1

Are the OfS’ statutory duties clear and appropriate? How successful has the OfS been in performing these duties, and have some duties been prioritised over others?

Assessment of the statutory powers and duties of the OfS as set out in the Framework Document between the DfE and OfS in January 2023  leads to some ambiguity over a number of clauses, and some of the requirements are not appropriate for the HE sector. The performance of OfS to date is not successful, has engendered significant distrust in its role as a regulator and has resulted in a divergence of the regulatory quality and assessment framework of the English HEIs away from the other devolved nations which is damaging to the international brand of UK HE.

1. In terms of OfS’s duty to have regard to ‘The need to promote value for money in the provision of higher education by English higher education providers’. The OfS published a VfM strategy 2019-2021 and this strategy defines ‘Our primary measure of value for money will be based on the perceptions of students and graduates’. There is no current version of this VfM strategy beyond a mention of it in the new 2022-2025 OfS Strategy, as ‘All students, from all backgrounds, receive value for money’. It is unclear what “the need to promote value for money” means in the context of the act, particularly when set against the need to promote quality of provision, and choice and opportunities for students, in areas where there are significant socio-economic challenges. This is especially difficult in the current status of frozen tuition fees and eroded maintenance loans to students. 
2. In terms of OfS’s duty to have regard to ‘The need to protect the institutional autonomy of English higher education providers’. - We are not clear how the need to protect institutional autonomy is interpreted. Given the close links between OfS’s interests with those of various ministers e.g. the fixation on spelling and grammar, the freedom of speech legislation, the directives from government to the OfS around its focus areas (direction is expected in this regard but the lack of consistency from one minister to the next negates any continuity), the interference on the equality charters (manipulated through a VfM argument) it could be argued that the OfS is being influenced unduly and used as a tool by politicians to drive practice and policies within institutions. Another aspect is the sheer volume of regulatory change that comes from the regulator with addition clauses and conditions being added and mooted for future addition with no clear proportionate response, transparency of the OfS’s risk based approach or consideration of the burden imposed. Overall it seems that institutional autonomy is being threatened. This autonomy is enshrined in legislation and the governing documents of all providers so resolution of this boundary needs to be resolved.
3. In terms of OfS’s duty to have regard to ‘The need to encourage competition between English higher education providers in connection with the provision of higher education where that competition is in the interests of students and employers, while also having regard to the benefits for students and employers resulting from collaboration between such providers’. How realistic is it to expect the OfS to promote both competition and collaboration at the same time? Is genuine competition really a goal in this market? Despite institutions all competing for students, the extent of collaboration in sharing good practice for the benefit of all students is one of the strengths of the sector and also an unusual feature when compared with other industries.

4. It is difficult to argue that the OfS promotes “quality” as the fora for quality enhancement activity are external to OfS. OfS simply takes data and proxy measures to evaluate HE quality without fully understanding what quality is. Quality is expressed as statistical output that has no real relationship to how the sector has previously defined quality. Beyond this there is no real engagement in quality enhancement between the OfS and HEIs at the national or regional level. The increased focus on competition and marketisation of the section within the OfS is at odds with the “definition” of quality used by the OfS. For example, an institution which has a high proportion of commuter students from IMD1 and 2, offering significant student support for learning, can be offering a high-quality experience for their students and community, yet this will not be surfaced in completion and progression data which is heavily impacted by societal factors. The promotion of quality is complex and happens through sophisticated dialogue facilitated by established and trusted HE structures and organisations. OfS works to the premise that the sector cannot be trusted and therefore should work to targets it sets, rather than allowing the sector to work with its long-established quality enhancement systems which have been proven to be effective and impactful. The Key Performance Measures released in March clearly indicate the sector has been getting it right for a long time without OfS’s intervention, and the regime introduced by OfS – underpinned by disrespect for the sector – is potentially damaging. It also calls into question the competence of OfS, revealing a lack of understanding of the complex ecosystem of HE in the UK.
5. In terms of OfS’s duty to have regard to ‘So far as relevant, the principles of best regulatory practice, including the principles that regulatory activities should be:

• Transparent, accountable, proportionate and consistent; and

• Targeted only at cases in which action is needed’. It is not clear that the OfS has regard for the best principles of regulatory practice.

