Committee publication · Correspondence · 13 January 2026
Letter from Minister for Skills on Higher Education and Funding, dated 19.12.25
From: Education Committee
Inquiry: Higher Education and Funding: Threat of Insolvency and International Students
Summary
Minister for Skills Baroness Jacqui Smith clarifies government policy on higher education provider insolvency, confirming that English HE providers incorporated as Royal Charter bodies or HE corporations can enter compulsory liquidation. She outlines government contingency measures, including the Office for Students' role in safeguarding students and research, and sets out sector funding reforms including tuition fee cap increases and automatic indexation legislation.
Key findings
- No English HE provider has previously entered insolvency, creating uncertainty about the process, but government view (supported by UKGI and Insolvency Service) is that Royal Charter bodies and HE corporations can enter compulsory liquidation
- Liquidators have power to continue trading during winding up; government cites precedents (Carillion, Thomas Cook) where companies continued operating in liquidation to protect public interests, though intervention threshold remains high
- Office for Students has primary role in safeguarding students when providers face severe financial difficulties; Department for Education would support OfS efforts with involvement depending on circumstances
- Department for Science, Innovation and Technology would safeguard strategically important research including in-flight projects and research assets during insolvency
- Government proposes tuition fee cap increases aligned to forecast inflation in 2026/27 and 2027/28, with future automatic indexation legislation; OfS leadership refocused on financial health monitoring under Professor Edward Peck
Tone
FactualTopics
Key actors
Baroness Jacqui Smith, Helen Hayes MP, Office for Students, UK Government Investments (UKGI), Insolvency Service, Professor Edward Peck, Department for Science, Innovation and Technology, Department for Education
Notable line
“… a liquidator does have the power to carry on a company's business for its beneficial winding up. There is precedent for this in other sectors.”
Key Quotes
“… my department's view, supported by UK Government Investments (UKGI) and the Insolvency Service, is that a provider incorporated in one of these ways would be able to enter compulsory liquidation.”
“… a liquidator does have the power to carry on a company's business for its beneficial winding up. There is precedent for this in other sectors.”
“… the OfS has a crucial role when a provider faces severe financial difficulties that threaten its ability to continue trading in the short to medium term.”
“… the fundamental responsibility to protect students and research remains the same, regardless of the institution's scale.”
Source · parliament.uk record ↗