Lord Jo Johnson has taken aim at previous Conservative governments including his own brother Boris’s, over the precarious state of university finances.
The two-time former universities minister lamented the state of finances in the university sector as the House of Lords discussed a recent Universities UK report on the future for higher education.
Lord Johnson of Marylebone said it had led to a “real abdication of responsibility on the part of more recent governments” to have let institutions’ balance sheets deteriorate, and welcomed the Government’s announcement that fees will rise.
He echoed the concerns of Baroness Warwick of Undercliffe, a former head of Universities UK, over the depths to which finances had sunk.
Lady Undercliffe referenced a Office for Students (OFS) report that said 40% of universities expected to be in deficit in 2023/2024 and a rising proportion reported having limited cash flow.
Lord Johnson said: “The financial condition of the sector is worsening very rapidly.
“Updated analysis suggests that as many as three-quarters of the sector will be in deficit next year, suggesting that conditions are really deteriorating extremely rapidly.
“Like (her) I welcome the Government’s move to increase fees with inflation for the next financial year, it is an important step.”
It's a shame that the sector has had almost a decade... of real-terms erosion of undergraduate tuition fee income
The Tory peer added: “Obviously it’s a shame that it’s taken this long, it’s a shame that the sector has had almost a decade, as (she) said, of real-terms erosion of undergraduate tuition fee income, but I am glad this decision has at last been taken.
“It was a real abdication of responsibility on the part of more recent governments to have let this issue drift in the way it has.
“It is no way to provide certainty for institutions vital to our success as a knowledge economy.
“It has led to needless job cuts, programme closures and… an increased dependence on the volatile income from overseas students, welcome though they are.”
Last week the Government announced that it would be increasing the tuition fees cap for full-time students by £285 to £9,535.
The freeze at the current rate since 2017 has led some institutions to complain that they have struggled to keep up with rising costs, including inflation.
A poll commissioned by the Higher Education Policy Institute in October, before the Government’s announcement on tuition fee increases, found that nearly a third of students were worried that their university could become insolvent.
A total of 31% were found to be “quite worried” or “very worried” about the financial status of their institution.
Lord Johnson told a Conservative Party conference fringe event in October that the party had been “irresponsible” to let university funding stay the same for its last six years in power, according to Times Higher Education.
Labour peer Lady Undercliffe said it was widely understood among peers that the funding for universities was “structurally unsustainable” and that this had impacted university research.
She said: “Given the financial deterioration of universities this has produced a huge gap in funding and renders this vital activity exposed.
“Fees from international students currently make up some of this short term. But I think we can all agree that this is not a robust or indeed a sustainable solution.
“An ambitious and long-term approach is needed to ensure that the UK can retain its international competitiveness and continue delivering on the Government’s ambitions for economic growth.”
She added that the maintenance grant for students should be reintroduced, and that in the long-term both fees and student loans should be linked to inflation.
“The financial sustainability of the university sector is not a challenge that can be ducked. Inflation has eroded the real value of student fees and maintenance loans as well by around a third, which has proved unsustainable for both students and universities,” she said.