The OfS largely dictates to the sector, ‘consultations’ are shared with either a short turnaround period for responses or sent at a time where the sector is not able to provide a decent objective response due to busy periods of the academic calendar or  holiday periods. This suggests either a lack of foresight and understanding or the sector, or simply contempt for the opinions of the sector.

One very telling example of this is the series of TEF consultations the sector was asked to respond to. Dame Shirley Pearce’s review into TEF revealed significant flaws in the process and put forward suggestions for improvement which were largely ignored. The unpopularity of Pearce’s report within OfS was signalled in the delay in its publication, the redaction of OfS response to the report in the OfS board minutes in July 2020, and the decision by OfS to run a second consultation into TEF. The second consultation spoke to a narrative of “well, you [the sector] didn’t get the answers right the first time so we are going to give you another go at it”. The sector response to the second consultation was similar to that uncovered by the Pearce Report, and was again ignored, which OfS admitted to in its report to the second consultation.

A second example is in the consultation into the revisions to the National Student Survey questions (see detail in question 2 below). Further to this the OfS now has another consultation out on how to analyse the results of the NSS now that it has implemented all the changes; this when the data collection for the survey for 2023 is almost complete. It again points to a lack of foresight that the changes were implemented without any recognition that the whole analysis structure would need to be changed. The new consultation also points to a change in the thematic analysis of NSS and potential consequences for the metrics in the Teaching Excellence Framework (an exercise that has taken years to come to fruition might be changed again).

As an institution, when we are now asked to participate in a consultation with OfS, the first question we ask ourselves is “what is the point?. The second response  is “not another one!”. Perhaps the Lords might want to investigate the number of consultations posed by OfS and evaluate the nature of OfS responses to the consultations. The volume and turnround time, coupled with lack of genuine engagement with sector feedback, suggests a disrespect for the sector.

Despite the OfS’s risk based approach there is tendency for them to think there is a one size fits all HE sector e.g. by focussing on the retention of assessments, a process which is easy to undertake if you only assess students via exams and coursework but becomes increasingly difficult once you factor in all other forms of assessments that we use (performance, art pieces, architectural models etc, placement portfolios, presentational videos) as well as any new and innovative methods of assessment (that universities can use to stand out from their competitors). This decision also implies the OfS has no confidence in the other processes and assurance mechanisms universities use to ensure that benchmark standards are met (EE systems, moderation second marking etc. where we do keep records) as the OfS made it clear that if universities don’t keep assessments they will assume that they were poorly marked. This is not in line with the OfS’ principles of best regulatory practice especially in relation to proportionality and transparency.

In summary, while there is some clarity in the general duties of the OfS, there is also some ambiguity around their interpretation, the performance of OfS has strayed significantly from these duties, to the extent that there is significant risk of serious harm to the sector. We have little confidence that OfS properly understands the sector or is willing to listen to the sector voice where it might learn a better understanding.

2

How closely does the OfS’ regulatory framework adhere to its statutory duties? How has this framework developed over time, and what impacts has this had on higher education providers?

There has been significant drift from the regulatory framework since the inception of OfS which go beyond what could reasonably be understood as its remit.

For example:

1. In English language requirements (spelling and grammar) - academics are best placed to judge where SPaG is relevant within a curriculum, how this impacts on admissions choices, and how this should be assessed within any course offer. Institutions have autonomy over their admissions, so this interference is at odds with a core duty for the OfS to protect the autonomy of institutions. The increasing regulatory burden and edicts from OfS are also at odds with the protection of autonomy.

