Public money ‘wasted on EU students at private colleges’

MPs slam the Government for failure to act on warnings of potential abuses

Around 140 institutions, classed as “alternative providers” do not get direct government support, but can receive public funding through loans which students take out to pay their course fees (Getty)

Millions of pounds of taxpayers’ money was wrongly paid out to alternative higher education colleges run by private companies and charities for EU students who failed to attend or complete courses, MPs have said.

In just two years the number of students claiming funds for courses at private colleges rose from 7,000 to 53,000, while the amount of taxpayers’ money paid to students through loans and grants rose from around £50m to around £675m.

But ministers and officials are unable to say how much money has been lost through funding students who have failed to attend or complete courses, or who were on poorly taught programmes or not entered for exams.

In some cases, there is evidence that students could not speak English well enough for a course, that students claiming funding were not actually attending courses, and that institutions were recruiting students on the streets, the Public Accounts Committee (PAC) concluded.

In a damning report, it accused the Government of ignoring repeated warnings about the potential waste and abuse of public funds that could be caused by allowing this expansion.

Around 140 institutions, many run by private companies and charities, offering higher education are classed as “alternative providers”. While they do not get direct government support, they can receive public funding through loans which students take out to pay their course fees.

Following a major overhaul of the system in 2011, there has been massive growth in this sector, the cross-party group of MPs said.

The report concluded that the Government pressed ahead with this expansion without strong legislative backing in place to protect public funds. The Business Department then failed to identify and act on known risks and was slow to react to warning signs of problems.

“There was also evidence from whistleblowers that proficiency in English language was not tested, that some institutions were recruiting students on the streets, and that students claiming funding were not attending colleges,” the report said. “Rather than respond to the warning signs by conducting a broader investigation, the department chose to focus on specific issues and specific providers.”

PAC chair Margaret Hodge claimed the Government had ignored repeated warnings about the potential waste and abuse of public money intended to support legitimate students and institutions.

In two years the number of students claiming funds for courses at private colleges rose from 7,000 to 53,000 (Getty)

“The department pressed ahead with the expansion of the alternative provider sector without sufficient regulation in place to protect public money,” she said.

Ms Hodge also said that even though the expansion was intended to widen access for students in England, 40 per cent of funded students attending these colleges were from the EU, compared with 6 per cent in the rest of the higher education sector.

But a Business Department spokesman defended the policy. “Alternative providers play a significant role in widening access to higher education for British and foreign students, as well as boosting our exports,” he said.

“Our priority is to protect the interest of students and safeguard taxpayers’ money. We have made continuous improvements to the management of alternative providers since 2012. We recently introduced reforms to drive up quality, aimed at the small number of providers not meeting our high standards. These include 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.”