The new head of the Office for Students (OfS) will have to oversee rescue plans to avoid a “domino effect” with a number of universities going under, experts have warned.
The new government’s Department for Education (DfE) announced on Tuesday that it had accepted the resignation of the OfS’s controversial chair, James Wharton, a former Tory MP who ran Boris Johnson’s leadership campaign. Lord Wharton, who was given the job of running the independent regulator in 2021 despite having no experience of higher education, did not give up the Tory whip in the Lords and was widely criticised for being too close to the Conservative government.
One of the most surprising names said to be on the list of possible contenders to replace Wharton is Chris Skidmore, the former Tory energy minister who resigned from the government in January and has been excoriating in recent public attacks on his former party.
Skidmore was once the universities minister and is respected in the sector. Other names suggested to the Observer by a range of well-connected figures in higher education include David Bell, vice-chancellor of Sunderland University and a former DfE permanent secretary.
With 40% of universities projected to be in deficit, according to recent reports by both PricewaterhouseCoopers and the OfS, experts said this weekend there has never been a more crucial time to have a more effective and stronger regulator with clearer priorities. In 2023, a scathing report by the Lords industry and regulators committee criticised the OfS, which had intervened on Conservative pet causes, including free speech and “low value” courses, for being driven by the “ebb and flow of short-term political priorities and media headlines”. Prof Steve West, vice-chancellor of the University of the West of England, who stepped down from the OfS board when he served as president of Universities UK, said: “This is the OfS’s most critical moment. It has a very serious job to do protecting students and the reputation of UK higher education.”
When West was on the board, he said discussions about how to protect students at universities that looked financially unstable were more manageable because they typically involved one or two universities. “The difference now is the sheer scale of what they are facing. If you’ve got a large number of institutions at risk and posting deficits, that is a far bigger systemic issue,” he said.
More than 50 universities are making job and budget cuts in response to a drop-off in overseas students and a decade-long freeze in the £9,250 a year fees paid by UK students. The Russell Group has estimated that English universities lost an average of £2,500 a student a year in 2022-23 and without a change in policy this will increase to £5,000 a student a year by 2029-30.
Nick Hillman, director of the Higher Education Policy Institute thinktank, said: “When this many universities are projected to be in deficit, you can’t say: ‘This is a market and some institutions will have to go,’ because there is a serious risk of a domino effect.”
He warned that if one university went under, lenders would “start calling in their debts left right and centre”. Hillman added: “It was inevitable that Lord Wharton had to go. It was an extraordinary appointment for political reasons.”
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Chris Millward, professor of practice in education policy at Birmingham University and former director for fair access at the OfS, said the regulator now had a key role to play in “not only forecasting risk but also managing it”.
He added that although the OfS was supposed to protect the interests of students: “If a university goes bust, the implications will be much wider.”
A spokesperson for the DfE said the process to appoint an interim chair was under way with a permanent replacement announced “in due course”. SheIt added: “It is important that we have a sustainable higher education funding system that provides opportunities, supports students and maintains the world-leading status of our universities.”