has been involved in. If we don’t take these examples seriously, we risk missing a crucial opportunity to improve outcomes for students.

Over the course of the project, there has been increasing discussion about these policy issues and a ‘playbook’ for market exit is frequently suggested. Whilst neither the SUMS nor the OIA has the expertise or role to produce something quite this detailed and comprehensive, SUMS have gathered insights from university leaders, students’ unions, experts, and those who have dealt directly with closures.

Part one of our report provides the context for the study and collates findings on lessons and effective practice for the sector derived from all the research and information gathering for this study. SUMS also provide some conclusions on the gaps identified by the research and make a series of recommendations for Government, regulators and sector bodies and providers to consider to better support providers navigate exit and help mitigate the impact of future closures on students.

Part two is a separately appended framework (in MS Excel format), which is a summary of the key lessons learnt from the study. The framework is not intended as a comprehensive guide for good institutional governance or achieving financial sustainability. Rather it is intended to provide a checklist of key actions that might be taken by providers to mitigate the risk of exit and, if exit is unavoidable, to help prepare for a managed exit.

Several consistent themes emerged across our discussions – notably the practical disconnects between the current legal, regulatory, financial, and student protection processes. What’s clear is the value of early engagement – acting early and being transparent can reduce the impact on students – but we recognise this is difficult when reputational and commercial pressures are in play. Also it is apparent that receiving providers and students’ unions often play a vital role but aren’t always given the resources or support they need.

We found that student protection is too often treated as a compliance task. If the sector is to avoid repeating past mistakes, this mindset must change.

Moving the conversation forward

This report is not the final word. We see it as a starting point — a resource that will grow over time, as more providers engage with it and share their own experiences. We hope that going forward the framework will continue to evolve – helping shape a more student-centred response. We also hope it will support other initiatives in this space, such as the forthcoming updates to the CUC Governance Code.

Above all, we want to encourage providers, governors, and policymakers to engage in open and honest conversations about the risk of market exit — before it becomes an emergency. Used early, the framework can help institutions strengthen their preparedness, build resilience, and ultimately safeguard the student experience.

What happens next?

We encourage providers and others to review the framework and checklist with leadership and governance teams, integrate its guidance into risk and student protection planning, share feedback to help develop the next iteration of the work.

We hope that this work will help enable honest and open conversations about exit, both within and between providers. We all need to understand that student protection isn’t just a compliance issue – it has a very direct impact on the experiences of students in the system, and we must all be ready.

Ultimately, we need a more collaborative whole sector approach – because when a large-scale provider exits the market suddenly, the impact isn’t isolated – it becomes a sector-wide challenge. Ensuring students are protected must be a shared sector priority.

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July 15, 2025
OfS insight on institutional closure lacks a firm statutory foundation

The Office for Students’ (OfS) insight briefing “Protecting the interests of students when universities and colleges close” is as much a timely reminder of where the law falls short when providers are at risk of closure as it is a briefing on how to protect the student interest under the current policy framework.

As we set out in our Connect more report which explored, among other things, the legal framework for institutional insolvency, market exit and/or merger, the role of OfS in any institution at risk situation is already unhelpfully ambiguous. Its concern may be the student interest, but it is not empowered to prevent institutional closure (even if, as is often likely to be the case, the student interest would be best served by completing the course they registered for at the institution they enrolled in) – or even to impose order on a disorderly market exit.

In the absence of express powers or an insolvency or special administration regime for higher education, OfS’ role becomes one of a point person, facilitating conversations with other agencies and stakeholders, but with no powers itself to prevent a disorderly closure. The tone of the briefing is collaborative and collegiate but, in a world where students are no better protected than any other unsecured creditor if a provider becomes insolvent, it’s doubtful that, under the law as it currently stands, the interests of students will be protected to the degree to which OfS desires.

While OfS may be primarily concerned with protecting students’ interests, the trustees of those providers that are constituted as charities have a statutory duty to act in the best interests of the charity and to pursue their charity’s purposes. This duty will, of course, encompass the needs of present students but will also encompass past students, future students, research activities and much more besides. While no one would disagree with the general sentiment that “throughout the process [of institutional closure] the interests of students, and their options for continued study, must be kept in mind” – and the briefing does offer lots of useful ideas for how to ensure sufficient attention is given to the many types of students who will be affected – the elevation of student interest to a pre-eminent concern is not what the law generally, nor what OfS’ statutory duties currently require.

