RSM responds to Government measures to protect higher education sector

Today the Government announced a range of measures to protect the higher education sector which will be seen as a positive step for most providers. 

The impact of coronavirus has seen the sector respond well to remote learning, providing engaging and varied support to its students and to the frontline NHS and communities.  

Today’s financial proposals and student number control provides clarity to enable future planning and stress testing.

Lisa Randall, partner and head of higher education at leading audit, tax and consulting firm RSM, said: ‘The Government proposals today present further clarity over what has been and will continue to be a very difficult situation that higher institutions will have to manage into 2021. The student number cap of recruiting up to 5 per cent of domestic students above a university’s forecasts for the next academic year has been speculated and to have the confirmation today will support universities during admissions. The introduction of the OfS’ consultation on a new temporary registration to safeguard against organisations deemed to take actions which negatively impact the sector or students, is again a positive step.’

Lindsey Cooper, partner at RSM restructuring advisory, said: ‘It is important to note that the DfE’s package of measures also included a statement that it will be working with the Treasury and other Government departments to develop a restructuring regime. Whilst it wasn’t explicit, this suggests that some form of formal insolvency regime for higher education is being considered. This is not altogether surprising given that such a regime came into force for the further education sector in 2019 pursuant to the Technical and Further Education Act 2017. There is no reason that higher education should be excluded from an insolvency regime, which provided it is well thought out, should be seen as a potential rescue tool when other options have been exhausted. 

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‘Given many of the traditional universities are statutory bodies governed by Royal Charter, there is currently no mechanism for them to be formally wound up through an insolvency process, although they could wind down and cease to operate or look to merge with another institution.

‘The newer post-1992 universities may be limited companies and as such the existing insolvency regime will apply and they will be able to enter into an insolvency procedure such as administration. 

‘We don’t anticipate many formal university failures but there is a strong likelihood of more merger type activity within the sector as has been seen in the further education sector.’ 

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