Almost £4m wasted on ineligible EU student support, says PAC

24 Feb 15

The government’s ‘lax approach’ to the regulation of private higher education has led to almost £4m in public money being given to ineligible European students in loans and grants, the Public Accounts Committee said today.

The MPs criticised the Department for Business, Innovation & Skills for failing to heed warnings about the potential ‘waste and abuse’ of public money intended to support legitimate students and institutions.

There has been a huge increase in the numbers of EU students coming into the UK to study at HE institutions that are not publicly funded, up from 7,000 in 2010/11 to 53,000 in 2013/14. Students at such institutions can apply for fee loans and maintenance loans, but become ineligible if they leave the course, fail to attend or fail to receive a qualification because of poor teaching or their inadequate English language skills.

The amount of money paid to these students in loans and grants has increased from around £50m to around £675m.

PAC chair Margaret Hodge said the department was warned ‘explicitly’ by the Higher Education Funding Council for England and the Universities and College Union about the risks associated with a rapid expansion of the private HE sector.

But the department chose to disregard them and went ahead with expanding the sector ‘without sufficient regulation in place to protect public money’.

‘As a result of its lax approach, the department allowed £3.84m of public money to be given to ineligible EU students in the form of student loans and grants, where EU students had either chosen not to or had been unable to prove that they met eligibility criteria on residency,’ Hodge said.

‘Furthermore, [the department] has been unable to quantify how much money has been lost when it has funded students who have failed to attend, or failed to complete courses, or were not proficient in the English language, or were not entered for qualifications, or where courses themselves were poorly taught.’

However, the government said it had already taken a number of steps to tighten standards in the private HE sector. For instance, from 2014, all alternative providers have been required to re-apply for designation using a more robust process.

A BIS Spokesperson said: ‘Alternative providers play a significant role in widening access to higher education for British and foreign students, as well as boosting our exports.

‘Our priority is to protect the interest of students and safeguard taxpayers’ money. We recently introduced reforms to drive up quality, aimed at the small number of providers who are not currently meeting our high standards. These include a fit and proper persons test for directors and a requirement to register students for the course before they can access funding. We are also shortly consulting on how to ensure that all students on funded courses have the right English language skills to achieve their qualifications.’

UCU general secretary, Sally Hunt, said: ‘Members of the Public Accounts Committee were as shocked as we were over the government’s refusal to heed our warnings about private providers’ access to taxpayers’ money. The government still has serious questions to answer about why it ignored these repeated warnings and why it allowed such rapid expansion to go unchecked.’

  • Judith Ugwumadu

    Judith Ugwumadu joined Public Finance International and Public Finance online as a reporter after stints at Financial Adviser, Global Security Finance and The Sunday Express. Currently, she writes about public finance, public services and economics.

    Follow her on @JudithUgwumadu_

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