2. Requirement to regulate institutions for their ability to police sexual misconduct and harassment. We do not condone any form of sexual misconduct and harassment and work with staff and students to raise awareness of issues and have policies and processes in place to deal with incidents. We, however, do not feel it appropriate that providers are expected to fill gaps that the police cannot deal with. Policing is not a function of a university, and regulating in this area is highly specialist.

3. Requirement to keep work for five years – this suggests a lack of any understanding of the excessive burden this will place on institutions with no clear indication as to why this is being requested; nor any realistic likelihood that it will ever be needed. In institutions like ours, where we use a broad spectrum of assessment mechanisms beyond the essay or exam, which are relatively easy to store, this is particularly burdensome. Some student work is in the form of large portfolios of physical assets requiring significant physical storage space, or video/film/multimedia assets which occupy massive digital storage space, each type presenting a massive resource burden where required to store for any length of time. Also, some student work is required by the students themselves for use in interviews or the development of their own career pathway, for example in architecture, design, education, the arts – to be required to keep work for five years is simply not reasonable or appropriate. The management of 5-year storage will require dedicated archive officers to monitor the data, such is the size of the task, which places additional financial burden on institutions. Again this is not a proportionate request.

4. Setting of thresholds against B3 conditions - these are particularly challenging in areas where there is a significant proportion of households from lower socio-economic quintiles and limited access to highly paid work, placing another burden on institutions which are dealing with  specific local civic contexts and having a significant impact of the economy of the area. Whether intentional or not, this approach serves to reinforce entrenched hierarchies within the HE sector and appears at odds with the duty to promote equal access and participation. There are cultural, social and structural barriers to student mobility which are outside the control of providers, and serve to reinforce current inequalities.  This is compounded by the current situation with maintenance loans where the cost of living rises and lack of uplifts to maintain relative value has exacerbated difficulties in populations of students from low socio economic households and this situation is a significant external factor which is beyond an individual institutions ability to compensate for. The application of narrow metrics as a proxy for ‘student success’ bakes in the inequalities which are present from birth and fails to appreciate the transformational change which education can bring, including to those who do not go on to command great salaries. We would support the OfS’s focus on ensuring that students can progress into employment or further study, as we share this ambition, however, we would challenge the transactional view of success as defined by ‘how much money you earn’. We believe the OfS does a disservice to students through its narrow definition of the power of education to change lives.

Throughout the at least 18 years of the individual’s life before they decide to study with a provider, society has the opportunity to tackle some of these inequalities. Whilst universities should be part of a solution and are committed to the part they can play they cannot fully compensate for 18 years of social, educational and economic deficit.

5. Request for participation on consultations which are then ignored – despite the time and effort put into such participation – is deeply distracting and resource intensive.  This diverts resource away from the core purpose of providers to teach and support their students, as they feel required to respond despite mounting evidence through experience that the feedback will not be taken on board. Alongside of the need to produce reports and participate in unwieldy regulatory exercises this takes resource away from students and seems contradictory to the core purpose of the OfS as we understand it. Ignoring the outcome of consultative processes has left the sector feeling disempowered to the extent that we now ask ourselves whether it is worth engaging in the consultation. One example of this is seen in the consultation regarding NSS questions. In its report on this consultation OfS quotes at paragraph 80: ‘Most of the responses disagreed with the proposal to remove the summative question for England (Q27 Overall Satisfaction). Many thought this was a useful question that enabled students to feedback holistically on their experience.’ The data showed that over 90% of respondents disagreed with this aspect however at paragraph 98 the OfS’s final decision was ‘Therefore, we have decided not to retain a summative question in any form for England’ which represents a complete disregard for the majority opinion. This is significant as the changes are for England only and there is now a disconnect with NSS as operated in the devolved nations, which cannot serve students well.  Similarly in the final TEF consultation document it acknowledges throughout that the sector was critical of proposals but decided to ignore this criticism. As one example, see paras 101 to 114 which discusses educational gain. The argument here is that there is no definition with which to work and the sector suggestion was to wait for this to be developed before introducing it: OfS chose to implement educational gain in the 2023 TEF and asked institutions to define their own and to suggest how they were going to measure it.

