Written evidence by The Cathedrals Group of Universities (HEF0037)

The Education Select Committee

Higher Education and funding - threat of insolvency and international students

Pam Tatlow, Policy Advisor, Cathedrals Group of Universities                

1. This evidence is submitted by the Cathedrals Group of Universities in response to the Committee’s mini-inquiry Higher Education Funding - the threat of insolvency and international students.

The Cathedrals Group

2. The Cathedrals Group is composed of fourteen universities in England. Located throughout the country from Cumbria to Plymouth, our universities are variously linked with the Churches, Church Foundations and others which support a commitment to widening opportunities and qualifications that benefit and contribute to local communities and public services including teacher education, health, and social work. Cathedral Group Universities are diverse and distinguished universities with turnovers which range from £20m to £120m per annum. They offer a wide range of other courses including new medical schools, degree apprenticeships and arts and humanities programmes; they attract students from less advantaged communities, work with local employers as well as multi-national companies and make a significant civic contribution to their local communities.

3. We should be pleased to appear before the Committee to give evidence about the implications of the government’s policies for Cathedrals Group Universities which play a crucial role in terms of place and underpinning the government’s industrial strategy and the public sector workforce on which the latter rely.

Summary

• The Home Office’s White Paper will add to the considerable financial pressures already facing the Higher Education sector. It risks increasing the insecurity of staff, further undermining student choice and is likely to limit the ambition of institutions to expand international market share and the latter’s contribution to UK GDP.
• The Home Office and UKVI must commit to the provision of real-time data rather than retrospective proxy indicators if BCA metrics are to be increased.
• International commercially produced rankings should not be used by the Home Office or the Treasury to judge the value and contribution of UK universities to the UK and its regions.
• We are opposed to a 6% levy on international student fees; this would undermine recruitment and further undermine financial sustainability and is also unfair on international students who make a positive contribution to university life and already pay fees for visas, NHS charges and to study in the UK or on TNE programmes.
• The insolvency of an established university would impact adversely on staff and students and significantly undermine the social and economic prosperity of local communities, regions, learning opportunities and widening participation and the government’s industrial and skills strategies as well as on the domestic and international reputation of UK HE.

Impact of Government Policy on International Students

• How will current Government policies affect the financial stability of higher education institutions?

4. There are several aspects of the Home Office’s White Paper Restoring control over the immigration system which will undoubtedly affect adversely the financial stability of higher education institutions. The proposed changes to the Basic Compliance Assessment (BCA) metrics which are used to monitor each sponsor’s level of compliance, are one concern. The BCA is an annual assessment and is composed of three metrics with required ‘pass’ thresholds:

• a visa refusal rate of less than 10%
• a course enrolment rate of at least 90% and
• a course completion rate of at least 85%.

Sponsors that fail at least one BCA metric can have their sponsorship licence revoked and temporarily be removed from the Register of Student Sponsors for up to two years. The Home Office has stated that each metric will be increased by 5%.

5. The Cathedrals Group is committed to quality and compliance. Universities therefore need time to prepare for any increase in BCA metrics. If the Home Office wants to increase the latter, they and UK Visa and Immigration (UKVI) should also commit to the provision of real-time data rather than proxy indicators about which universities are advised retrospectively. Visa refusal rates and enrolments from countries can change over a short period of time due to circumstances beyond a university’s control. A single failure can have a significant impact on smaller to medium-sized institutions with fewer international students.

International Rankings

6. The Cathedrals Group is strongly opposed to the Home Office’s reference to ‘international rankings’ as a means of valuing the contribution (or otherwise) of UK universities to the international, national and regional agendas. The use of such rankings will have strongly negative effects and unwarranted financial consequences. These rankings are promoted by for-profit commercial interests, are highly influenced by historic patterns of research funding and take little account of the contribution that universities such as those in the Cathedrals Group make, to their regions, local communities and to the public and not-for-profit sectors, especially those related to health and education, and to STEM.

7. For the Home Office to write off these and other universities in terms of their contribution to the UK and to the international market on the basis that they are not highly ranked in university league tables reveals a profound misunderstanding of the value to the UK and its regions of universities such as those in the Cathedrals Group. 

8. Cathedrals Group Universities are involved to varying degrees in Trans-National Education (TNE) programmes and the recruitment of international students. These students make a positive contribution to the vibrancy of our institutions and add to the experience of home students, including for those who have had fewer opportunities to travel or experience different cultures.

