MPs are set to examine the state of university finances as almost half of institutions in England face a deficit this year.

The House of Commons Education Select Committee?has announced a new inquiry into the financial viability of universities as more struggle with rising costs and falling international student numbers.?

It follows a report from the Office for Students (OfS)?in May, which found that university finances have worsened across England for the third year in a row, with 43 per cent of institutions forecasting a deficit.?

International students numbers are also lower than expected, partially?because of a ban on dependent visas that came into force in January 2024.? ??????

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Helen Hayes, chair of the committee, said universities are facing a ¡°perfect storm of problems¡± as a ¡°consequence of tuition fees having barely increased in a decade, pressure on research funding and government immigration policy which is leading to the number of international students falling¡±.?

The new inquiry ¡°will look at the pressures on university finances, the steps that could be taken to stop a university from becoming insolvent and the plans and processes that should be in place in the event that a university does go bankrupt to protect students and staff and safeguard the local economy,¡± Hayes said.?

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The committee will probe the impact of government policies on international students, the current state of insolvency processes for higher education institutions and the regional impact of potential insolvency.?

In April, the committee held a one-day session focused on funding issues in the higher education sector.?

At that session, they heard from Philip Augar, chair of the 2019 review of post-18 education and funding, who said the idea of a university closure in England was ¡°unthinkable¡± and called for a ¡°behind-the-scenes support package¡± to prevent this.?

Earlier this year, the devolved Scottish government was forced to intervene to bail out the University of Dundee, offering a ?25 million support package for the sector, most of which went to the cash-strapped institution.?

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The committee has written to the government asking how it is engaging with universities and what work is happening on a ¡°potential framework of guidance and support in the event that one or more universities cease to be able to operate¡±.

In response, education minister Bridget Phillipson acknowledged the ¡°serious challenges¡± highlighted in the April evidence session and said her department was working with the OfS ¡°to understand the sector¡¯s changing financial landscape¡±.

The government is expected to publish a post-16 White Paper this summer, which could include details of higher education reform.?

Submissions to the inquiry can be made until 31 July.?

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helen.packer@timeshighereducation.com