We would argue that if we as a University responded to consultations with our stakeholders (our students) in the way that OfS responses to consultations with the HE Sector, we would be rightly criticised for ignoring stakeholder voice.

6. Metrics introduced to evaluate HEIs do nothing to enhance the quality of HE provision. There is very little focus on the quality of provision beyond the use of proxy metrics via TEF, and no focus on quality enhancement which has served the sector well in the past. This is one symptom of the metrics driven approach.

7. There are contradictions baked into the OfS systems. Recently released Key Performance Measures on the one hand signal providers should work with students to help them attain good degree outcomes, yet on the other, criticises institutions for high proportion of first-class degrees. There has been significant focus on improving teaching and learning over the past ten years, which surely should lead to improvement in student performance. This also undermines the hard work students put into achieving high degree outcomes, and discredits any work institutions are doing to remove attainment gaps.

3

What is the nature of the relationship between the OfS and the Government? Does this strike the right balance between providing guidance and maintaining regulatory independence?

It is difficult to disentangle OfS from Government. Political headlines are very quickly translated into OfS policy which places additional burden/responsibility on the University sector. There does not appear to be balance. Edict masquerades under the thin disguise of “guidance”, and there is no confidence in the OfS in its claim to maintain regulatory independence from Government.  For example, even at a high level, the appointment of Conservative peer, James Wharton as Chair of OfS.

As a further example, the populist press targeted graduate capabilities in written English (without clear evidence), and the interest in this story led to a small number of headline-chasing MPs raising concerns about the quality of English in HEIs. This quickly translated into an OfS edict imposed on the sector requiring spelling and grammar assessment, without any investigation of what was common practice or the rationale for the sector position.

The OfS is written to each year by the government to outline the areas the OfS should focus on for the next 12 months (with the letters being published and circulated as part of the process). These letters generally link to the headlines of the day and this prevents the OfS from being seen as independent. It will be interesting to see, if there is a change of government, whether the nature of the relationship between the OfS and a new government changes as a consequence.

The differential application of NSS in England and the devolved nations is another indicator that the coherence of HE in the UK is falling apart which could lead to political ramifications. Note that a consultation into how the NSS data for 2022/23 should be communicated was put to the sector on 29th March – surely this should have been considered prior to changes to the survey being released?

4

Does the OfS have sufficient powers, resources and expertise to meet its duties? How has its expertise been affected by the Quality Assurance Agency for Higher Education’s decision not to continue as the OfS’ Designated Quality Body?

The OfS has too much power and too little expertise, which has become increasingly evident over time, and seen through the demands made of the sector with little understanding of how the sector operates.

It’s inability to understand fundamental precepts of education quality systems was exposed through its relationship with QAA, and QAA decision to discontinue as DQB – an issue forced by OfS refusal to align with international expectations of HE quality systems. QAA has significant and long-standing confidence of the sector; its policies and frameworks have been developed over time in consultation with the sector and with genuine engagement with the student community. The quality management of HE is complex and wide ranging and QAA’s understanding of this was exemplary and held in good regard internationally as an organisation which takes a careful and measured approach to quality assessment and improvement. The European Quality Assurance Register for Higher Education and other international HE quality bodies have been informed by what is seen as international best practice from the QAA in defining their own quality assurance processes. QAA withdrew as DQB as these bodies recognised that the way that QAA was required to function as the OfS’s DQB did not conform with these standards namely around involvement of students in review visits and in the transparency in terms of publication of review visit outcomes.

