Out-Law News 2 min. read

PAC: UK government 'ignored repeated warnings' about alternative higher education providers


The UK government pressed ahead with the rapid expansion of private sector higher education despite "repeated warnings" about the potential for abuse of the publicly-funded student loans system, a committee of MPs has said.

The Department for Business, Innovation and Skills (BIS) should have learned from previous examples of rapid expansion leading to serious problems and put regulations in place to protect public money before allowing changes to 'alternative' higher education provision to go ahead, according to the Public Accounts Committee (PAC). In a new report, the PAC said that £3.84 million in loans and grants was given to ineligible EU students as a result of failings by BIS; with much more likely to have been lost when students failed to attend or complete courses.

"The department took over a year to tighten up some of its procedures to control public expenditure more effectively," said committee chair Margaret Hodge. "It has also failed to protect the interests of legitimate students, the taxpayer and the reputation of those alternative providers who may be performing well."

"[BIS] 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. It should also report back to us urgently with an assessment of how much money is at risk of being wasted," she said.

Earlier this month, BIS announced that it would introduce tougher quality standards for private providers which more closely reflected the requirements placed on universities receiving direct state funding. Providers will have to be 're-designated' by the government every year, and will undergo a strengthened quality assurance process as part of their application. Providers will also be required to register their students with the relevant qualifications body before a claim for student support can be made.

The number of 'alternative' providers of higher education, ranging from private companies to charitable institutions, has risen rapidly to around 140 institutions since the introduction of higher education reforms in 2011. These providers do not receive government grants directly, but do access public funding through student loans which are used to pay their fees. Between 2010/11 and 2013/14, the number of students claiming support for courses at these institutions rose from 7,000 to 53,000, while the Student Loans Company (SLC) has paid out £1.27 billion in financial support for these students over this four-year period.

In its report, the PAC said that BIS had allowed "rapid expansion" of the sector without sufficient oversight, and despite warnings from organisations such as the Higher Education Funding Council for England (HEFCE) and the University and College Union. In addition, it was slow to react when evidence of problems began to emerge in some institutions. According to the PAC, much of the expansion in student numbers over the review period was concentrated in five colleges, drop-out rates in some places were particularly high and 20% of students receiving funding were not registered for a qualification.

Whistleblowers quoted by the PAC in its report claimed that students' English language skills were not being tested, that some alternative providers were recruiting students on the streets and that students claiming funding were not attending colleges. The PAC said that although BIS was able to report that EU students that should not have been eligible for student loans received £3.84m from the SLC, it did not know the full extent of the impact of its lack of oversight on public expenditure.

"The department's record in collecting monies from EU students is already poor," the PAC said in its report. "Furthermore, it did not know how much money may have been wasted where larger than expected numbers of students have failed to complete their qualifications, or how much funding has gone towards paying for additional EU students rather than for the intended purpose of widening access to higher education in England."

BIS should provide a proper estimate of how much public money was at risk of being wasted "urgently", the PAC said. It also needed to implement specific, measurable objectives against which its stated policy of widening access to higher education in England could be measured, it said.

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