DfE hires finance expert to advise on university collapses

The Department for Education is hiring a policy expert whose job will include developing its position on “potential intervention” if an English higher education institution risks going bust, acknowledging in the job advert the “considerable risks” facing the sector.

That the DfE is recruiting for a “policy expert on higher education financial sustainability” – whose job will include leading for the department “on how insolvency arrangements work for HE providers” – may be seen as signalling a growing recognition of the possibility that institutions face the risk of collapse.

The new post, with a salary of between £48,000 and £60,000, also appears to be an acknowledgement by the DfE that the former Higher Education Funding Council for England’s role monitoring sector and institutional financial health is no longer being performed by its successor organisation, the Office for Students – and that this gap must be addressed.

The DfE job advert says that the policy expert role will include “understanding the OfS approach to its functions”, as well as “considering whether the department’s concerns about risks might vary from the regulator’s”.

The role will also include “developing the departmental policy position in relation to potential intervention in face of the risk of provider financial failure (where OfS as regulator is the primary actor)”.

The OfS was created by former universities minister Jo Johnson via the 2017 Higher Education and Research Act.

Since then, however, a significant number of institutions have seen their financial positions worsen – with the impact of the government’s decision to abolish student number controls often cited as a key factor. This means that the regulatory system envisaged by Mr Johnson, which saw a regime allowing for “market exit” as necessary to the functioning of a proper market, is now operating in a very different context.

As the DfE acknowledges in the job advert, “there is a considerable range of income and cost pressures and risks facing the HE provider sector currently and over the coming years”.

That was underlined last week by Higher Education Statistics Agency data revealing that 32 out of 134 English higher education institutions posted a deficit in 2017-18, up from 24 the year before and just 10 in 2015-16.

Meanwhile, the University of Cambridge has warned staff that it is on course to post a £30 million deficit this year, citing the freeze in undergraduate tuition fees and a real-terms decline in quality-related research funding.

In the DfE’s job advert, the department says that it is “seeking to develop [its] own comprehensive understanding of HE provider financial sustainability issues”.

The advert continues: “This insight in to financial sustainability will be very significant in a policy context that currently involves a major government review of post-18 education and funding and is likely soon to involve a full government spending review.”

Andy Westwood, professor of government practice at the University of Manchester, said that this expressed “an expectation that these [the post-18 review and the spending review] are likely to make things worse for those institutions already suffering in the current regime, but also perhaps a tacit admission that a different regime is on its way”.

The OfS’ “uber regulatory-market model always looked slightly out of place the minute that Theresa May started talking about reforming post-18 [education] when she became prime minister”, he added.

After the post-18 review, the future policy landscape is likely to involve more direct public funding and will be “much more reminiscent of Hefce than of anything envisaged for OfS in HERA”, Professor Westwood said.

A DfE spokeswoman said: “The role being advertised is a routine matter of ensuring suitable capacity in the policy team which deals with these topics.”

john.morgan@timeshighereducation.com