Damian Hinds: English university finance worries ‘hyperbolic’

England’s education secretary has claimed that warnings about the state of university finances are “hyperbolic” and “scaremongering”, in remarks that will be seen as preparing the ground for the government’s post-18 education review to recommend shifts or cuts in funding.

The comments – which brought a critical response from Universities UK – were the latest in the series of comments on higher education from Damian Hinds as the report from the independent panel of the post-18 education review appears to near publication.

Theresa May, who personally launched the post-18 review, has announced that she will resign as Conservative leader on 7 June. The review panel’s report is expected to be published before that date.

The review panel is thought likely to recommend a cut in tuition fees to £7,500, with replacement direct public funding so that average funding per student remains at present levels.

However, crucially, it also thought that the government may shift funding away from courses that are lower-cost or are deemed to have lower value in the jobs market.

Sector finances have been a subject of concern in recent months, with press speculation that some universities could be on the brink of collapse. According to finance figures published by the Higher Education Statistics Agency, the total number of providers in deficit rose from 40 in 2016-17 to 47 in 2017-18, Times Higher Education has reported. In 2015-16, 24 had been in deficit.

Many in the sector blame government policy on a number of fronts for the problems.

However, Mr Hinds said in comments released by the Department for Education on 25 May that “with the vast majority of universities in a good financial position, hyperbolic warnings from some on universities’ finances are distorting the overall picture”.

He added: “Following the financial crash, most sectors have had to tighten their belts whereas universities have enjoyed rising student numbers and increased tuition fee income. Since our reforms in 2012, resource per student is around an historic high.”

Mr Hinds also said: “I do understand universities are facing some challenges, but reports of financial hardship across the entire sector [are] scaremongering. Most universities have healthy balance sheets. We’ve been seeing growth in international student admissions, with much further potential. And the number of 18-year-olds in England is soon to enter a period of sustained growth.

“I will do all I can to ensure the sector is financially stable now and in the future, but of course institutions need to act responsibly and develop sustainably.”

Alistair Jarvis, UUK chief executive, said: “It is good to see the education secretary highlighting the importance of a financially sustainable university system for students, staff and local economies. Under this government, an overly restrictive visa regime has damaged international student recruitment, teaching funding has not kept pace with inflation, the Treasury has hiked up pension contributions for many universities, and the sector is braced for further funding challenges linked to Brexit.

“If Theresa May’s review of post-18 education recommends a cut in tuition fees, the funding gap must be made up in full by a government teaching grant. A funding cut for universities would be a political choice that harms students, the economy and communities that benefit from universities.”

john.morgan@timeshighereducation.com