Today I am setting out the actions this Government are taking to tackle concerning evidence of abuse of public money associated with the franchised higher education system which we inherited.
Franchising, where one higher education provider subcontracts provision to a delivery partner, grew significantly under the previous Government, but most franchised providers were not placed under the direct oversight of the regulator—the Office for Students. When done well, franchised higher education can be an important driver of inclusion, but against a backdrop of growing financial instability within higher education, for some institutions, it is apparent that franchising became less about expanding access and more about maximising income.
In 2023 and 2024, the Government Internal Audit Agency, the National Audit Office and the Public Accounts Committee all raised concerns about abuse, unethical behaviour and fraud. Without the necessary guardrails, or a funding settlement that put universities on a sound financial footing, in some institutions the system has become a breeding ground for abuse, unethical behaviour and fraud.
Earlier this month, I was made aware that there is a disproportionately large number of Romanian students settled in the UK who receive student funding from the Student Loans Company.
Investigative work undertaken by the Student Loans Company suggests organised exploitation both of Romanian students and of the UK taxpayer.
Under this Government, this abuse will end. The Department for Education and the Office for Students already have a programme of investigations under way related to franchised provision. Where these investigations have found abuse of the student finance system there will be serious consequences. I have now also asked the Public Sector Fraud Authority to tackle this threat and take forward this work across Government.
We will also take immediate action on the use of agents to recruit students. The Government can see no legitimate role for domestic agents in the recruitment of UK students. We are taking urgent steps to prevent any further abuse of the system.
Since taking office in July, the Government have moved at pace to tackle the many inherited challenges in the higher education sector, which this Government believe should be treated as a public good, not a political battleground. In November, I set out changes to the level of tuition fees and maintenance, for the first time in seven years, and set out the five principles for broader reform of the sector which underpin the approach this Government will take. We have already reformed the Office for Students, accepting the report of Sir David Behan and bringing new leadership and a tighter focus.
I have written to Edward Peck, the incoming chair, to ask him to make protection of public money a top priority. To support this, I will bring forward legislation at the next available opportunity to give the Office for Students stronger powers to act more quickly and effectively to protect public money.
In January the Department launched a consultation on franchised higher education. The proposals would bring much closer regulatory scrutiny of the largest franchised providers—the ones in which there has been significant growth in recent years—bringing them under direct oversight by the Office for Students. The Office for Students is also consulting to strengthen its conditions of registration, to stop providers with weak governance arrangements from being able to register in the first place. We have asked it also to urgently strengthen the requirements on the providers who subcontract provision. Together, if implemented, these proposals would impose new and significant controls on franchising.
Higher education providers are engines of growth and drivers of opportunity, but these issues threaten the integrity of the sector. With the regulator, we will set the rules, we will enforce them and we will protect public money. However, ultimately universities must take ownership of these issues for themselves and we will look to them to take responsibility to ensure abuse like this is brought to an end. There can be no excuse for the abuse of public money, and under this Government there will be no hiding place for those who perpetrate such abuse.
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