Why Special Administration Will NOT Make the UK Higher Education Sector More Resilient and Sustainable

The UK Higher Education (HE) sector, despite its significant economic contribution and world-leading research, faces unprecedented financial strain. High tuition fees, coupled with real-term wage cuts for academic staff, increased workloads, rising operational costs, and declining international student numbers, have created a precarious situation. While formal insolvency cases across the higher-education sector remains rare, cost-cutting measures and restructuring are increasingly common.

This paper critically examines the proposal to introduce a special administration regime (SAR) for HE institutions, mirroring those in the further education, energy, and water sectors. Drawing on the recent experiences of these sectors, this analysis argues that a SAR for HE is likely to exacerbate the current crisis, leading to widespread restructuring, job losses, and disruptions to student learning.

The current informal workout framework, while imperfect, empowers universities to negotiate turnaround plans with creditors, avoiding value destruction inherent in formal liquidation. The paper contends that the root cause of the crisis lies in governance failures, including ill-judged investments, lack of risk assessment, and ineffective regulatory oversight.

Instead of a SAR, this paper advocates for comprehensive reforms focused on enhancing transparency, accountability, and sustainability in HE decision-making. Building on lessons from local public entity reforms, it proposes a holistic approach that integrates governance, regulatory, and auditing improvements. Only such a comprehensive strategy can ensure the sector’s long-term resilience, preserving its diversity, vibrancy, and crucial contribution to the UK economy and innovation landscape.