Anthony McClaran.

Q79 The Chair: Good morning. Welcome to the Industry and Regulators Committee. This is the ninth evidence session for our inquiry into the work of the Office for Students. The session is being broadcast on parliamentlive.tv. A full transcript is being taken, which will be made available to you shortly after the meeting, to make any corrections. Our first witness is Anthony McClaran. You are very welcome; it is very nice to see you.

Looking at the OfS from the perspective of some of your earlier roles, as chief executive of Australia’s Tertiary Education Quality and Standards Agency and, before that, of the UK’s QAA, do you feel that the statutory duties of the OfS are clear and appropriate? Has the interpretation and balancing of the statutory duties operated in the way you would have expected? What is unexpected?

Anthony McClaran: Thank you for the opportunity to come to speak to you this morning. I recognise very clearly the need for regulation of a sector as large as higher education, and I think the duties of the Office for Students, as set out in the Higher Education and Research Act, are appropriate. They are intended to protect students, and they provide accountability for taxpayers and reassurance for stakeholders.

I support the creation of the statutory regulator, as it took place under that Act. From personal experience, having moved to be chief executive of a statutory regulator in Australia, in the form of TEQSA, you might expect me to say what I have just said. It is because I can see the benefits of that kind of statutory regulation regarding clarity, the provision for sanctions, and the way in which it can bring together the whole series of university stakeholder groups potentially to offer support and protection for them all.

Clearly, the regulatory framework for the OfS has changed and grown. It has become more complex and, arguably in some ways, disproportionate in the demands it makes. I say this as chair of GuildHE, representing about 60 predominantly smaller and specialist providers in higher education. It creates a particular burden for small institutions, which are, nevertheless, required to meet the full range of regulatory requirements that are met by much larger institutions with much greater resources.

The similarities with TEQSA are strong, and that is not surprising. I am certainly not the only common link. When HERA was being drawn up and the move towards a statutory regulator was envisaged in the UK situation, TEQSA, which, I think I am right in saying, was the first risk-based higher education regulator in the world to operate overtly, was clearly a model and influenced the way in which the legislation was drawn up in the UK. TEQSA has a very similar statutory basis. There is a TEQSA Act, which is the basis for the operation of the agency. It has the clarity, the frameworks and the clear lines of accountability that are benefits of statutory regulation.

The Chair: Did it have the same experience of developing the duties as it went on and adjusting them with experience?

Anthony McClaran: Yes, in at least two ways. The first was quite traumatic for TEQSA. TEQSA began operations in 2012. By 2013, it was already under a national review that could have ended in its discontinuation. There were a number of clear reasons for that. There was enormous concern across the sector about the way in which TEQSA was operating its statutory duties. Other witnesses before you have probably made the distinction between the statutory duties, with which I find very little disagreement across the sector, and the way in which those duties are carried out.

In TEQSA’s case, there was enormous concern about excessive complexity, regulatory burden, and failure to communicate adequately or consistently with higher education providers, so a national review was set up. It was conducted by a former vice-chancellor of the University of Melbourne, Kwong Lee Dow, and Valerie Braithwaite, a professor at the Australian National University. Their conclusions can be summarised in the way that they characterise the early phase of TEQSA as operating as a regulator that regulated objects rather than partners. They argued for a move towards a stronger sense of partnership with a sector as mature and generally as successful as the Australian higher education sector. That was the first challenge and it led to a very considerable change in the way that TEQSA operated. I ought to add for avoidance of doubt that those events were prior to my arrival at the agency in 2015. They led to a very significant cutting back of TEQSA’s duties.

The agency was asked to focus on the regulatory knitting, so to speak. It was asked to stop conducting sectorwide reviews of issues across the whole of higher education. Its resources were very significantly reduced; its funding and staffing were set on a path towards being halved. That was the first challenge and it led to a very different style of operation.

The second part, which coincides with the time I was there, pointed in a slightly different direction. Having been cut back and had its scope of operation circumscribed, what subsequently happened was that a number of issues arose across the higher education sector, which it was felt necessary to address on a sectorwide basis. TEQSA was well placed for that, once it had regained the trust of the sector and the trust of government. Importantly, it had lost both. Once it regained that trust, TEQSA was placed in the position of looking, for instance, at a sectorwide response to issues of sexual assault and sexual harassment, freedom of speech, the transparency, or otherwise, of admissions requirements to universities, and the strength, or otherwise, of the English language requirements that were being put in place for international students. There were two very significant changes of direction, one restricting the activities and the other opening them up again in the area of those sectorwide issues.

