Ministers are throwing students to the wolves

It’s 37 pages of “plans already in place”, “partially accept” and “reject” that, read quickly, amount to a department competently batting away an inconvenient select committee.

Read it on a substantial train delay – alongside the promises made to students when the Office for Students (OfS) was created – it is something much worse.

It is the formal expiry of the deal that was supposed to make marketisation safe for the people paying for it.

The committee’s report, published back in May, was hardly a radical document. As I argued at the time, it was a fire extinguisher report – focused almost entirely on the dramatic scenario of a provider going bust rather than the slow hollowing-out of courses that is already underway – but within that frame it asked for things that any student, parent or adviser would regard as the bare minimum.

An early warning protocol, triggered when OfS categorises a provider as at risk, with costed plans for protecting students. Legislation to clarify whether an insolvent university can actually keep teaching. A special administration regime, learning from the one further education has had since 2017, to guarantee teach-out and orderly exit.

Strengthened student protection requirements applied to every provider, not just new ones, with teach-out and transfer plans covering undergraduates, postgraduates and research students.

It asked for these things because the evidence it heard was chilling. OfS admitted, in writing, that its tools have only ever been shown to work “for very small institutions with a limited academic portfolio” where the provider is willing to cooperate – and that under the current framework it would be “unlikely” to secure reasonable outcomes for students if a large multi-faculty university closed.

Its chief executive told the committee that 24 providers sit in the regulator’s highest risk category, on a twelve-month exit horizon, seven of them large – with 50 in the top two risk categories overall.

The committee’s charge sheet against Student Protection Plans (SPPs) ran to eight counts – untested in insolvency, lacking detail, lacking resources, lacking legal standing, wildly variable, silent on postgraduates and international students, blind to staff and communities, and enforced by fines that mean nothing once a provider is broke.

So what did the government say to all that? In substance – no, no, no, and it’s someone else’s job anyway.

The deal that was struck

Let’s have a butcher’s at the paperwork from when the system was built – the promises were written down, and they were specific.

The Department for Education’s September 2016 information note on student protection, published as the Higher Education and Research Bill went through Parliament, said the reforms would give students “greater clarity about what they can expect from their provider, and greater consistency about what would happen if unexpected problems occur, including if their course, campus or institution were to close.”

Students, it said, should be “reassured that they will not be left exposed” if their chosen course or institution got into trouble, through “adequate, appropriate and consistent protection.”

That mattered because of what was being traded away in the same breath. It should not fall to government or the new regulator to bail out failing institutions, the note said – providers were responsible for their own sustainability, and “managed course changes and orderly institutional exits are a feature of a healthy, competitive and well-functioning higher education market.”

The state would take on no institutional risk precisely because robust protection meant students would carry none. That was the deal. That was what made “no bailouts” tolerable to Parliament.

And the 2017 consultation on the regulatory framework added a specific insurance clause for the scenario we are now living through. If there were “wider economic changes that dramatically affected the sustainability of many providers”, OfS would review its regulation with “particular regard” to student protection plans – and would “work with providers to improve their student protection plans so that they remained strong, deliverable, and in service of the student interest.”

Hold those words in your head while we go through what the government has just signed off.

The trigger clause fired – and the response is deletion

Nobody seriously disputes that the 2017 trigger condition has been met. Forty-five per cent of providers forecasting deficits. Nearly one in six with fewer than 30 days’ liquidity at points last year. Twenty-four providers on a twelve-month exit horizon. A minister telling the committee it would be “wholly irresponsible” to name them. This is exactly – precisely – the “wider economic changes” scenario the promise was written for.

The promised response to that scenario was improvement of student protection plans. The actual response, endorsed in this week’s document, is their abolition.

Asked to apply strengthened protection to all providers, the government points at OfS’s current consultation and then approvingly narrates its centrepiece – providers “would no longer be required to publish a self-assessment of risks”, because decoupling a provider’s change policy from its risk assessment will supposedly deliver “more effective” protection.

The department has publicly blessed the scrapping of condition C3 before OfS has even finished reading the consultation responses. The one instrument that forced a provider to commit, in a published document, to a substantive statement of the risks its students face – however badly policed, however routinely fictional – is being retired at the exact moment the risks are highest, and replaced with process text that nobody outside the institution can verify.

A provider in serious trouble will have a stronger incentive than ever to keep that trouble invisible.

Consistency, exposure and a theory of liquidation

The 2016 promise of “greater consistency about what would happen” fares no better. The committee documented that when GSM London failed as a private company in 2019 it could enter administration and teach to the end of the semester, while when ALRA failed in 2022 it went into compulsory liquidation and students were locked out of the building the same morning – and that Royal Charter universities and higher education corporations would, on the weight of legal opinion it heard, liquidate immediately with no teach-out at all.

