University accused of £36m student scam

The body which funds English universities has taken the unprecedented step of calling for the mass resignation of governors at a university accused of misusing public money.

A letter seen by The Independent from the Higher Education Funding Council for England (Hefce) to the chairman of governors at London Metropolitan University calls on members of the governing body and senior staff to "consider their position".

It follows two damning reports which revealed that the university falsely claimed funding for thousands of students. As a result it has been ordered to repay an unprecedented £36m in funding – which is expected to lead to hundreds of job losses among academic staff. The reports, one from Sir David Melville, former vice-chancellor of Kent and Middlesex universities, and the other from Deloitte, the accountancy firm, found that London Metropolitan failed to keep track of students at the university or ensure they sat exams at the end of the year.

As a result it continued claiming funding from the Government on the basis of an artificially low drop-out rate, getting funding for far more students than were attending the university. Its failure to keep track of the students meant that many would not get the kind of help they needed to stay on their courses.

The case highlights a lack of care towards students from some of the most disadvantaged backgrounds in higher education. Inner-city universities such as London Metropolitan take far more youngsters whose families have no history of entering university than the average – just the kind of people the Government is trying to attract into staying on in education.

On Friday Sir Alan Langlands, the funding council's chief executive, wrote to the chairman of governors, Peter Anwyl, giving them six days to consider their positions.

"The reports make it very difficult for Hefce to have confidence in the governance of the university," says Sir Alan's letter. "Throughout the history of this case we have been concerned that the university is unable to safeguard public funds and the reports confirm our view. Given the criticism of the board and the senior management team, I do not believe that confidence can be restored until action is taken to consider the position of the board members and senior staff who are criticised in the report and new governance and management arrangements are put in place."

London Metropolitan has more than 34,000 students on two campuses, in Islington and the City. It offers nearly 500 courses and employs 2,400 academic and non-academic staff.

Latest figures show a first-year drop-out rate of 16.6 per cent, putting it eighth from bottom in a national league table. It has the second highest percentage of students from low-income groups, at 55.1 per cent of the student population, according to the Higher Education Statistics Agency. A recent study found that only 68 per cent of students leaving the university were satisfied with the education they received, against a national average of 82 per cent.

Sir David Melville's report laid much of the blame at the door of the former vice-chancellor, Professor Brian Roper, who resigned this year. But it suggested that the problems were endemic. Sir David wrote: "I received over 50 such submissions, from a wide range of staff, predominantly academics but also including some from support staff. They attest to problems of student data quality over many years and provide many detailed examples of the difficulty of removing students from the record whom they know to have left or who never ever appeared.

"[There was] a strongly held view amongst staff and students that student academic potential is not being realised by a laissez-faire attitude ... and a failure to provide much-needed extra support for the many students admitted with modest educational backgrounds."

Sir David also blamed a group of senior managers, including the university secretary, the finance director and the deputy vice-chancellor (academic). The governors should take responsibility because they could have followed up on the poor student completion rates and challenged the vice-chancellor, said his report. "[Staff] generally describe a highly centralised and dictatorial executive led by the vice-chancellor, which was incapable of listening to what was going on in the university, discouraged or ignored criticism and made decisions without consultation," Sir David said.

The other report, from Deloitte, shows that as early as 2003 senior staff were aware that the definition the university was using of students who had completed a year's study did not conform to Hefce's. An email from a senior manager in May 2004 said that if Hefce's definition were applied literally, it would be "disastrous for the university".

No one from London Metropolitan could be contacted for comment yesterday, but the university has previously admitted that it counted a student as having completed a year's studies if they moved into the next year regardless of whether they had sat all their exams. It said on Friday that it had learnt "important lessons" from the Melville report.

Professor Malcolm Gillies, a former head of nearby City University, has been made vice-chancellor. A spokesman said the appointment "will renew our focus on students and their education".