The consequences of this action are that the English HEI sector is isolated from the quality assurance and enhancement systems which operate in other devolved nations, in Europe and internationally and is effectively not compliant with international expectations. Given the key role of the QAA in driving enhancement and the reputation that the UK had through the QAA it is difficult to justify OfS’s disregard for the same standards.

The sector is currently awaiting any transparency on the expertise available within the OfS to function as its own DQB. There is very little confidence that they have the relevant expertise and recent advertisements would suggest that it is not yet available within the organisation, and that individuals are dissuaded from applying because of the lack of standing of OfS with the sector.

The reasons behind the QAA decision to discontinue with OfS is worth revisiting as the OfS does not emerge well from this.

5

How does the OfS measure value for money for students? How can this be measured in an objective, tangible way that is not based on economic or political judgements about the value of subject areas or types of institution?

See question 1, response section 1.

Current measurement of VfM as assessed by the B3 progression metrics is flawed as it looks only to whether a student is in graduate employment/further study, based on income, at fixed points post-graduation. It is transactional, and underpinned by a hidden narrative which drives grade inflation.

It also disadvantages certain types of programme linked with the nature of the fixed point assessment and the expected pathways of career development post graduation. For example, social science students, before moving into a career in social work, are advised to spend time working in elderly care settings – low paid work as registered at GO survey points, yet valuable in the development of social workers. Students graduating in arts-based programmes will devote several years to developing a portfolio of work while accepting low paid employment in order to secure reputation and lucrative projects. This approach also doesn't account for structural issues such as gender pay gaps that are outside of our students’ or institutional control.

A better approach would be to assess societal value, taking account of the communities served by graduates and the contribution they make to civic life and local economies. For the individual student then VfM should be tailored to their context and there are significant studies showing the lifetime value to an individual of graduate status. In Scotland HEIs reference their ‘economic impact’ as a monetary value – this would provide a flavour of the impact of individual institutions.

6

How does the OfS engage with students? To what extent does input from students drive the OfS’ view of their interests and its regulatory actions to protect those interests?

There is very little evidence to suggest that the OfS engages in a meaningful way with students. The OfS appears to have a view on what students’ interests are, or should be, but there is little evidence of genuine consultation. They have a student panel but its influence on the overall strategy and direction of OfS is not clear. The panel requires 6 students to be quorate; this doesn’t seem like wide engagement.  There is a missed opportunity to integrate students as partners or co-producers in designing, implementing, monitoring and reviewing processes to improve the quality of their education.

One of the key terms of reference of the panel is to help the OfS to understand, and take account of, the interests of students (short, medium, and long term) in its policy development and decisions. This suggests at best a marginal and advisory role, rather than any form of genuine co-creation. The meeting minutes suggest that students are briefed on the OfS’ thinking and told why the OfS has decided on a particular route.  Rather like the consultations with providers, we are left with the impression that the OfS asks for views, only to do whatever it was intending to do anyway. Whilst it seems fair to recognise that the OfS listened to students’ concerns about Covid, it would be interesting to know how many students believe other OfS generated initiatives take account of their primary interests. Another example links with the student union submissions to the TEF. The OfS document assessment methods for TEF documentation from each institution does not make it clear the impact of student based submissions in overall judgement ratings, or even if they are taken into account at all. OfS frame this in the context of the difficulties and variances of the ability of student bodies within HEIs to respond. This is somewhat disingenuous given that all HEIs are expected to take part but the variation across the sector is not considered.

From our perspective the engagement of the OfS with our student body is tokenistic and this is borne out by our Students Union comments on their dissatisfaction with the lack of clarity given about the role of the student submission in TEF submission. Students' Unions can play an important role in representing students, but (in common with Universities) spend more time responding to OfS regulatory consultations than in meaningful contributions about student interests. 

7

What is the nature of the OfS’ relationship with universities? Does the OfS strike the right balance between working collaboratively with universities and providing robust challenge?

Not at all. There is no sense of collaboration with the HE sector.  The nature of the relationship is of mistrust with conflict simmering under the surface, and a brittle veneer of politeness on top.