University executive teams and boards may wish, therefore, to read OfS guidance in light of these realities, and be aware of the limits of what is realistically possible or likely to occur in giving consideration to the sort of scenario planning and preparation OfS advocates in the briefing.

A herd of elephants

OfS’ recommendations about the need to have suitably durable and maintained student records and to have entered into binding contracts with validating and subcontracting partners that contain clauses that deal realistically with the end of the relationship and contain adequate data sharing agreements clauses are all well made.

But once things actually start to get tricky in real life there is a level of reliance on transparency, for example, in sharing information both with OfS but also with other organisations such as funding or regulatory bodies, or government departments, or even other institutions who might be prevailed upon to welcome displaced students. In the absence of a systematised notification process, any ambiguity about whose role it is to liaise with the various potentially affected stakeholders or the timing of any such communication has high potential to create problems. There are obvious issues raised by disclosing or revealing another institution’s “at risk” status, some of which may have the effect of accelerating the very process everyone is seeking to avoid.

If OfS considers a registered institution is at risk of closure, it can impose a student protection direction under condition C4 of the conditions of registration. The briefing provides a helpful reminder of what a student protection direction might include and encourages regular thought about these issues to avoid the need for a provider to “improvise at speed and under stress if an institutional closure becomes possible.” That sounds very laudable at first glance, but it confuses the regulatory obligation with the real-world outcome. A provider at risk of closure may well come under pressure from OfS to produce a market exit plan and to map courses at a time when university teams have the least bandwidth to undertake such tasks. In any case, it is highly doubtful whether an insolvency practitioner would be bound by such planning in the event that a provider goes into an insolvency process.

In scenario planning, OfS moots the idea that higher education providers might consider setting up “agreements in principle” with other institutions “to take on relevant students if one or the other closes” or even “possibly multiple agreements, for different courses and subjects.” It is surprising not to see competition law mentioned in this context. The higher education sector contains a broad range of institution types, with varied teaching and delivery methods, attracting students with different needs and expectations as regards learning and study.

This means that in practice the providers that pair up to take on one another’s students in the event of institutional failure will need to be similar types of provider – precisely those that are in competition for students in the first place. As Kate Newman has argued in an article on the impact of competition law on higher education collaboration, it would be helpful if OfS and the Competition and Markets Authority could jointly consider these kinds of circumstances for the sector as a whole rather than providers having to navigate this complex legal territory on an individual basis.

We’re also concerned that any such “agreement in principle” will not be legally binding and will have been reached at a single point in time, when conditions may be quite different to the time when the institutions seek to rely on them. There is a very real risk that unless these agreements are refreshed annually (a time consuming and potentially collusive activity) they will turn out to be like the original student protection plans in being not terribly helpful.

A sector like no other

In issuing its briefing OfS argues that “this sort of risk and contingency planning is normal in other regulated sectors,” citing the examples of customer supply contingency plans for energy suppliers and the need for banks to have recovery and resolution plans. However, both of these sectors have highly developed insolvency regimes. Drafting recovery and resolution plans is much easier to achieve when there is a viable insolvency process in place. Both the energy and banking sectors have special administration processes in place and there has been much recent press coverage on the water sector special administration process, in light of Thames Water’s difficulties.

OfS encourages institutions to undertake extensive course mapping. However, given the scale of the financial pressures facing the sector, it’s doubtful how valuable such course mapping is likely to be where potential recipient institutions are perhaps equally likely to be at risk of closure. To be fair to OfS, the briefing stresses that mapping is particularly relevant for those institutions that offer specialist provision.

And here, of course, lies the essential problem. As OfS states: “We have drawn on our experience of managing two relevant cases at small and specialist higher education providers during the past year, and of instances where there was a serious risk of a closure which did not materialise.” The counterfactual – closure of a large and generalist provider which does materialise – remains the biggest elephant in the room. While OfS’ openness in sharing its insights is to be welcomed, it does nothing to diminish the need for urgent structural change.

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April 5, 2025
Connect more: creating the conditions for a more resilient and sustainable HE sector in England

Despite it being the season of cheer, higher education in England isn’t facing the merriest of Christmases.

Notwithstanding the recent inflationary uplift to the undergraduate fee cap, the financial headwinds in higher education remain extremely challenging. Somehow, in the spring/summer of next year, the Secretary of State for Education is going to have to set out not only what the government expects from the sector in terms of meeting the core priority areas of access, quality and contribution to economic growth, but how it will deliver on its promise to put the sector on a long-term sustainable financial footing.