The Chair: Do you see echoes of what happened with the OfS in the journey that Australia has been on?

Anthony McClaran: I do. Inevitably, I see echoes: first, in the expressions of concern that have been made by witnesses to this committee and, more widely, about the way in which the regulation is operating in the sector. Many of the concerns are quite similar; they are about burden, bureaucracy, excessive complexity and problematic communication.

I also see, in the latter phase of TEQSA, similarities with the fact that in the English system we are now looking at issues of sexual assault, sexual harassment and freedom of speech—sectorwide issues where the regulator is asked to play a role.

The Chair: You used the word “disproportionate” and you mentioned the burdens of data. Is that where the disproportionality is? Are there other areas of disproportionality?

Anthony McClaran: Burden and complexity are major concerns. Again, to give you an example from the TEQSA experience, one of the features of the TEQSA system is to risk assess every provider in the Australian system every year and produce a red, amber, green rating for each of those institutions. That then determines, given that it is a risk-based regulator, how it approaches its regulatory tasks over the coming year.

The initial risk framework had 44 separate indicators. Higher education providers were simply overwhelmed by the amount of data that they had to manage, analyse and report on. As a result of concerns around that, the risk framework was dramatically slimmed down—first to 12 indicators and then to 11 indicators. The regulator needed to focus on those that were really important rather than those that were simply just good to know. Simplification and reducing burden, in that sense, is an important part of dealing with concern.

Other concerns arise around something that is always present for a statutory regulator. Statutory regulators have great powers. It is, therefore, important that those powers are subject to significant controls, lest they be misused. In looking at the operation of any statutory regulator, the balance between the way in which it exercises its powers and the checks and balances that there are and the redress that there is for the regulated entities is very important.

There have been concerns expressed, not least by GuildHE, of which as I mentioned I am chair, and by other sector organisations. When one looks at the objectives of the OfS, perhaps not as much attention has been paid, for instance, to its objective of maintaining the institutions’ autonomy. Autonomy and the maintenance of the sector’s autonomy are very closely bound up with questions of checks and balances and accountability for the exercise of regulatory powers. There were many examples of those checks and balances operating, in my experience, in TEQSA, which I felt were significant in making sure that the regulator operated responsibly within its statutory framework.

Q80 Lord Cromwell: Thank you. Good morning. Well done for not being phased by the Division Bell testing. Thank you for that too.

I have two areas of questioning. One is about politics; the other is about money. I have the fun questions today. First, continuing your point about the increasing regulatory burden and the autonomy question, is government guidance to the OfS too prescriptive? How would you describe the role of the OfS standing between the sector and government?

Anthony McClaran: On the first question, there seems to have been a notable increase in the volume of communications to the regulator and directly to universities. That is unusual. It is certainly very different from my time at the QAA, where one of your colleagues, Lord Willetts, famously said that he did not have a mailing list for the vice-chancellors of the UK. It has become more common for vice-chancellors directly to receive letters from the Minister with particular concerns being expressed.

In relation to the regulator, in relation to the OfS, I believe that during 2021, there were something like 10 separate letters. Typically at TEQSA, in the Australian context, we would receive from the Minister—I was a ministerial appointment—one or two letters a year. That was the norm. It was not prescribed anywhere. It was just an expression of the sense of the right balance between the right, enshrined in both HERA and the equivalent Australian legislation, for Ministers to give direction, and the concern not to be seen to impinge on either the autonomy of institutions or the independence of the regulator itself.

Lord Cromwell: I take from what you are saying that it is prescriptive and it impinges on autonomy. Is that fair?

Anthony McClaran: That is a legitimately raised concern.

Q81 Lord Cromwell: My second area of questioning is, as I warned you, money, value for money specifically, which is a task that the Office for Students has. How does it evaluate value for money? Indeed, can that be evaluated objectively? Once again back to politics, to what extent is the definition of value for money politically driven?

Anthony McClaran: To take the last part of that first, there is a political context for the concern around value for money. I am not saying by that that I do not think value for money matters; of course it matters in all sorts of areas of life, but the particular fact that the loan regime in England effectively places the full cost of, let us say, the undergraduate course on the student means that VFM, value for money, has taken a particular flavour in debates in this country.

