Education

England’s higher education sector faces ongoing financial fragility despite reforms and government strategy

Monday, 27 October 2025 6:03AM UTC

Despite recent measures, England’s universities remain vulnerable to financial collapse, prompting calls for improved governance, renewed regulatory oversight, and sector-wide reforms amid rising operational costs and declining international student numbers.

The financial stability of England’s higher education sector remains fragile despite recent measures to stabilise university finances, the chair of the Office for Students (OfS), Edward Peck, has cautioned. While the recent inflation-linked increase in tuition fees has helped many institutions balance income and expenditure, Peck warned that some universities still face the risk of collapse unless governance and financial oversight improve significantly.

Peck, who took up his role as OfS chair in mid-2025 after a distinguished tenure as vice-chancellor of Nottingham Trent University, highlighted that the sector is on a broader journey towards financial sustainability but acknowledged that challenges persist. His comments come in the wake of the UK government’s higher education strategy, which includes revising research funding, strengthening regulatory oversight, and legislating for inflation-linked tuition fees to ensure sector stability. Peck described the financial difficulties experienced by Dundee University earlier in 2025, attributed to alleged mismanagement, as a "wake-up call" that exposed weaknesses in institutional governance across the sector.

The OfS chair has been vocal about the need for universities to take ownership of their financial health, urging institutions to enhance governance and improve financial management practices to minimise regulatory intervention. He stressed that universities should view themselves like autonomous businesses rather than dependent entities, signalling a shift from the OfS’s earlier, more distant regulatory approach to a collaborative model aimed at supporting institutions.

The government’s recent post-16 education and skills white paper has been broadly welcomed by universities, particularly its emphasis on vocational and technical education and alignment with industrial strategy. However, a proposed levy on international student fees, intended to fund maintenance grants for domestic students, has drawn criticism from universities. They argue the levy could undermine efforts to boost the economy and worsen financial pressures already exacerbated by rising employer National Insurance contributions.

Peck acknowledged the complexities the levy would impose, noting that while it could help demonstrate the value of international students to the public, universities may face tough decisions regarding fee structures. Currently, overseas undergraduates pay up to £38,000 annually compared to £9,535 for English students. The OfS has previously criticised universities for overly optimistic recruitment forecasts for overseas students, especially following visa restrictions introduced by the previous government. Although sector forecasts have become more realistic, Peck warned that some providers might still need to explore new models, such as mergers—highlighted by the proposed Kent and Greenwich universities merger—to secure their futures.

Governance remains a central concern for Peck and policymakers alike. The white paper underscored the necessity for diverse board competencies to prevent the approval of unrealistic financial and recruitment plans. Peck noted that some institutions have been slow to confront financial realities and, in some cases, clung to overly optimistic forecasts. He emphasised that running a university now demands a level of professionalism akin to managing a large business to ensure sustainability.

The OfS plans to take a more proactive stance in areas like franchise arrangements and student exploitation by recruitment agents, with expanded legal powers sought in upcoming legislation to accelerate the removal of "bad actors" in the sector. Such regulatory reforms may require an increased budget; however, the OfS has committed to internal efficiency targets to reallocate resources towards frontline regulatory activities.

Peck’s leadership marks a repositioning of the OfS towards greater collaboration with universities, moving away from its former reputation for poor engagement and a “pro-competition” approach that often failed to prevent emerging financial risks. In September 2025, the OfS formed a ‘provider board’ of senior university leaders to foster closer ties and improve sector dialogue.

Despite these initiatives, the financial outlook remains grim, with recent OfS data revealing that nearly half of English universities are running deficits, a situation worse than anticipated just months earlier. The combined pressures of declining international student enrolments and rising operational costs continue to strain institutional finances. In response, the OfS has enhanced its financial monitoring capabilities, requesting more detailed and timely financial information from universities to act swiftly against institutions at risk of failure.

Peck has consistently argued against government bailouts for universities, describing them as a “moral hazard” that could entrench dependence on public funding and erode institutional autonomy. Instead, he advocates for universities to independently address financial challenges, reinforcing the need for sound governance and prudent financial planning to secure a sustainable future for higher education in England.

📌 Reference Map:

Paragraph 1 – ^[1] (Financial Times)
Paragraph 2 – ^[1] (Financial Times), ^[2] (gov.uk), ^[3] (Times Higher Education)
Paragraph 3 – ^[1] (Financial Times), ^[5] (Times Higher Education)
Paragraph 4 – ^[1] (Financial Times)
Paragraph 5 – ^[1] (Financial Times), ^[7] (Times Higher Education)
Paragraph 6 – ^[1] (Financial Times)
Paragraph 7 – ^[1] (Financial Times), ^[6] (Times Higher Education)
Paragraph 8 – ^[5] (Times Higher Education), ^[7] (Times Higher Education)
Paragraph 9 – ^[7] (Times Higher Education), ^[6] (Times Higher Education), ^[4] (Times Higher Education)

