This article is more than 2 years old

What happened at ALRA?

For all the talk of student protection planning and regulatory transparency, the closure of a financially struggling provider seemed to surprise OfS. Jim Dickinson asks why
This article is more than 2 years old

Jim is an Associate Editor at Wonkhe

According to contributors on social media, yesterday morning staff at ALRA (The Academy of Live and Recorded Arts) awoke to an email that had been sent at 2am informing of them of a Zoom meeting at 9am that announced the provider’s closure and their redundancy.

It later emerged that its 284 students had been locked out of the two buildings in Wandsworth Common and Wigan – preventing them from accessing their belongings – and from their email accounts.

A charity founded in 1979, ALRA has not had a brilliant last few years – in 2020 a group of former students published an open letter accusing it of widespread and systemic racism (we looked at that briefly on the site) and last year it opened an internal investigation and issued a public call for information following allegations that a former teacher had sexually harassed students.

Student support

The good news is that all students are to be offered a place to continue or complete their programme at Rose Bruford College, which said that students at ALRA North will be taught at the same premises in Wigan, and students at ALRA South will be taught at an as yet unconfirmed London location.

That means that students will be able to obtain their qualification – although it’s the final shows that will concern the final years the most who’ve been paying circa £13k a year to get into acting. ALRA was an approved provider with an access and participation statement and had TEF silver, so had no fee limit. Students had access to loans only up the basic fee limit of £6,165 – with the rest covered personally.

The OfS statement said that ALRA had reported “emerging concerns” about its financial situation to the regulator in November 2021, when it says it became clear that “poor legacy financial management” had led to the worsening of ALRA’s financial position.

That, it says, led it to work with ALRA and other organisations to ensure that the interests of students were protected as far as possible – with the Rose Bruford offer the “best way to ensure that the majority of the cohort can stay together, have a positive experience of higher education, and achieve their qualifications”.

Is this how these things should work?

As such this all feels like a bit of a test for the regulator’s student protection regime, and on the face of it notwithstanding some temporary disruption, this is probably the closest to “orderly” that a “market exit” might look like. But it does raise several questions.

ALRA’s last published accounts for 2019-20 looked fairly positive with good signals on recruitment, but its statement yesterday said that following losses in 2020-21 a restructure last spring had been carried out to try to stabilise its finances.

That’s where things get interesting. You might have thought that a restructure to address major losses of that sort would trigger a reportable event into OfS – but it won’t tell us whether it had one. That might then trigger a rewrite of the student protection plan, but the version on its website dated September 2021 said that the risk that it would be unable to operate was “very low” and the risk that it would be unable to deliver any of its programmes in the next 3 to 5 years was therefore “correspondingly low”. OfS wouldn’t tell us about that either.

You might also recall that in 2020, OfS consulted on a new thing called “student protection directions” that would allow it to “intervene more quickly and in a targeted way” when it considers there to be a material risk that a registered provider may cease the provision of higher education. OfS won’t tell us if one of those was issued.

There are, therefore quite serious questions about what OfS knew and when – and why it didn’t tell students earlier. Did it know, for example, about the restructure last spring – and if not, why not? Has ALRA been under enhanced monitoring? Again – OfS won’t tell us.

A question of framing

OfS’ FAQ says that whether to tell students about ALRA’s financial difficulties was a “difficult decision” which it says that it had not been able to do earlier for two reasons – that it had only been confirmed in recent days that ALRA will definitely have to close on 4 April 2022, and that it wanted students to have as much certainty as possible about their next steps at the point they were told about the closure.

The problem is that while OfS frames those factors as causing it to be “unable” to tell students, in reality it had a choice – and if it was assuming that the secrecy might save ALRA, it was mistaken. Given students will be asking why they only found it yesterday, it’s important that we know what OfS knew and when – because while it’s possible that it’s done everything in its power to protect the interests of these students, it’s also possible that its monitoring regime has gone badly wrong in the run up. Saying to us yesterday that “our focus right now is on ensuring that students’ interests are protected as best as possible and we won’t be adding to our statement” really won’t do.

What we can say with some confidence is that the current published and apparently approved Student Protection Plan has predictably turned out not to be worth the paper it wasn’t printed on. Its risk assessment doesn’t feel very accurate – students who enrolled this year will want to know how that “low risk” judgement could be compatible with a restructure last spring and a collapse now – and its commitment to “teach out” in the event of provider closure now exposed as hopelessly inadequate.

No-one’s mentioning refunds if students now want to leave (other than OIAHE highlighting the issues students would face in securing funds from a former provider that ran out of money), and even if they stay plenty will be asking about the difference between Rose Bruford’s £9,250 fees and ALRA’s £13k sticker price. International students might also note that the uncertainty embodied in the statements reminds us that approved SPPs still don’t mean that the home office is any less hostile, even with the kind of run up to yesterday’s events that OfS and others have had behind the scenes.

ALRA also of course remains on the OfS register with no publicly imposed conditions, “assuring” to students who have paid term three’s fees in the last few weeks or those who’ve been paying to audition that the regulator thought its finances were both viable and sustainable.

There are also, of course, questions for the validating partners (mainly St Mary’s Twickenham with a masters course validated by Arts University Bournemouth) in terms of what they knew when, and what they ought to have known when. And the Bruford deal deserves some scrutiny – who will do all the extra teaching and support? Has any money changed hands in exchange for its apparent act of benevolence? Again, we don’t know.

This time around, HEFCE-style behind the scenes machinations appear to have rescued an entire provider’s student body. But transparency has taken a back seat – and the secrecy surrounding that process will leave a nasty taste in students’ mouths. More importantly, next time this happens, OfS might not be as lucky as it has been to have Rose Bruford’s kind offer land in its lap.

7 responses to “What happened at ALRA?

  1. ALRA from a revenue and student point of view was tiny – so if the OFS was unable to keep on top of that then they have no chance of keeping on top of a large more complex organisation.

  2. ALRA was a charity wasn’t it? Don’t questions have to be asked of the trustees too?

    A bad business all round

    1. “Don’t questions have to be asked of the trustees too?”

      They do and this is a complex area of law but by and large they aren’t required to answer any of these questions…

      1. I’ve been a trustee myself. You don’t have to tell me! But if this is a bad way for a profit-making business to behave it is worse from a charity IMV. And the financial weakness of the charity seems to have been long-standing, so there was no excuse not to be prepared.

  3. While running an institution of less than 300 students in an expensive discipline across 2 geographically distant campuses will always be a challenge, ALRA has operated for decades and HESA data shows 270 students in 20/21 vs 195 in 14/15 so looked to be an improving situation. It’s not made clear, so far, as to what the particular financial imperative was to force closure right now.

    1. I wonder if they had a higher number than normal of defaulters ? (given students had to direct pay significant amounts of their tuition).

  4. Looking at the 2019/20 accounts, the situation already appeared perilous. They say their free reserves target is 3-6 months of expenditure (worryingly unspecific already). They then state their unrestricted funds are £77k (not the same thing as free reserves).

    Free reserves would typically start with unrestricted funds then take off your fixed asset balance, this would leave them with negative free reserves of £303k.

    Their expenditure was £3.1m in 2019/20, so 3 months of this would be £775k (admittedly, they might not need to cover ALL expenditure in their reserves calculation).

    The difference between £775k and £77k (never mind negative £303k) is huge and a going concern red flag which is seemingly ignored by trustees and auditors.

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