To contrast it with the Australian experience, on which our loan system is based, the loan system there has a contribution paid by the student to recognise private benefit and a contribution covered, effectively, by the state to recognise the public benefit of higher education. The debate about value for money is not quite as charged as it is here. Clearly, when the student is paying the full cost, it becomes a very important measure.

Then the question arises of how to measure value for money. The OfS attempts to measure it by looking at graduate outcomes. The graduate premium, depending on which estimate you read, varies from between 10% or 20% of earnings over a lifetime. The difficulty with looking at value for money in career outcomes or salary outcomes is not that those two things are unimportant, but that they leave out other things. If you look at the documents of my own university, for instance, there will be a great deal about the importance of higher education forming rounded individuals, broadly in a tradition of humane learning where their full character is developed. Those elements are not easily measured in value-for-money terms, but for student satisfaction they are extremely important, and they are certainly very important to us as a university where we happen to have extremely high student satisfaction rates. That wider formation of students is important too.

Lord Cromwell: You have highlighted very well the difficulty of trying to get a yardstick to work on this. When the Office for Students comes out with a value-for-money comment on an institution, does it have much impact?

Anthony McClaran: Inevitably, when the Office for Students comes out with any commentary, it has impact. That is a wider issue than simply the value-for-money impact. The experience of the sector since full fees were introduced has been that it seems to have relatively little impact on student behaviour, partly because almost every institution moved immediately to the full fee anyway. What was originally envisaged as a system where there might be various fees and, therefore, students might be making an informed decision about whether they were going to get value by paying a particular fee, has not really happened, but that is another discussion.

Lord Cromwell: The money part of the equation has become a constant, and it is the “value for” bit that is difficult to measure.

Anthony McClaran: The money part has become a constant; that is a very good way of expressing it. Students will then evaluate the “value for” in all sorts of ways. Some of those ways are about the prestige or reputation of the institution, which may or may not relate to the quality of the teaching or the experience that students will undergo there. Determining value is quite a complex proposition for students. It is very important, therefore, that they get as much information as possible to assist them to make those decisions.

Lord Cromwell: Thank you very much.

The Chair: Baroness Bowles has the next question. She is online.

Q82 Baroness Bowles of Berkhamsted: Apologies for not being there in person. How does the OfS engage with students? To what extent does student input drive the OfS view of its interests and regulatory framework? To what extent should the higher education sector be guided by the views and interests of policymakers rather than providers or students?

Anthony McClaran: In answering that question, I inevitably reflect on my experience when I was chief executive of the Quality Assurance Agency. I can only speak now for the period when I was there, and I know you are seeing witnesses from the QAA later on. One of the things that that agency did extremely well was to embed the student interest at every level of its operation, from having, significantly, not one but two board members through to a student advisory committee, which the OfS also has and which I think is a good thing. By having a student network throughout the institution, requiring a student written submission for every review, interviewing students on every review, that embeddedness of the student perspective was a great strength. Perhaps we will come to this, but it is one of the elements that is potentially lost to our current method of operation with the withdrawal of the QAA from the designated quality body role. There should be concern about that in the sector.

I am less familiar with the way in which the OfS engages. It has a student advisory committee. One of the reasons for the difficulties with the DQB has been the fact that students have not routinely been involved in reviews, which does not comply with international standards. There are a number of areas of concern. Like many others, I saw the evidence given to this committee by your student witnesses in relation to their experience of operating within the regulatory structures. To some extent, that raises more questions. The involvement of students is extremely important. During my time at the QAA and during my time at TEQSA, I made the strongest efforts possible to ensure that students were involved. Yes, it is very important.

Baroness Bowles of Berkhamsted: How can this be done at university level? How do you seek the input of students in driving the work of your university?

Anthony McClaran: At individual university level, it is very important. The structure that I described at the QAA was at the top of a pyramid of a whole network of relationships with the curriculum committees, the staff student liaison committees and the student representatives in each of the higher education institutions.

Student involvement at the most senior level will not be effective unless there is that involvement at university and higher education provider level. In my university, students are involved in all the ways I have described. As vice-chancellor, I personally regularly meet informally with the presidents of the student union when they can raise any issues that they wish to raise. If I may be forgiven a little bit of publicity for my own institution, one of the things on which we pride ourselves as a university is what were described by the Times in the Good University Guide as stellar levels of student satisfaction at St Mary’s University. It is hugely important.