A 6% levy

9. The proposal that a 6% levy should be applied to international tuition fees will impact adversely on so-called ‘less prestigious’ universities. A small number of universities which trade on historic reputation, are already able to charge higher fees to international students; these universities may be able to transfer the costs of any levy to their students without damaging their market.

10. This is not the case for most universities. While Cathedrals Group Universities are not as dependent as others on international students, a levy would impact adversely on their financial position. Given the decline in both direct government investment in higher education and in the value of the unit of resource for home students, such a levy would add to current financial pressures. These are already resulting in cost-cutting measures including job losses, restructuring and a review of programmes offered across the sector.

11. Universities incur costs not only in respect of the recruitment of international students but also in ensuring compliance with UKVI regimes. The logistics of the implementation of a levy remain unclear but institutional administrative costs are likely to increase to the further detriment of the ‘bottom line’.

12. As a point of fairness, we also see no merit or justification in levying an additional charge on international students and the universities that recruit them to contribute to the domestic HE and Skills system. International students already pay heavily for visas, fees, living costs, travel and NHS charges. The international higher education market in the UK is a net contributor to GDP estimated by the Home Office to be in the order of £20.65bn taking account of students’ living expenditure and tuition fees. The families of many international students make great sacrifices to enable family members to access UK higher education. ‘Robbing Peter in order to pay Paul’ is hardly fair given the contribution that the international students already make to UK GDP.

• What implications will these policies have on future tuition fee increases?

13. Tuition fees for home students may increase by inflation but this will not arrest the decline in the unit of resource. It is estimated that if the £9250 fee had kept pace with inflation, fees should now be circa £13,000pa for a full-time student. However, mature students and those from less resourced backgrounds remain debt averse and the Cathedrals Group has consistently argued for more direct investment in higher education including more support for students’ living costs.

• How will the interaction between international student enrolment and tuition fees shape the sector’s financial outlook?

14. The Office for Students (OfS) reported in May 2025 that 43% of institutions anticipated reporting a financial deficit in 24/25 but also that they were implementing a series of cost reduction measures. If international student enrolment is further compromised because of Home Office and Treasury policies, the sector’s financial outlook can only deteriorate further.

Higher Education Insolvency Protections

• What is the current state of insolvency processes for higher education institutions?

15. University structures are varied and include universities founded by Royal Charter, as Higher Education Corporations (HEC) and as companies limited by guarantee. Established universities are also charities and the Directors are charity trustees. Given the complexities of these structures, insolvency legislation would be difficult to apply. While liquidation might be an option in respect of a Royal Charter or a HEC, this would prevent ‘teach out’ and, in any case, would be an extremely undesirable outcome which would damage the government’s place agenda, add to the problems which are now emerging of  ‘cold spots’ in terms of the education of the public sector workforce, reduce opportunities for students who are unable to study away from their home locality and undermine the skills agenda of Ministers and Skills England.

16. The failure of an established not-for-profit university would damage the domestic and international reputation of the UK’s Higher Education sector. This was recognised by the Scottish Government and the Scottish Funding Council when the latter provided the University of Dundee with £22m after it reported a financial crisis and deficit of £30m in November 2024. In England, the Higher Education Funding Council (Hefce) was abolished by the 2017 Higher Education Research Act (HERA) which established the OfS as a market regulator. Unlike Hefce, the OfS has no powers under the legislation to provide funding if a provider gets into financial difficulties.

17. If an established provider reported severe financial problems, the only alternative to avoid closure with all the highly undesirable consequences for staff, students and place that would result, would be for Ministers to intervene. This could be achieved by Ministers identifying a way to make funding available, perhaps on an interest-free loan basis, ensuring that the university continued, that student interests were not compromised, and that the university was taken forward with a recovery plan by an interim management team and Board.

18. In contrast, we would not expect private for-profit providers to be supported with public funds in the same way. The number of these providers has increased exponentially following the incentivisation by HERA of the HE market. These businesses are commercial for-profit organisations in receipt of significant public funds via the student loan book. The OfS does have a role to mitigate as far as possible the impact on students, (many of whom might be studying part-time at these for-profit providers) and seek to prevent ‘disorderly’ provider closure.

• What measures exist to protect students, staff, and other stakeholders in case of institutional insolvency?