Source: Noah Wire Services

More on this

https://www.ft.com/content/8afaacc8-4970-48af-b67b-dcff3be39a1a - Please view link - unable to able to access data
https://www.gov.uk/government/news/preferred-candidate-to-lead-office-for-students-confirmed - In February 2025, the UK Department for Education announced Professor Edward William Peck CBE as the preferred candidate to chair the Office for Students (OfS). Peck, then Vice-Chancellor of Nottingham Trent University, was set to succeed Sir David Behan, the interim chair. His appointment aimed to strengthen the OfS's leadership and address challenges in higher education, including financial sustainability and governance. A pre-appointment hearing was scheduled for March 4, 2025, to finalise the appointment. ([gov.uk](https://www.gov.uk/government/news/preferred-candidate-to-lead-office-for-students-confirmed?utm_source=openai))
https://www.timeshighereducation.com/news/nottingham-trent-v-c-picked-next-office-students-chair - In February 2025, Edward Peck, Vice-Chancellor of Nottingham Trent University, was nominated to become the next chair of the Office for Students (OfS). Peck, who had announced his intention to step down from his university role in the summer, was recognised for his significant contributions to higher education, including his involvement in the Augar Review and his role as the Department for Education's Student Support Champion. His appointment aimed to bring a sector-friendly approach to the OfS. ([timeshighereducation.com](https://www.timeshighereducation.com/news/nottingham-trent-v-c-picked-next-office-students-chair?utm_source=openai))
https://www.timeshighereducation.com/news/government-bailouts-moral-hazard-universities-says-peck - In March 2025, during his selection process for the OfS chair, Edward Peck expressed concerns about government bailouts for universities, describing them as a 'moral hazard'. He emphasised the importance of financial autonomy for institutions and cautioned against government intervention that could lead universities too far into the public sector. Peck advocated for universities to address financial challenges independently, highlighting the need for institutions to balance income and expenditure without relying on government support. ([timeshighereducation.com](https://www.timeshighereducation.com/news/government-bailouts-moral-hazard-universities-says-peck?utm_source=openai))
https://www.timeshighereducation.com/news/ofs-recruits-provider-board-peck-signals-new-approach - In September 2025, the Office for Students (OfS) announced the formation of a 'provider board' comprising 12 senior university leaders. This initiative, led by new chair Edward Peck, aimed to foster a collaborative relationship between the regulator and higher education institutions. Peck indicated that this move was a clear indication of the OfS being 'repositioned' to work more closely with universities, moving away from a previously more distant approach. ([timeshighereducation.com](https://www.timeshighereducation.com/news/ofs-recruits-provider-board-peck-signals-new-approach?utm_source=openai))
https://www.timeshighereducation.com/news/regulator-seeks-more-information-english-university-finances - In March 2025, the Office for Students (OfS) requested additional financial information from universities amid concerns about the viability of some institutions. The regulator sought interim financial returns covering income, expenditure, cash balances, and borrowing, aiming to improve the agility of its financial monitoring. This move was prompted by ongoing challenges in the higher education sector, including rising costs and declining international student numbers. ([timeshighereducation.com](https://www.timeshighereducation.com/news/regulator-seeks-more-information-english-university-finances?utm_source=openai))
https://www.timeshighereducation.com/cn/news/university-finances-worse-predicted-nearly-half-red - In May 2025, the Office for Students (OfS) reported that nearly half of English universities were facing financial deficits, a situation worse than previously predicted. The decline in international student numbers and rising costs were identified as primary factors contributing to the financial challenges. The OfS warned institutions against being overly ambitious in their financial forecasting and emphasised the need for improved financial sustainability within the sector. ([timeshighereducation.com](https://www.timeshighereducation.com/cn/news/university-finances-worse-predicted-nearly-half-red?utm_source=openai))

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 8

Notes: The narrative appears to be original, with no evidence of prior publication. The Financial Times article is dated October 27, 2025, and includes recent developments, such as Edward Peck's appointment as OfS chair in mid-2025 and the University of Dundee's financial crisis earlier in 2025. The inclusion of these recent events suggests a high freshness score. However, the article references earlier reports from Times Higher Education and other sources, indicating that some information may have been previously reported. Nonetheless, the combination of recent events and the original reporting justifies a high freshness score.

Quotes check

Score: 9

Notes: The direct quotes attributed to Edward Peck and other officials appear to be original, with no exact matches found in earlier publications. This suggests that the quotes are exclusive to this narrative, enhancing its originality.

Source reliability

Score: 10

Notes: The narrative originates from the Financial Times, a reputable and established news organisation known for its rigorous journalism. This lends high credibility to the information presented.

Plausability check

Score: 9

Notes: The claims made in the narrative are plausible and align with known events. Edward Peck's appointment as OfS chair in mid-2025 is consistent with available information. The University of Dundee's financial difficulties, including a £35 million deficit and plans to cut 632 jobs, have been reported by multiple reputable sources. The narrative's tone and language are appropriate for the subject matter, and there are no signs of sensationalism or inconsistencies.

Overall assessment

Verdict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: The narrative is original, with no evidence of prior publication. It is sourced from the Financial Times, a reputable organisation, and presents plausible and consistent information. The quotes appear to be exclusive, and the tone is appropriate for the subject matter. Therefore, the overall assessment is a PASS with high confidence.

Higher Education
Financial Stability
University Governance