Baroness Bowles of Berkhamsted: Can what individual universities do feed upwards, or does it have be sampled completely differently?

Anthony McClaran: Under the QAA review, it fed up through the review process. When you have visits on the ground, it can feed up through that process. It could also feed in, of course, at national level, at policy level, which is why student advisory committees are very important. It is important that those students are supported to feel confident in expressing their views. It is very significant at that level too in foregrounding student concerns.

Q83 Baroness McGregor-Smith: Good morning. Thinking about the regulators in this whole sector, I am interested in understanding what you think the challenges and opportunities are for them in how they work. How do they get the balance right between providing robust challenge and working pragmatically with the sector?

Anthony McClaran: That is very important. During the course of any regulatory body’s life, an act of rebalancing goes on with greater or lesser intensity all the time. Providing robust challenge is clearly very important. During my career in higher education, I have moved through a system of self-regulation to co-regulation to statutory regulation. One of the problems with self-regulation is that you are marking your own homework; therefore, the sense of robust challenge that a good regulator can provide is incredibly important.

Going back to the report I referred to, in a sector as mature and as internationally recognised and successful as the UK higher education system, which has a form of regulation that recognises the expertise that exists in the sector, the primary responsibility for quality will always lie within the institutions themselves. It is not something, or it should not be something, that is simply imposed from outside. The most effective kind of quality is lived within the institution. The collective expertise in the higher education institutions will always vastly exceed the expertise available in a regulator, even one as large as our current regulator. There are real benefits in regulating in a sense of partnership, drawing on expertise and particularly regulating in a way that seeks primarily to encourage compliance, rather than simply exposing failure. That makes good sense for a regulator, almost good business sense.

The reason for that is that sectors are large, institutions are very complex, and regulators need to cover a huge amount of ground. Encouraging compliance was certainly our approach at TEQSA, partly because the challenges to regulatory decisions in checks and balances were significant. You had to prove that a regulatory decision was necessary, proportionate and the only way of achieving the desired outcome. Because those challenges were significant, we always sought, where we could and where we believed that it would have the right result, to work with the regulated entity to move them back towards compliance, rather than simply being punitive.

Baroness McGregor-Smith: Is our education system too punitive at the moment? There is a huge amount of pressure on regulators to do what is deemed right. Has it gone the wrong way or is the regulator still learning?

Anthony McClaran: Your comment is probably appropriate. The OfS has itself said that it has moved from, or is in the process of moving from, its initial phase, which was essentially about registering the sector—I think the register is a good thing, by the way—moving through to the phase of regulation and intervention. In a sense, it is too early to say that it is a purely punitive regime. We will see, as the regulator moves forward in this phase, how that is going to shape.

However, it would be true to say, as expressed by my own sector organisation and by other sector organisations, that there is concern that the more collaborative, communicative, co-regulatory aspects are not, at the moment, being paid the attention that might be beneficial for the system as a whole. To draw on my Australian experience, when I arrived at TEQSA, after the rather traumatic review period that I described at the beginning of the session, part of what we did to rebuild an effective working relationship was genuinely to survey what the institutions thought about us, to establish an annual conference where representatives from the universities and colleges could come to discuss regulation and quality assurance and how it might be improved. That kind of open engagement is not just good politics with a small “p”; it is good for the way in which the regulator itself can learn and develop.

Q84 Lord Cromwell: I am very interested in the evolutionary path of a young regulator moving from stick to carrot and then to co-operation, and I would be interested in talking more about that, but that is not my role today. Given where it is currently, does the OfS have sufficient powers, the right powers? Does it have the resources to exercise those properly? I would like to move to expertise separately in a moment.

Anthony McClaran: It has the right powers. The powers, as set out in HERA, are comprehensive and appropriate. I do not perceive that it lacks powers. Sometimes there is a temptation for regulators, and perhaps behind regulators for Governments, to think that every regulatory problem needs another power to resolve it. Sometimes there are other ways of addressing those issues. I think there are sufficient powers.

