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PAC criticises ‘lax’ oversight of private higher education expansion

The government’s ‘lax approach’ to regulating private higher education providers has led to £3.84m of public money being given to ineligible EU students in the form of student loans and grants, the Public Accounts Committee (PAC) has stated. 

The committee’s latest report – Financial support for students at alternative higher education providers – notes that since the Department for Business, Innovation and Skills (BIS) embarked upon the expansion of the private higher education sector, it has ignored repeated warnings about the potential waste and abuse of public money intended to support legitimate students and institutions. 

BIS has also been unable to quantify how much money has been lost when it has funded students who have failed to attend, or failed to complete courses, or were not proficient in the English language, or where courses themselves were poorly taught. 

Margaret Hodge MP, chair of PAC, said: “Between 2010-11 and 2013-14, there was an extraordinary rise in the number of students claiming support for courses at alternative providers, from 7,000 to 53,000. The total amount of public money paid to these students, through tuition fee loans and maintenance loans and grants, increased from around £50m to around £675m. 

“The Department pressed ahead with the expansion of the alternative provider sector without sufficient regulation in place to protect public money. In our view, the risks associated with proceeding without the necessary legislative powers were sufficiently great that the Accounting Officer ought to have sought a Ministerial Direction. 

“The Department was explicitly warned by the Higher Education Funding Council for England and the Universities and College Union (UCU) about these risks but chose to disregard them both before and after implementation.” 

Approximately 140 institutions offering higher education are termed ‘alternative providers’, and comprise a diverse range of organisations ranging from private companies to charitable institutions. 

These institutions do not receive government grants directly but do access public funding through student loans which are used to pay their fees. Following the announcement of higher education reforms in 2011, and the associated increase in tuition fee loans, there has been substantial and rapid growth in the sector. According to the PAC report, 40% of the publicly funded students attending these colleges are EU students, compared to 6% in the rest of the higher education sector. 

But a BIS spokesperson said: “Alternative providers play a significant role in widening access to higher education for British and foreign students, as well as boosting our exports. 

“Our priority is to protect the interest of students and safeguard taxpayers’ money. We recently introduced reforms to drive up quality, aimed at the small number of providers who are not currently meeting our high standards. These include a fit and proper persons test for directors and a requirement to register students for the course before they can access funding. “We are also shortly consulting on how to ensure that all students on funded courses have the right English language skills to achieve their qualifications.” 

In the meantime, PAC has recommended that BIS should report back to the committee “urgently” with an assessment of how much public money is at risk of being wasted. It also needs to ensure that it has a “much firmer grip” on the quality of teaching and the standard the students can expect in private sector higher education colleges. 

Also, the MPs say the Department needs to set “specific, measurable objectives for this policy”, and collect and analyse the right data in order to evaluate the full impact, taking account of any unanticipated impacts, such as the recruitment of EU students. 

Sally Hunt, UCU general secretary, said: “Members of the PAC were as shocked as we were over the government’s refusal to heed our warnings about private providers’ access to taxpayers’ money. The government still has serious questions to answer about why it ignored these repeated warnings and why it allowed such rapid expansion to go unchecked. 

“Politicians of all stripes need to study today's report about the sector's failings when it comes to dealing with privatisation.” 

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