Universities could go bust in plan for more competition


Three universities are facing bankruptcy under government plans to allow poor-performing institutions to fold, The Daily Telegraph can disclose.

By Robert Winnett, Deputy Political Editor (Telegraph.co.uk)
Published: 8:00AM BST 26 Sep 2010

Ministers are drawing up proposals that would make universities more competitive and could lead to the weakest colleges disappearing.

It is understood that officials believe the new regime could undermine London Metropolitan University, the University of Gloucestershire and the University of Cumbria.

All were former polytechnics or further education colleges that have only recently become universities.

The plan to allow universities to go bankrupt is expected to be unveiled next month as part of a major package of higher education reforms.

Universities will also be free to charge far more for degrees, with the leading institutions expected to introduce fees of about £7,000 a year from 2012.

Popular degree courses at top-ranked universities will cost far more under the “variable fees” system but poor-performing colleges are expected to be forced to offer cut-price degrees.

In future, higher-earning graduates will have to pay a levy to help pay for their education.

Private firms will also be allowed to set up universities and teach degrees.

Under the new system, successful, well-managed universities will be encouraged to expand but state protection for weaker colleges will be removed.

In a recent speech, Vince Cable, the Business Secretary, who is in charge of higher education policy, likened the new system to football’s Premier League, where new teams can emerge and flourish while weaker teams are relegated. He said: “It must also be a system with less protection for inefficient institutions. Government’s concern must be for the students — not for any particular institution which has failed to manage its costs.”

The universities that could be at risk currently educate tens of thousands of students. They have all previously faced financial difficulty and have worked with the Higher Education Funding Council to resolve their problems.

London Metropolitan has more than 30,000 students but has recently been blighted by financial problems and was found to have over-claimed more than £50 million for students who did not exist.

A spokesman for the University of Cumbria said last night that the university was now in a relatively strong financial position after having problems in the past. It is expecting to be in the black next year, even after accounting for funding cuts.

A University of Gloucestershire spokesman said: “The University of Gloucestershire has improved its financial position significantly. We are anticipating a healthy surplus at year end. This is a university on an upward trend following excellent Quality Assurance Agency and Ofsted reports.”

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