Students could be left stranded if a major UK university went bust this year, according to an influential parliamentary committee as it warned about the “real possibility” of institutional failure.
Noting the UK higher education sector is facing “unprecedented” financial pressure, the House of Commons’ Education Select Committee said it is concerned over the “deeply conflicting” evidence that its inquiry had received over what would happen if a university became insolvent.
While ministers have insisted these institutions could enter liquidation and continue operating – which would allow them to “teach out” existing students and avoid a “disorderly exit” – legal specialists told MPs that liquidation would require the immediate cessation of trading, potentially meaning the sudden closure mid-term of an institution.
This “uncertainty” applied, in particular, to “universities that either hold a Royal Charter or are Higher Education Corporations that sit outside of the usual insolvency process that applies to private higher education providers that are companies and can be wound up by the Insolvency Act 1986”, explains a report outlining the findings of the inquiry published on 12 May, referring to both older universities and most post-92 universities.
