On Sunday Australian ABC broadcast a radio programme about alternative and for-profit providers in US and English higher education.
David Willetts issued a written parliamentary statement this morning covering the results of the BIS / SLC investigation into EU students claiming maintenance grants and loans at alternative providers.
The results of this exercise are now available. Of the 11,191 students who we
asked for additional residency evidence, 1,333 (12 per cent) received a
payment but were either unable to or chose not to demonstrate that they had
been in the UK for the three years prior to the start of their study.Around £65 million was due to have been paid out to these individuals. As a
result of our prompt action only £8 million was actually paid. We have taken
immediate action to recover these sums and already have recovered around
£2.5m. Work continues to recover the rest including using debt collection
agencies, court action, and if we find evidence of fraud, we may prosecute
those involved.
After speaking to BIS, I can confirm that in fact 5 342 of those 11 191 were found to have made ineligible claims, but only 1333 had received funding by the time the investigation was launched and payments suspended. 48% of claims were therefore rejected for 2013/14 indicating a much wider problem than suggested by the official statement.
£65million would have gone to those 5 342 students over the course of their study. £8m had already been paid out to 1 333 students of which £2.5m has since been recovered. BIS has sought the help of EU governments to recover the additional £5.5m outstanding.
Willetts used the occasion to launch a ‘Fraud & Debt’ review of the student finance system. This is in addition to the National Audit Office review into the funding of students at alternative providers due to commence later in the year. He also threatened legal action against any provider found to be complicit in fraudulent claims.
The Guardian has launched a secure platform for whistleblowers to securely submit confidential documents to the newspaper’s reporters.
rather ugly sentence… but the SecureDrop is here.
There is also a googleform for information on your experiences of HE at private colleges.
The BSA Education Study Group is hosting a workshop entitled, ‘Making a market in higher education: Changing landscape, continuing inequalities?
Date: Thursday 12 June
Time: 10am-4.45pm
Venue: Sheffield Institute of Education, Sheffield Hallam University
Recent government polices to produce a market in higher education have caused profound concern and considerable turbulence for universities. These changes include replacing public funding of universities with student fees; the ‘high grades’ policy which frees institutions to compete for students with AAB and ABB grades at A Level; and the ’value for money’ policy in which 85,000 places were allocated to ‘low cost’ providers. Add to this the recent budget statement about the unlimited expansion of places and the entry of new providers and we are now looking at a fully marketised higher education system. However, this market reorientation of higher education towards price, competition and profit has been strongly contested by alternative conceptions of the idea of the university, such as…
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I have covered the exponential expansion of the numbers of funded full-time students at private colleges on this blog since its inception. Recent figures suggest that £900m of funding from the Student Loans Company will flow to more than 40 000 students this year.
Several colleges that hardly figure in the sector’s consciousness now have over 1000 full-time funded students.
How was such growth possible? Our latest work at the Guardian reveals how one recruitment agency used by several colleges operated outside job centres, tube stations and shopping malls.
This report and film follows on from last week’s work on London School of Science and Technology.
In November, the government intervened to suspend the recruitment of funded students at 23 of the fastest growing colleges, including those featured so far. Things may have improved, but back in the Autumn some colleges were enrolling hundreds of new students monthly and there’s no reason to suppose that without intervention growth wouldn’t have continued apace with all the pressures that entails.
Back in December and January, I discussed here some problems with the figures presented in the 2013 Autumn Statement relating to the sale of student loans and how the gross proceeds would fund the expansion of undergraduate places. The problem was basically that the Treasury used an estimate of gross proceeds, rather than net, and thereby overstated the revenue generated by a sale of loans to the tune of roughly £1.7billion. If you sell loans to the private sector, then the private sector receives the repayments instead of you and you have to reduce your estimated income accordingly.
Appearing before the BIS committee in January, David Willetts denied that any ‘schoolboy howlers’ had been committed and promised to set out the proper figures in a written statement.
That statement has now been published on the BIS committee website.
“The headline remains that the announcement on removing the cap on student numbers is fully funded.”
The two tables there layout what is to be funded by HMT – grants for teaching and maintenance which reach £720m by 2018/19 – and which ‘costs are offset by the planned loan book sale’: those based on new loan outlay to fund an expansion of 60 000 places. I have reproduced Table 2 below.
| (£m) | Costs | |||||
| Year | 13-14 | 14-15 | 15-16 | 16-17 | 17-18 | Total |
| Outlay of loans | 0 | -180 | -600 | -1,170 | -1,670 | -3,620 |
| Gross proceeds from ICR Sale | 0 | 0 | +2,300 | +2,300 | +2,300 | +6,900 |
| Revisions to student loan repayments compared to March 2013 forecast | -300 | -200 | -200 | -400 | -700 | -1,800 |
| Net impact | -300 | -380 | +1,500 | +730 | -70 | +1,480 |
At this point, it is worth recalling that the original Autumn Statement claims were that the loan sale would fund a suite of policies to 2018/19 not just additional loan outlay to 2017/18.
But, concentrating only on loans, the new figures are still somewhat misleading.
In 2018/19, loan outlay is projected to climb to £1.93bn and the value of loan repayments at that point going to the private sector is estimated at £1bn – significantly exceeding the gross proceeds of £2.3bn. The following year, 2019/20 will be similar: another net impact of -£633m, and we are approaching ‘breakeven’. But 2019/20 is also the year that the sales programme and its proceeds will come to an end, while additional outlay and lower repayments persist: 2020/21 sees £2.93bn of commitments that need to be funded from somewhere else.