The overall structure of the sector in terms of the total number of providers of higher education and their relationships to each other might arguably be considered a second-order question, subject to the specifics of the government’s plans. But thinking that way would be a mistake.

The cusp of change

There are real and present concerns right now about the short term financial stability of a number of providers, with the continued increased risk that a provider exits the market in an unplanned way through liquidation, making the continued absence of a regime for administering distressed providers ever more stark.

But on a larger scale, if, as some believe, the sector is on the cusp of entering into a new phase of higher education, a much more connected and networked system, tied more closely into regional development agendas, and more oriented to the collective public value that higher education creates, then the thinking needs to start now about how to enable providers to take part in the strategic discussions and scenario plans that can help them to imagine that kind of future, and develop the skills to operate in the new ways that a different HE landscape could require. It is these discussions that need to inform the development of the HE strategy.

The Office for Students (OfS) has signalled that it considers more structural collaboration to be likely as a response to financial challenge:

Where necessary, providers will need to prepare for, and deliver in practice, the transformation needed to address the challenges they face. In some cases, this is likely to include looking externally for solutions to secure their financial future, including working with other organisations to reduce costs or identifying potential merger partners or other structural changes.

Financial challenge may be the backdrop to some of this thinking; it should not be the sole rationale. Looking ahead, the sector would be planning change even if it were in good financial health: preparing for demographic shifts and the challenge of lifelong learning, the rise of AI, and the volatile context for international education and research. Strategic collaboration is rarely an end in itself – it’s nice to work together but ultimately there has to be a clear strategic rationale that two or more providers can realise greater value and hedge more readily against future risks, than each working individually.

There’s no roadmap

In the autumn of 2024, Wonkhe and Mills & Reeve convened a number of private and confidential conversations with heads of institution, stakeholders from the sector’s representative bodies, mission groups, and regional networks, Board chairs, and a lender to the sector. We wanted to test the sector’s appetite for structural change; in the first instance assessing providers’ appetite for stepping in to support another provider struggling, but also attitudes to merger and other forms of strategic collaboration short of full merger. Our report, Connect more: creating the conditions for a more resilient and sustainable higher education system in England sets out our full findings and recommendations.

There is a startling dearth of law and policy around structural collaboration for HE; some issues such as the VAT rules on shared services, are well established, while others are more speculative. What would the regulatory approach be to a “federated” group of HE providers? What are merging providers’ legal responsibilities to students? What data and evidence might providers draw on to inform their planning?

We found a very similar set of concerns, whether we were discussing a scenario in which a provider is approached by DfE or OfS to acquire another distressed provider, or the wider strategic possibilities afforded by structural collaboration.

All felt strongly that the driving rationale behind any such structural change – which takes considerable time and effort to achieve – should be strategic, rather than purely financial. Heads of institution could readily imagine the possibilities for widening access to HE, protecting at-risk subjects; boosting research opportunities, and generally realising value through the pooling of expertise, infrastructure and procurement power. The regional devolution and regional economic growth agendas were widely considered to be valued enablers for realising the opportunities for a more networked approach.

But the hurdles to overcome are also significant. Interviewees gave examples of failed collaboration attempts in other sectors and the negative cultural perceptions attached to measures like mergers. There was a nervousness about competition law and more specifically OfS’ attitude to structural change, the implications for key institutional performance metrics, and a general sense that no quarter would be given in accommodating a period of adjustment following significant structural change. The risks involved were very obvious and immediate, while the benefits were more speculative and would take time to realise.

Creating conditions

We have arrived at two broad conclusions: the first being that government and OfS, in tandem with other interested parties such as the Competition and Markets Authority could adopt a number of measures to reduce the risks for providers entering into discussions about strategic collaboration.

This would not involve steering particular providers or taking a formal view about what forms of collaboration will best serve public policy ends, but would signal a broadly supportive and facilitative attitude on the part of government and the regulator. As one head of institution observed, a positive agenda around the sector’s collaborative activity would be much more galvanising than the continued focus on financial distress.

The second is that institutions themselves may need to consider their approach to these challenges and think through whether they have the right mix of skills and knowledge within the executive team and on the Board to do scenario planning and strategic thinking around structural change.

In the last decade, the goal for Boards has been all about making their institution stronger, and more competitive. While that core purpose hasn’t gone away, it could be time to temper it with a closer attention to the ways that working in a more collective way could help higher education prepare itself for whatever the future throws at it.

This article is published in association with Mills & Reeve. View and download Connect more: creating the conditions for a more resilient and sustainable higher education system in England here.

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December 16, 2024