The financial challenges higher education institutions are facing are not just due to historic tuition fee freezes, but also failures of governance and oversight, a government minister has said. 

Speaking at the Independent Higher Education conference in London on 26 November, skills minister Jacqui Smith said “decision-making that hasn’t always been informed by the best governance, culture, and behaviour” had helped lead to the problems universities face today. 

Referencing a report released by the Office for Students earlier this month that said universities had been “overly optimistic” in their forecasts and predicted 45 per cent of the sector may report financial deficits this year, Smith said there had been a “failure to forecast” and “recognise risk”. 

The Committee of University Chairs, which represents UK university governing bodies, is currently reviewing higher education governance – work Smith described as “important”. 

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“I think all institutions…should be thinking about who they have available to them and how they’re using them to make sure that they are doing that strategic planning that we’ve now put the sector in a position to do [by uplifting tuition fees], but also understanding risk and other challenges,” she said. 

Speaking shortly before the release of the autumn budget – which is expected to provide more details on the proposed international student levy – Smith denied that there had been a “collapse” in overseas student numbers since Labour came into power. 

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“In fact, there’s the beginning of an increase,” she said, adding that the Home Office had confirmed a 6 per cent increase in the “number of permissions to sponsor” it had issued this year. 

However, she continued, “we also had a manifesto commitment to cut net migration and in the immigration White Paper, we took action as a government across all the routes of migration.”

“Had the Home Office alone been responsible for this, I think the challenge to international students would have been stronger than it was given the arguments that we made in [the Department for Education],” including protecting the graduate route, she added.

She said that although the government will be tightening the metrics that sponsoring institutions have to comply with, “we’ll also work to make sure that that’s done in a way that gives institutions an understanding of what’s expected of them and time to adapt if they’re breaching those conditions”. 

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Smith reiterated her defence of the incoming international student levy, referencing a recent poll that suggests the public support the tax. She said she believed the messaging around a levy that “supports the most disadvantaged students in the UK to also benefit from higher education” would help garner greater public support for higher education. 

She said in designing the levy, the government had listened “to the case made by the sector”.

helen.packer@timeshighereducation.com