Does the OfS have sufficient resources? This is a difficult one. Does any organisation ever have sufficient resources? It certainly does comparatively. If I think back to my experience at TEQSA, where we were regulating a sector very roughly half the size of the UK’s higher education sector, we did that, at a low point, with 40 staff. By the time I left, we had about 90 staff. Although this would need to be checked, TEQSA’s staff is around the 90 to 100 level today. I understand that the OfS staff is around 400. At the QAA, when I was there, we had about 150 staff. Regarding resources, one has to say that, in comparison, we were regarded as a mega agency by other agencies in the European Higher Education Area.

How do you answer that question? It was answered, very simply for TEQSA, that, because we were funded by the federal government, the federal government was extremely interested in knowing whether we were value for money, whether we were doing that effectively. Here, it is the sector that funds the OfS, so given that the sector cannot hold that aspect of the regulator to account, I am not quite sure who does.

Lord Cromwell: Moving on to expertise, which obviously relates to resources, the OfS has an ever-broadening canvas, as you have highlighted, from looking at the financial stability of the sector as a whole, through to the whole range of other issues that you touched on earlier, which have perhaps been loaded on. I would be interested in your thoughts on whether it has the expertise to cover that very broad church, but specifically on the designated quality body issue. Leaving to one side the philosophical point about whether it should be in-house or arm’s length, does it have the expertise to step into that role and deliver it, if that was not an issue?

Anthony McClaran: Clearly not at the moment, because it is in recruitment mode. Even on an interim basis, to take on the DQB role, one needs to recruit a body of peer reviewers. At the QAA it took a very long time and a lot of training; a lot of expertise was accumulated. “No” must be the immediate answer to that question. Whether the OfS can replicate that, time will tell.

Lord Cromwell: I shall not ask whether you think there should be an arm’s length body. You have already told us that you do. Thank you very much.

The Chair: Could I press you, Mr McClaran, on the issue about the QAA? Were you surprised at what the OfS had to say about the QAA; that if it had not stood down itself, it would not have been renewed because it was not doing the job in the way that the OfS asked it to?

Anthony McClaran: Yes, I was surprised. I was no longer close; I left the QAA in 2015, so I was not close to the detail of the relationship between the QAA and the OfS. Yes, I was surprised, because of the high international regard in which the QAA is held, as one of your earlier witnesses, Sir David Eastwood, pointed out. You might say that, as a former chief executive of the organisation, I would tend to think it was well run, and I do think that. It had accumulated a lot of expertise. Its internationalism is important, not just for itself as an organisation learning from best practice across the quality assurance world, but for the international recognition and status of the UK’s higher education system.

Yes, I was surprised that the relationship with a body so obviously suited to the role of the DQB ended in the way it did, although, as I say, I am not close to the detail of that. During the period I was there, the QAA could be extremely responsive. In 2013-14, in response to a request from what was then Theresa May’s Home Office, the QAA conducted over 400 reviews of private providers in just over a year. There was an urgent need. It was all to do with the visa regime and the decision at the time that private higher education providers should be able to demonstrate the same level of quality as publicly funded institutions if they wished to benefit from the same regime. The QAA conducted hundreds of reviews in a relatively short space of time and enabled the effective implementation of that policy, so I know from my own direct experience that the organisation can respond extremely effectively to those kinds of requests from government or from other agencies.

The Chair: One of the criticisms was that some of the statements that were made did not seem to have sufficient background justification for the conclusions they reached. Another was the potential conflict of interest. Does that surprise you?

Anthony McClaran: The first surprises me. I would need to know more about the basis for those concerns. The second, the conflict of interest, is difficult. It seems to me that, in principle at least, that situation is manageable. For instance, in another organisation where I worked for many years, UCAS, we were careful. We had to balance all the time the interests of universities and HE providers, which were supplying us with a fee for running an admission service, the interests of students, who were supplying us with a fee for facilitating their application to university, and the commercial use of the data generated by the system. We managed those very carefully through separation of duties, separation of powers, creations of subsidiaries, et cetera.

It seems to me that those kinds of conflicts, if conflicts they are, which are inherent in trying both to review and to support and enhance the provision of higher education, are entirely manageable. That is from my perspective, not as someone involved in the detail of the difficulties between the QAA and the OfS.

The Chair: That is very helpful. Thank you very much.

Q85 Lord Clement-Jones: Good morning. I declare an interest as chair of the governing body of Queen Mary University of London.

I shall come on to the OfS role in financial oversight, but first I want to ask you what financial risks you think the higher education sector faces as a whole. Are some of those risks limited to particular groups of providers or are they across the board and systemic in nature?

