Unis told to manage own budgets after call for bailouts

Universities should put their own finances in order before looking for help from the taxpayer, the education secretary has told the BBC.

Speaking to Radio 4’s Today programme, Bridget Phillipson said there was an expectation universities should “manage their budgets”, as independent institutions.

It follows a call from the Universities and College Union (UCU) for bailouts for those universities struggling financially.

Ms Phillipson said Labour recognised universities as a “public good” and would seek a firmer financial footing for the sector in the long term.

Jo Grady, general secretary of the UCU, warned over the weekend that universities faced “catastrophe” without an emergency rescue package from the government.

In its most recent assessment of university finances, the higher education regulator the Office for Students (OfS) said 40% of universities were predicting deficits.

It suggested some institutions were making optimistic predictions for recruiting international students, who bring in more money in fees than students from the UK.

There has been a sharp fall in recruitment of international students since a restriction on bringing partners and children came into force in January this year.

Some universities have also been affected by a currency devaluation in Nigeria.

The education secretary said she wanted to maintain the graduate visa route, adding that “we want to welcome international students to this country”.

Vivienne Stern, chief executive of Universities UK, which represents more than 140 institutions, told the Today programme on Monday that the “majority of the sector is in trouble”.

She said 70 universities were now engaging in cost-saving exercises, adding that she would be “quite surprised” if nearly all universities were not doing the same by the end of the year.

“We’ve gone way beyond cutting things no-one will notice,” she said, adding that the coming cuts will soon start affecting student-to-staff ratios and the courses that universities can offer.

Across England, universities are restricting their finances with some seeking to cut their staff by as much as 10%, as well as closing or merging courses.

Staff at universities like Huddersfield, and Lincoln and the University of Central Lancashire are facing job losses, while Coventry University has said it wants to make nearly £100m worth of cuts over the next two years.

The University of Kent has confirmed it is cutting six courses to manage financial challenges.

And staff at Goldsmiths in London have been engaged in a marking boycott over plans to cut jobs there too.

While the new government is not offering universities immediate comfort with any taxpayer bailouts, it is clear it will still have to look for long-term solutions to the sector’s financial problems.

Last week, the new government accepted the resignation of Lord Wharton as chair of the OfS.

He had been criticised for lacking impartiality in the role, as he had continued to support the Conservative Party in the House of Lords at the same time.

The education secretary said she would set out detail in Parliament this week about how the OfS should work.

We might expect to see her telling it to focus on its biggest job – of ensuring the financial stability of the sector – rather than being caught up in culture war debates.

The body had previously been given a role in policing free speech on university campuses, with new powers to fine institutions and student unions due to come into force this summer.