The government’s answer is that contingency requirements “will vary depending on the type of provider” and that mandating the same requirements for everyone is “unlikely to deliver value for money.” Inconsistency-by-legal-form – the very thing students were promised protection from – is re-adopted as policy, with a value for money justification attached.

As for not being “left exposed” – the special administration regime is rejected as “not sufficiently demonstrated.” The early warning protocol is deflected to OfS as a matter for the independent regulator. The request to legislate for clarity gets no verdict at all, just a restatement of the minister’s theory that a liquidator can carry on a university’s business during winding up, citing Carillion and Thomas Cook – a theory the committee had already dismantled, pointing out that Thomas Cook’s continuation meant flying holidaymakers home over a fortnight while a degree takes three years, that Carillion’s continuations were state contracts run by court-appointed special managers, and that students’ contracts are with their provider, not the government.

The response does not engage with any of that. It simply says the same thing again, more slowly, and adds that the bar for intervention would be “very high.”

And then there’s the detail that gives the game away entirely. Reassuring the committee about staff, the response notes that employees of an insolvent provider have preferential creditor status, and can claim through the Redundancy Payments Service – a pre-funded statutory scheme that pays out “even in cases where there are insufficient funds in a liquidation.”

The government is describing, with evident satisfaction, exactly the funded-guarantee architecture – the thing that exists for package holidays through ATOL, for pensions through the Pension Protection Fund, for bank deposits, for solicitors’ clients, for the deposit on a student’s bedroom – that has never been built for the students themselves, who remain unsecured creditors at the back of a queue for a vanishing pot.

Staff get a safety net written into statute. Students get a “case-by-case” consideration of compensation from an administrator, and a suggestion on an OfS webpage that they might try Section 75 if they paid by credit card. In this system, students are not protected by the insurance scheme – they are the insurance scheme.

What got accepted tells its own story

It would be wrong to say the response gives nothing to anyone. The Teachers’ Pension Scheme employer contribution falls from 28.68 per cent to 17.5 per cent from April 2027 – serious money. Fee caps will be indexed to inflation, with legislation promised to make uplifts automatic.

But notice who those things are for. The accepted items stabilise providers and help future students. The rejected items are, without exception, the ones that would protect the students enrolled right now – the ones whose fees are keeping the show on the road, who cannot be un-enrolled, and who were promised in 2016 that they would not be the ones carrying the risk.

Meanwhile the words “course closure”, “refund”, “compensation” and “consumer” are essentially absent from the protection sections of the response – even though the 2016 note explicitly promised protection where “a course cannot be fully delivered”, and even though the hollowing-out of courses is now, on OfS’s own polling, the sector’s survival strategy.

Fifty-two per cent of students have noticed cost-cutting, and 83 per cent of those say it changed the experience they were promised. Implosion was named in the original promise. It has simply been dropped from the conversation.

And the two most recent collapses – Dartington Hall Trust and Spurgeon’s College – appear in the response’s introduction as evidence the system works, with no published evaluation of what actually happened to a single affected student. It took the OIA to tell us what happened to GSM’s students. Nobody has told us yet what happened to ALRA’s, or ABA’s, or these.

They will blame the government

The thing about throwing students to the wolves while insisting the forest is perfectly safe is that when it goes wrong – and with 24 providers on a twelve-month horizon, the question is when – nobody affected is going to parse the constitutional distinction between an independent regulator, a sponsor department and an autonomous provider.

Students and their families will remember one thing – that the state took the numbers cap off, told them the register meant their university was sound, told them a protection plan had their back, and called it “wholly irresponsible” to warn them.

They will remember that when Parliament asked for an early warning system, a legal fix and an orderly exit regime, the government said no to all three in a single document, in the same month it blessed the removal of the only published risk assessment students had.

Of the promises made when OfS was created, the ones that protected the sector’s reputation and the Treasury’s balance sheet have been kept meticulously. The ones that protected students have been dropped, one by one, and this week’s response is the first document in which that is not drift but doctrine.

The stable door isn’t just open – OfS is consulting on removing the door, and has now published its formal position that doors were never really the answer.

When the first big one goes down, ministers will discover what every government that presides over a consumer protection failure discovers – that the paper trail is the prosecution’s exhibit A, and that the public doesn’t blame the wolves.

It blames whoever opened the gate, pointed at the woods, and promised everyone they’d be fine.