Academics are in the business of providing and receiving robust challenge; the OfS appears to be confident in delivering the challenge to others. The complete rejection by the OfS of any constructive criticism arising from the various ‘consultations’ is clear evidence that they do not currently work collaboratively with the sector (see question 1 and 2 above). The Regulators Code suggests that ‘when providing advice and guidance, legal requirements should be distinguished from suggested good practice and the impact of the advice or guidance should be considered so that it does not impose unnecessary burdens in itself.’ It is difficult for universities to distinguish guidance from instruction given the high-handed approach taken by the OfS.

OfS’s use of metrics, for example in the B3 outcomes assessment is problematic for the sector for long term planning. OfS ‘chooses’ the areas of investigation based on risk and other factors and these change year on year with a subset of characteristics used for the analysis. HEIs with lower metrics in these areas are then chosen for investigation. This lack of transparency over areas identified, especially given the potential reputational consequences is not a collaborative approach. OfS talks about a ‘risk based approach’ but does not notify institutions of whether they are considered high or low risk and this means uncertainty for the sector.

The latest proposal around the charging structures that OfS will use to charge institutions to investigate them gives rise to a conflict of interest and is heavily weighted towards the OfS’s interests.

8

What systemic financial risks are present in the higher education sector? Is there the potential for significant provider failures if these risks crystallise, for example through an unexpected reduction in numbers of overseas students or an unexpected increase in pension costs? Are these risks limited to particular groups of providers or are they widespread or systemic in nature?

At a systemic level financial risks emanate from a set of circumstances where government policy directly impacts on HEIs operational budgets. The regulation of tuition fees (and the government policy on student loans) leaves institutions unable to increase the tuition fee rate in response to rising costs. The tuition fee has effectively flatlined (from £9000 in 2012 through to £9250 in 2017). Increases in line with inflation would have put the fee over £12000 in today’s terms and this erosion of the relative value of the fee coupled with increases in pension and salary costs puts significant financial constraints on HEIs. The majority of these costs in any institution are negotiated nationally and choice of pension schemes are also a matter of legislation rather than institutional choice.

The HEI sector is large and diverse and as a result the financial risks faced by institutions vary depending on the part of the HE market they operate in, however a significant number of providers bridge the financial gap linked with a deficit in Home student income through international student fee income. This is another systemic risk across the sector. International fee income is subject to government immigration policy constraints (with control of visa allocations) and any changes to this policy could limit the ability of an individual HEI to offset deficits in home fee income. The reintroduction of the post study work visas has driven a significant uplift in international fee income over the last few years but, as above, immigration policy changes would decimate this market. The international student market is also vulnerable to shifting global economic, political and geographical contexts.

The risk of financial failure if mitigated through statutory financial audits as well as a comprehensive system of internal control but many of the risk factors above are not within an individual institution’s control. Provider failure is increasingly likely as income fails to keep up with cost pressures and institutions look for ways to reduce the cost base, which inevitably puts the quality of the student experience at risk. The reliance of many institutions in the sector on international fees does lead to significant risks of provider exit, or as a minimum, curtailing of student choice across the sector.

Institutions at particular risk of failure are ones where there is not a diversified portfolio (e.g. small and specialist institutions), or the impact of measures such as graduate outcomes disproportionately impacts on the perceived quality of a course / provision.

A further systemic risk across the sector is the level of the maintenance loans which are insufficient to support students to fund their studies. Students from low income backgrounds who do not have access to family based subsidies. Coupled with inflation and consequent cost of living concerns the impact of the erosion of the relative value of these loans impacts more heavily on this group and reduces the affordability of HE. This could have differential impact across HEIs with those working with a widening participation agenda experiencing declines in student recruitment and consequent increases in financial risk.

9

What business models are present in the UK higher education sector? Are these models resilient to the financial risks of the sector, and are universities focusing sufficiently on having a viable business model?

