London Metropolitan University has restored its finances and reputation - but at a price

The university has had a wretched time of late, being hit by a £36.5m fine and stripped of the right to sponsor students from outside the EU

Life, it would be fair to say, has not been a bed of roses for Malcolm Gillies since he took over the vice-chancellorship of London Metropolitan University four years ago.

Professor Gillies took office soon after it emerged that the university had falsely claimed funding for thousands of students, and was ordered to repay an unprecedented £36.5m to the Higher Education Funding Council for England (HEFCE), the higher education spending watchdog.

Then the university became the first in the country to be stripped of its right to teach foreign students after the UK Border Agency claimed that one in four students were still being taught at the university, despite no longer having permission to remain in the United Kingdom.

The university always disputed the agency's claims and later won a court victory to allow bona fide international students to continue with their studies. However, it took a full seven months, until last April, before the London Metropolitan was given the right to accept foreign students again.

Now, though, as Prof Gillies contemplates retirement from the university at the end of the year, a glimmer of light is dawning at the institution. For the first time since the student funding crisis, the university's finances have moved into the black again, with the latest accounts showing a modest £2m surplus for the past year.

In addition, the number of international student recruits is growing, although Prof Gillies estimates that it could take two or three years to get back to the original level of 4,500. "That's quite a task," he concedes.

The university's attempts to restore its image abroad, too, comes at a time when government immigration policy has had the effect of deterring some international students from studying in the UK, even though the Prime Minister has made it clear that there is no cap on student numbers.

Latest figures show overall recruitment is 1 per cent down, with the numbers from India falling by a massive 25 per cent.

"A lot of damage was done through an unclear message [to overseas students] and sometimes a very politicised message," he says. With a general election imminent, there is no guarantee that there will not be a repeat performance.

However, the green shoots of recovery are to be seen around the university, partly as a result of cost cutting and prudent finance.

At the time that Prof Gillies took over as vice-chancellor, the university was like "a speckled inheritance of real estate", with students learning on eight campus sites throughout north London.

Now, with prudent sales, it is down to three – Moorgate which Cross Rail goes underneath; Holloway Road, providing social science and arts courses popular with the local community; and Aldgate, an area with a high concentration of public-service employees.

The reference to Cross Rail gives a clue to the university's priorities – providing courses that will prepare students for the jobs on offer in the surrounding areas in the future. LMU has always recruited its home students from a more localised base than other universities.

"We're taking the service increasingly to where the student goes every day, rather than the student having to run around to different centres in different parts of the capital," he says.

The university has also benefited from one aspect of the Government's policy of lifting the cap on university recruitment, by allowing the 12 universities that charge fees of less than £7,500 a year to recruit extra students.

The road back to financial recovery has not been without pain, as less popular courses have been slashed with a consequent impact on lecturers' jobs.

The university, though, has always insisted that – at the very least – any student whose course is dropped can transfer to study a similar course elsewhere.

Prof Gillies says of the past four years spent restoring the finances: "You only achieve that result with a lot of hard work and also quite a lot of pain. The sadness is the staff who are no longer working here and the students studying on courses that we decided were no longer viable.

"Beneath the headlines, there is a whole series of stories and we have never forgotten it's been painful. It is no judgement on people's competence or ability. If it is a service that's had it, they have had to go – and that includes some very talented people."

The university still faces more challenges in the future and is hopeful that the Government will continue to allow those charging lower fees to recruit more students. It also has to prepare for the brave new world of the future when ministers plan to lift the cap on student numbers completely, allowing for more of a free-for-all in student recruitment.

At least, though, a university which at one stage looked as though it could be facing a very uncertain future will be able to do that without having one hand tied behind its back because of the debts it has to pay off.