So let’s extend the new Table provided by Willetts to 2020-21.
| Autumn Statement HE announcements: costs and proceeds | |||||||||
| £million | 2013-14 | 2014-15 | 2015-16 | 2016-17 | 2017-18 | 2018-19 | 2019-20 | 2020-21 | |
| Abolish the cap on student numbers: additional loan outlay | 0 | -180 | -600 | -1170 | -1670 | -1930 | -1930 | -1930 | |
| Gross proceeds from the sale of the student loan book | 0 | 0 | 2,300 | 2,300 | 2,300 | 2,300 | 2,300 | 0 | |
| Revisions to student loan repayments | -300 | -200 | -200 | -400 | -700 | -1,000 | -1,000 | -1,000 | |
| Cumulative Net impact of policies | -300 | -680 | 820 | 1550 | 1480 | 850 | 220 | -2710 | |
You could argue that Willetts has overstated the downwards revisions to loan repayments, since much of the changes for the years 2013-14 to 2016-17 are attributable to factors other than repayments being diverted to private hands. But it is worth recognising that the revisions quoted reflect only the changes made between March 2013 and December 2013; the latest figures from the OBR – those that accompanied the March 2014 budget – announce further downwards revisions of £2.5billion perhaps nullifying this whole exercise.
The Major Projects Authority rates the sale programme as ‘amber/red’ in terms of delivery confidence and the value of loans to be sold has been written down markedly in the last few months.
As a result of our investigations into private colleges in London offering funded HE courses, Margaret Hodge, chair of the Public Accounts Committee, has asked the National Audit Office to investigate this use of public money.
The 2013/14 annual report from the Major Projects Authority continues to rate the student loan sales programme as ‘Amber/Red’ (on the traffic light scheme ‘green’ indicates confidence in delivery, ‘red’ is the lowest category). Out of 200 major projects, roughly 40 are rated Amber/Red or Red.
The aim is still to commence the programme of sales in 2015/16 and to raise c. £11billion: the project has moved from feasibility to delivery stage with a budget of £28m to 2018.
Actions being taken to address the Amber/Red rating include the Project Steering Group assessing and confirming the delivery capability of key partners. Following agreement that the Go/No-Go criteria (required to continue with phase two of the project) has been met the Project will undertake work to further define its objectives, establish more robust plans, governance and project management disciplines, and appoint experienced external advisers to assist on the project.
In December, the Chancellor George Osborne announced plans to expand undergraduate numbers by lifting recruitment restrictions on universities. Concerns about the costings presented were first raised on this blog. We have since had further indications that a failure to go forward with the planned sale of student loans would affect the ‘uncapping’ of university undergraduate recruitment.
In related news, the £140m overhaul of the Student Loans Company is rated ‘Amber’:
The Amber status reflected the requirement to have more detailed plans in place from Transformation Partners and programme work-streams.
Detailed planning sessions are planned to l enable the development of a baseline delivery roadmap which will then be used to refresh the delivery plan , budget and team structures. This roadmap will continue to be refined.
Resource capacity has been highlighted as a challenge – action plans are being put in place to manage this challenge. A resourcing governance process has been agreed, defined and implemented.
And the ‘HE reform programme’ is rated ‘Amber/Green’. It aimed to realise ‘£3billion of savings annually by 2014/15’.
The Amber/Green status reflects that student numbers appear to be recovering this year after a fall in the first year of the new regime. New regulatory requirements for alternative providers have been introduced to strengthen protections in the absence of primary legislation.
The claim to savings is not assessed explicitly, but
The assessment of the long-term resource cost of loans has increased since the original cost estimates were made, primarily because the £21,000 repayment threshold for 2016 will now be more generous than originally planned due to lower than typical earnings growth. … [The £3bnsaving to government] has not yet been reviewed but is likely to fall as a result of the increase in the estimated resource cost of the new student loan outlay. We will review this estimate once we are in a position to review the expected cash outlay on loans using final 2012/13 academic year data.
The results of a four-month investigation with the Guardian start appearing tonight.
First up we look at London School of Science and Technology, apparently known in Wembley as ‘the ATM’.
Here’s a long quote from David Willetts, who was speaking back in 2012. It will be worth recalling this statement of intentions over the next few days.
“We are serious about supply-side reform. Those who are churlish about this forget that many of our universities started as alternative providers challenging Oxbridge dominance by offering something different often with support from local councils and local businesses. Those alternative providers were dismissed at the time – the new University College London was denounced when it was set up as a “mere lecture-bazaar” and now it is one do the world’s great universities. Now we are once more opening up our system to a wider range of providers that can take on students with public loan support.
“There are many ways an alternative provider can enter our system. We welcome new start ups, and international institutions with experience abroad. Or an existing university might set up a commercial subsidiary aimed for example at the overseas market. The current transformation of the College of Law is another example of what can be done provided of course charitable funds are protected. I envisage a wider range of providers with a particular focus on teaching, or concentrating on the efficient delivery of licences to practise, or focussing on distance learning.
…
“We have excellent universities. We have a regulatory system with the QAA which gives confidence in our academic standards.
Critical Education 