BIS failed to heed warnings about HE privatisation

A report released today by the powerful Public Accounts Committee (PAC) criticises the government for disregarding warnings about the dangers of vast sums of public money being given to for-profit higher education colleges.

Following the 2011 higher education reforms, various higher education bodies and stakeholders raised concern about expanding the alternative provider sector without creating a robust regulatory framework to protect public money.

“Since the Department for Business, Innovation and Skills embarked upon the expansion of the private higher education sector, it has ignored repeated warnings about the potential waste and abuse of public money intended to support legitimate students and institutions.” Said Rt Hon Margaret Hodge MP, Chair of PAC.

Between 2010/11 and 2013/14 the number of students claiming support for courses at alternative providers has risen substantially from 7,000 to 53,000. The total of public money paid to these students in the form of tuition fees, maintenance loans and grants, has increased from £50 million to £675 million.

A total of £3.84 million of public money was given to ineligible EU students in the form of student loans and grants according to the report. The report also criticises BIS for not managing to quantify how much money has been lost when funding students who failed to attend, complete courses, were not entered for qualifications, were not proficient in the English language or where courses were poorly taught.

Hodge calls out BIS for pushing expansion of the alternative provider sector with insufficient regulation to protect public money and suggests that the risks of proceeding without legislative powers were sufficient enough for the Accounting Officer to have sought a Ministerial Direction.

“The Department was explicitly warned by the Higher Education Funding Council for England and the Universities and College Union about these risks but chose to disregard them both before and after implementation.” Says Hodge in the report. HEFCE and UCU were not alone however, voices from across the sector and in the media expressed similar concerns, not least on the pages of Wonkhe.

Around 140 institutions offering higher education are termed ‘alternative providers’ ranging from private companies to charitable bodies. While alternative providers do not receive government grants directly, they access public funding through student loans. Since the 2011 higher education reforms and the resulting increase in tuition fee loans (from £3,375 to £6,000 for alternative providers) there has been rapid growth in the sector.

The dropout rate at some of these alternative providers is higher than 20%. Of the publicly funded students attending these colleges, 40% are EU students compared to 6% in the rest of the higher education sector.

The report outlines several recommendations for BIS:

• Accounting Officers should not proceed with implementing schemes without being assured that risks can be appropriately managed. If risks to public money cannot be sufficiently controlled, whether through legislative or other means, they should seek a Ministerial Direction.
• The Department must systematically assess and control the specific risks identified by the National Audit Office and at our evidence session, and provide us with a clear explanation of how it will manage these risks in – future.
• The Department should report back to us urgently with an assessment of how much public money is at risk of being wasted.
• The Department needs to ensure that it has a much firmer grip on the quality of teaching and the standard the students can expect in private sector higher education colleges. It needs to identify poor performers and take appropriate action to protect students and the sector as a whole.
• The Department needs to set specific, measurable objectives for this policy, and collect and analyse the right data in order to evaluate the full impact, taking account of any unanticipated impacts, such as the recruitment of EU students.

UCU general secretary, Sally Hunt, commented on the report, saying: ‘Members of the Public Accounts Committee were as shocked as we were over the government’s refusal to heed our warnings about private providers’ access to taxpayers’ money. The government still has serious questions to answer about why it ignored these repeated warnings and why it allowed such rapid expansion to go unchecked.

‘Politicians of all stripes need to study today’s report about the sector’s failings when it comes to dealing with privatisation.’

Find the report in full here.