Anthony McClaran: There are at least a couple of systemic risks. One is, of course, the systemic risk presented by the capping of the undergraduate fee in England for a significant period. This has become particularly acute during a period of high inflation. That is a systemic risk; effectively, the real value of that unit of resource is diminishing. The latest estimates are about £6,500. That is one systemic risk that everyone faces.

There is another systemic risk with which I was very familiar in the Australian system. It is the systemic risk of dependence on international student income. There is no doubt that for a long time—it is not new—that has been a key component in enabling universities to balance the books. That is very interesting. During my time at TEQSA, we were criticised legitimately and fairly for the fact that, because we were so focused on individual institutions, we were not paying sufficient attention to systemic risks to the sector as a whole—systemic risks that, of course, absolutely came home to roost with Covid and the fact that Australia closed down and students could not travel there. It is very important. Regulators have a very important role to play in looking at systemic risk. To the extent that the OfS is doing that, it is doing the right thing.

Lord Clement-Jones: I am not begging the question to say that you believe that there should be quite a high degree of sectoral oversight from the OfS. It is not purely about individual institutions. Do you think it has the right approach? Is its communication on this right? Does the way it operates spot potential risks? How does it go about the business and is that effective?

Anthony McClaran: I am conscious of speaking to you on the morning that the OfS has just published a report on its approach to financial sustainability, with case studies. I have not had the opportunity this morning to get fully across that report, so I do not want to commit myself without having read it. Clearly, the very fact that it published a report on that issue, describing its approach as sectorwide, indicates that it thinks that it is important, that it is a priority. As a former regulator myself, I agree with that.

Lord Clement-Jones: TEQSA, as you clearly described, went from one approach to another over quite a short period, so all your experience tells you that you need to have that kind of approach.

Anthony McClaran: It does. I am conscious that in saying that I might place myself at odds with some of my fellow vice-chancellors, wearing my current hat. It was a debate I had at the time over a number of issues in Australia where I felt that there was a legitimate role—for instance, in sexual assault and sexual harassment, which is something that the OfS is strongly interested in, and in the issue of freedom of speech, another area that the OfS is interested in, not least because of legislation.

It is legitimate for the regulator to take a sectorwide view of some of the sectorwide problems, not least because some of those sectorwide problems might, at least in principle and sometimes in fact, manifest themselves in otherwise high-quality, low-risk institutions. That is certainly the case. What matters then is the approach to take. As I said in reference to an earlier question, the answer is not necessarily always to establish another condition of registration or to approach the matter purely in punitive terms.

In the two examples I gave, our engagement was very much about talking to the sector, talking to students, talking to groups that were advocating on behalf of victims and trying to offer guidance and support. None of those was where institutions were complacent. The regulator was well placed, by virtue of its central position, to draw together good practice. In fact, we were asked by government to produce and circulate good practice. That is where the enhancement, improvement and support role can very much come to the fore. It is not simply about, “Let’s have another condition. Let’s punish those who we think aren’t meeting the requirements”. That is not to say that there should not be some requirements. Clearly, some things are completely unacceptable and institutions need to address them.

Lord Clement-Jones: That is very helpful. Thank you.

Q86 Lord Reay: To continue the financial theme, how would you describe the business models of higher education providers in the UK? How do they differ between providers? Do universities have sufficient focus on having a viable business model? Does the OfS have adequate financial oversight of the providers?

Anthony McClaran: On the latter point, there is significant financial oversight by the OfS of individual providers. There is plenty of evidence of that. There is certainly evidence of the work it does to monitor the financial positions of individual universities. Sorry, I should say universities and higher education providers generally; it is not only universities.

Business models will vary from institution to institution. There are some fairly fundamental points that shape the approaches taken. The first point to make is that universities work in a highly controlled and regulated market. There are limits to the ways in which they can flex their business model. For most universities, it is a mix of students coming in with loans, international students paying full fees set at various levels, partnerships with various other providers of education, whether internationally or domestically, and the whole realm of enterprise and third-stream activity.

The balance within different institutions will vary enormously depending on the approach they take and, in some cases, the capacity to engage. You cannot simply say, “We’re going to now engage in a lot of research”, just as a matter of will. You have to build up to being able to engage in research.