16. Every registered provider is required to have a Student Protection Plan approved by OfS which is then published on the university or provider’s website. The Plan sets out what the university will do, for example, in terms of course closure and how students and staff will be consulted and advised. Plans are updated on a regular basis. An established university will also have a comprehensive risk register which assesses risks and associated actions to mitigate the latter. The Student Protection Plan and the risk register may be reviewed by a Board Committee and will be approved by the Board.

• Are additional safeguards needed to strengthen protections?

19. Because of the complexity of university structures, we do not believe that it is feasible to further strengthen protections. In the case of established not-for-profit universities, the best protection would be to increase direct government investment in higher education, review the legislative framework which currently governs the OfS and value the contribution of international students and all the universities that recruit them.

Ramifications of Institutional Insolvency & Regional Impact

• What would be the consequences of a higher education provider becoming insolvent?

20. We do not anticipate that an established university, including any smaller university, will become insolvent. However, there are rising numbers of redundancies and the potential for students to study courses of their choice, to be restricted or lost, particularly if they want or need for personal reasons or family circumstances to study nearer to home and in the region in which they live.

21. If an established university did become insolvent the direct and indirect social and economic impact on the prosperity and well-being of local communities and regions would be profound. For example, Cathedrals Group Universities make a highly valued civic contribution in terms of place and the regions in which they are located, educate a third of the teaching workforce many of whom go on to teach in schools including in less well-resourced communities, support the local and national NHS by the provision of a wide range of health professionals, including by upskilling the latter. They also make a significant contribution to Local Skills Improvement Plans and to widening participation by providing opportunities to progress to higher education for first-in-family students and mature students, adding individual and inter-generational benefit and changing lives and family prospects.

• How do higher education institutions contribute to growth in their local economies, the provision of public services, and their wider communities?

22. Around 5 million people in England and Wales currently work in the public sector:  administration (c1m); armed forces (c150k); police (c270k); education (c1.2m); NHS (c1.7m); other health (c160k); other (c480k)[1]. Moreover, 56 per cent of public sector employees are qualified at Level 4 or above – this represents just under three in ten of all graduates in the workforce. The public sector is often thought of in terms of teachers, police, doctors, nurses and the armed forces. In fact, many professions have a public sector ‘version’ – from communications, data science, estates management, construction, law, human resources, catering to accountancy. The ethos and approach of public sector work attracts graduates from all disciplines – not just from the specialisms seen as “public sector facing”.

23. Hence the contribution of universities to the infrastructure of regions underpins the Treasury’s ambition to promote economic growth. A third of undergraduates go on to the public sector from every member of the Cathedrals Group which has an ethos of public service: the Group supports the education of nearly 10,000 new graduates each year who enter the public sector workforce - numerically and proportionally making a bigger contribution to the latter than the “big 7” UK providers.

24. In addition, Cathedrals Group Universities have contracts with multinational companies and SMEs, underpin the economic vitality of their regions including regions outside London and the South-East and support and promote emerging industries and sectors; they work with local government and combined authorities, are represented on regional and local economic bodies, support local FE colleges and schools, community events and make a major contribution to the creative industries.

What strategies should be implemented to prevent insolvency and ensure sustainable regional provision of courses?

25. The Competition and Markets Authority has indicated that it will look more favourably on universities collaborating to ensure that some programmes continue to be offered on a regional basis. However, it is an indicator of the marketisation of higher education in England that competition rather than collaboration is underwritten by legislation. Collaboration e.g.in respect of shared services is also undermined by the imposition of VAT on the latter.

26. With more direct government funding and a different role for OfS or a successor organisation it would be possible for the Westminster government to set out strategies at regional and national level in terms of priorities and the provision of courses In England without undermining university autonomy. This was the case under Hefce and has remained the case in Scotland.

Conclusion

27. The Committee’s Inquiry into the effects of Home Office and Treasury policies on international students is timely. From welcoming the new approach to international students outlined by the Rt Hon Bridget Phillipson MP, Secretary of State for Education, in a speech to the Embassy Education Conference on 24 July 2024, there is now real concern among university leaders that the Home Office and Treasury are pursuing a change of direction based on evidence that is disputed and a partial view of the value of different universities to the UK and its regions. These polices will add to the considerable financial pressures already facing the Higher Education sector, increase the insecurity of staff, further undermine student choice and limit the ambition of institutions to expand international market share and thereby the latter’s contribution to UK GDP.

September 2025