With the introduction of higher student fees, the sector has migrated towards the concept of ‘the student as a customer’ based market model. There are numerous debates around the value of that model in a HE context but it is the model that government and OfS are driving. Within this individual institutions function to generate their own strategies and operating models generally based on a ‘growth’ trajectory, necessitated by the cost base outstripping the income (see above) with structures that generally reflect the size of the HEI in terms of complexity and extent of devolution of responsibility. Escalating costs without growth also drive an efficiency agenda with potential detriment for high cost subjects (generally in STEM) compared to lower cost subjects.

Across the sector then institutions and their governing bodies have a large focus on a maintaining financial viability but the interplay of external factors beyond their control makes this increasingly difficult. A business or strategic model chosen by an institution will generally be successful as long as the culture which underpins it sufficiently aligns with a balance between autonomy and accountability but the necessary drive for efficiency could lead to a significant shift in the portfolio on offer to the students.

10

How does the OfS oversee the financial sustainability of higher education providers and the higher education sector? Is its approach clear, and is its oversight sufficient to spot potential risks early on and take action accordingly?

The oversight is adequate in as much as it receives financial data which is both forward and backward looking, however it is not clear to what extent the OfS “stress-tests” the robustness of forward plans or checks them against performance. This would be particularly pertinent for institutions where cash / cash-equivalents are under pressure and the forecast accuracy does not have a strong track-record. 

The OfS regulates for the provision of ‘Student Protection Plans’ but these are aimed at what would happen to the students in the event of provider exit, not in the context of spotting a provider at risk. The OfS approach to dealing with providers at risk (C4) would result in further decline in reputation and potentially accelerate provider exit. The OfS’s approach is for protection of the students not the HEI and at the point of intervention by the OfS under C4 then significant financial decline has already happened. It is not clear that the OfS’s oversight does pick up risks at a sufficiently early stage to allow meaningful rescue based interventions.

There is no evidence of the OfS as a regulator intervening to protect one particular institution and the policies are based around stated lack of intervention. It would be interesting to discover how oversight was managed in the case of the University of East Anglia, a major HE institution which is now in significant highly publicised financial difficulties.

11

What is the OfS’ tolerance for the failure of higher education providers, and what processes are in place to manage provider failure? Would the failure of a large provider follow a clear regulatory process or is there the potential for political considerations to play a role in such decisions?

As discussed in question 10.

To date there is a lack of any evidence of OfS managing provider failure in any context. There would be a low tolerance for the failure of providers. That is not to say that individual providers might be allowed to fail, however, the failure of a large provider would have consequences to the whole sector, and is likely to be the subject of some political interference, for example the effect on the local economy or the availability of alternative provision for the cohorts of learners. The OfS’s policies are around the protection of the students rather than continuation and rescue of the HEI per se.

Many large providers have a civic role to play within their community, and the impact of any failure of established institutions which are integrated into the local economy (bringing income to the local area, investment in infrastructure, knowledge transfer, providing skilled employees etc) should not be underestimated, particularly in Northern England. It is difficult to envisage that political considerations would not play a role in these decisions.

12

To what extent is the financial sustainability of providers determined by government policy and funding rather than the OfS’ regulation? Is there a need for policy change or further clarity to ensure the sustainability of the sector?

See question 8.

Government policy is the key determinant of financial sustainability, with the regulator responsible for oversight through a number of returns of student and financial data to provide assurance. The government policies dictate the unit of income to HEIs whilst the regulator is merely assessing the financial health in a retrospective manner through annual returns.

Any required policy change has been slow to be enacted, with the consequential uncertainty creating a vacuum in which institutions are forced to make their own assumptions and action planning about future income amounts rather than responding to a clear policy direction. HEIs (especially large providers) have institutional control over portfolio development, making decisions over efficiency and viability with potential impacts on STEM subjects and the vocational verses non vocational balance in each context.