Lord Reay: Should universities, for instance, be looking at being more flexible in their courses, with perhaps two-year rather than three-year courses, which would dramatically lower the financial burden on students?

Anthony McClaran: Flexibility is very important. Many higher education providers have been doing that for quite some time. Covid produced a surge in the ability of institutions to operate flexibly, because, of course, in those circumstances we had to do it by force. Digital media are opening up different ways of delivery, whether it be at home or abroad, which are really significant. Looking at the utilisation of the institution’s estate, which is, in effect, what a two-year degree might be, can be part of that mix. It is balanced with concern, rightly, about the student experience. Is a student undergoing an online degree having an experience that is as rich and fulfilling as a student might have if they are face to face? It can be done, but it needs to be thought about seriously.

Lord Reay: Could the OfS do more to encourage higher education providers to expand their business, including introducing new courses and other diversification to grow revenue streams?

Anthony McClaran: Providing a robust regulatory environment that underpins the reputation of English higher education is probably the way in which the regulator could contribute most effectively. Interestingly enough, TEQSA had a statutory duty to enhance the international competitiveness of Australian higher education, and to enhance its utility for the social and economic goals of the country. There was a very clear link to Australia plc in the way that the regulator was being asked to operate.

There is encouragement for courses. The OfS plays its part in encouraging new developments and new courses. We are starting new courses in computer science at my own university this September, and there has been OfS funding in support of that. There is absolutely a contribution that can be made. The energy for new courses should be found in the institutions. Again, it comes back to the balance between autonomy and regulation. If you get to a situation where either the regulator or the Government is effectively telling universities and institutions of higher education what they should teach, it impinges on the autonomy of those institutions. That is not just a nice quasi-legal or governance point. Autonomy is a source of energy and creativity in institutions. That is why it is important that it be preserved.

Lord Reay: Regarding possible regulatory failure of higher education institutions, is the OfS approach satisfactory? Do providers have enough confidence in the OfS, or are sufficient incentives in place, to encourage engagement with the regulator in advance of potential financial difficulty and not just leaving it to the very late stage of 30-day liquidity notification?

Anthony McClaran: At the heart of that question is something that we have touched on in some of the previous questions. What is the relationship between the regulated and the regulator? Are the regulated just objects of regulation or are they partners in regulation? If they are partners in regulation, institutions have the confidence that they can go to the regulator at an early point of difficulty and discuss the issue. Conversely, if confidence is lacking, if trust is lacking, those conversations become much more difficult because of the fear that there might not be supportive engagement. I only know, from my own experience, how we managed that at TEQSA, but my advice to any regulator would be to foster those relationships.

The Chair: That has all been very helpful. Could I close by going back to one of the earlier questions about the data burden and requests for information? We have been told that other regulators in the sector also require information, but it is sometimes asked for in a different way. Do you have any suggestion as to how one can improve the situation, given what appears to be enormous demand for documents and for data generally?

Anthony McClaran: Speaking on behalf of my fellow GuildHE members, that is a major concern, particularly because they often operate in specialist areas where there are public and statutory body demands, other regulators and a number of providers that also report to Ofsted. There is absolutely no doubt about the scale of the problem. As a former regulator, I am very conscious of the difficulty of addressing it effectively. When I was at TEQSA, we signed agreements with a whole range of other regulators broadly within the Australian education and professional sectors. We met very regularly with a body called ASQA, which regulated what is broadly FE. We even had some joint reviews of particular institutions to see whether we could combine our two methods to try to reduce the burden.

The challenge is often that the frameworks that the respective regulators are asked to work to are so different in their approach—the difference in approach between the OfS and Ofsted is enormous—that it is very difficult to dovetail requirements in a way that I am sure providers themselves would find more satisfactory. I do not think that means that we should abandon the attempt. It requires will, probably at government level; that is the only level where there would be a sufficient co-ordinating view. It requires that will to try to make it more effective.

There is an incentive for government, particularly at a time when we are increasingly conscious of the need for the various parts of what might broadly be called the tertiary education sector to work more closely together. There is quite a prize to be won if there can be engagement between regulators to reduce burden, reduce duplication, collect once and use often—those kinds of principles.

The Chair: Thank you very much, Mr McClaran. It has been a very helpful session, and we are very grateful for your patience and the way you have answered our questions.

Anthony McClaran: Thanks for the opportunity to be here this morning.