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UCU demands inquiry into taxpayer-funded student loans for private colleges

29 November 2013

Government ignored repeated warnings that there needed to be a cap on student recruitment • BIS insisted earlier this year that everything was under control and within a well-managed budget

UCU has written to the Public Accounts Committee (PAC) asking for an inquiry into amount of taxpayers' money going to private providers of higher education.

It has been revealed that the Department for Business, Innovation and Skills (BIS) underestimated the number of students private colleges would recruit, despite repeated warnings from UCU that the government needed to introduce caps on the number of students they could recruit, along with proper quality checks.

There are 30,000 students at private providers accessing student loans to pay for their tuition. The total outlay on public support to these students is reported to have rocketed to more than £300 million, with the taxpayer expected to pick up the cost of £175 million of this figure.

Last year UCU warned the PAC that BIS had radically increased the amount of student support it was providing to students studying with private providers and was directly signing off a huge increase in the number of courses designated as eligible for public support.

As a result of the Department's actions, the amount of loan outlay flowing to these private providers had trebled in one year to £100 million. In February this year, BIS wrote to the PAC to reassure the Committee that:

'controlling the numbers of publicly-supported students at alternative providers will provide assurance that alternative providers will continue to operate within a well-managed student finance budget'.

However, recent press reports have revealed that since that reassurance, the figures for outlay of loans will once again have trebled in one year. Embarrassingly, press reports also reveal that the Department has had to write to private providers asking them to stop recruiting students because of the budgetary pressures this is creating.

UCU general secretary, Sally Hunt, said: 'We raised this issue time and again with ministers but, on the back of these staggering increases in the handing over of public money, we are now asking the Public Accounts Committee to properly investigate this mess.'

'We specifically warned David Willetts about the dangers of opening up more state-backed loans to private colleges to cover their students' fees. There were no quality control checks in place and no limits on the number of students they could recruit. What did they think would happen?

'While it is incredibly worrying that BIS managed to get their sums so spectacularly wrong, the department did have a number of opportunities to impose controls on the number of students institutions could recruit. As recently as March this year David Willetts chose not to.

'Embarrassingly eight months down the line, the minister now has to ask colleges to stop recruiting. He now must explain why he ignored our warnings, and those of others, which led to a waste of public money and a shortfall of funds for crucial priority areas such as science and student support.'

A copy of the letter to the PAC is available from the UCU press office.

Last updated: 10 December 2015