Additional Supplementary Written evidence from the Office for Students (WOS0069)

30 May 2023

Dear Baroness Taylor

Industry and Regulators Committee: Inquiry into the work of the Office for Students

Thank you for inviting Lord Wharton and me to give evidence to your inquiry into the work of the Office for Students. I said during my evidence that I would write to you with more information about our approach to student engagement. I also wanted to follow up on two other issues that we discussed during our evidence session. I’ve therefore attached short briefing notes on the following subjects:

• Annex A: Student engagement
• Annex B: Financial sustainability and risk
• Annex C: European quality expectations

You might also find it helpful to know that, since our evidence session, we have started our programme of visits to higher education institutions. We expect senior OfS colleagues to complete around 20 visits to a range of institutions before the end of the academic year, with more scheduled from the autumn.

We have also seen a high level of interest from vice-chancellors and principals in joining our first briefing session for accountable officers which took place on 23 May and focused on our work on quality. We also continue to remind vice-chancellors of their named OfS contact in my fortnightly mailings and to encourage them to get in touch with the team.

We hope that visibly responding to feedback from the sector in this way will bring benefits to the OfS and institutions. We want to build better understanding across the sector of what, how and why we regulate, and to make sure we have opportunities to hear from institutions in a richer two-way dialogue.

I hope these additional points are helpful to the committee, but please do contact me if you have any further questions about any aspect of the OfS’s work.

Yours sincerely

Susan Lapworth

Chief Executive

Annex A

Student engagement

We are mindful that the name of the OfS, and our regulatory approach, can create expectations from students that we might not be able to meet. This issue is on our organisational risk register and we think about it routinely.

The whole organisation, from the board down, is focused on regulating in the interests of students. The Higher Education and Research Act 2017 (HERA) and the regulatory framework create that context for our work and our new organisational strategy focuses on two core areas that matter a lot to students: quality and standards; and equality of opportunity. To implement those policy priorities we have a student engagement strategy[1] which sets out how we involve students in our work. It has several aspects:

1. We have a board member appointed because of their experience of representing the interests of students. That is a requirement in HERA and the appointment is made by the Secretary of State on the same basis as for any other board member.
2. That board member chairs our student panel. The panel advises on our work, especially on student engagement. Other board members attend panel meetings, and have taken part in ‘reverse mentoring’ between panel members and board members, which has been valuable for both groups. There is a report from the panel to the board after each meeting, ensuring the panel is properly built into the OfS’s governance arrangements.
3. The student panel has done important work with us over recent times. For example, the panel:

• Shaped the scope of the review of blended learning we carried out towards the end of the pandemic, with panel members joining the review team, taking the lead on sessions with students in the providers that took part, and contributing to drafting the report.
• Was instrumental in ensuring that there was a student submission for the Teaching Excellence Framework (TEF) – 89 per cent of providers included a student submission giving is access to important evidence about students’ experiences.
• Has been involved over a long period in the development of our work on harassment and sexual misconduct. That work is a direct response to students’ interests – with a much more significant number of consultation responses from students or student groups than we would normally expect.

4. The student panel cannot give us a comprehensive understanding of the views of students across the sector and so we have two main mechanism to gather those views:

• We run the National Student Survey (NSS) which asks all final year undergraduate students a series of questions about the quality of their course. That covers around 500,000 students each year, has a very high response rate (around 64 per cent compared with 40 per cent for the Australian QILT SES survey) and is one of the largest student surveys in the world.
• We poll students – including an annual poll of around 3,000 students on a range of issues including their perception of value for money and polling on particular issues during the pandemic.

5. The intelligence we collect from students feeds into our regulatory work, for example:

• We use the NSS data to construct indicators that we consider when looking for signs of risk for individual providers, and as a core part of the TEF.
• We receive ‘notifications’ from students, or from their parents, about issues they have experienced in their higher education provider. We have received over 1,000 notifications since 2018, 46 per cent of these were from students, a further 10 per cent from parents. They most commonly tell us about concerns with the quality and standards of courses, and we use these notifications to inform where we focus our regulatory attention.

6. Students are active participants in reaching judgements about the quality of courses, most notably as full members of the TEF panel.
7. We have produced a ‘guide to the OfS’[2] for student unions, and provide training on our work to newly elected sabbatical officers.
8. We meet regularly with the National Union of Students (NUS) and have continued to do so over recent months as the government stepped back from formal engagement with the NUS because of concerns about antisemitism. We thought it was important that the lines of communication stayed open while the NUS was tackling those difficult issues.
9. We issue a student-facing bi-monthly newsletter which reaches 1,000 people.

In addition to our work described above to engage with, and understand the perspectives of, students, we have also put in place regulatory requirements, in a condition of registration, to ensure each provider also engages effectively with its own students.

Annex B

Financial sustainability and risk

We provided evidence to you about the risks we have identified for the higher education sector and for particular groups of providers. I also explained the approach we take to monitoring the financial sustainability of individual providers. We have since published our annual report on financial sustainability.[3] The report finds that that, broadly, the sector’s finances are in good shape. However it explains that there is significant variation between providers, and all of them face a number of financial risks which they should seek to understand and mitigate. These include the continuing impact of inflation, an overreliance on fees from international students at some providers, and continuing challenges in terms of maintaining estates and facilities.

Key findings from the report include:

1. The sector is expecting to report growth in income across the next three years, rising from £40.8 billion reported in 2021-22 to a forecast £50.1 billion in 2025-26.

2. The sector’s cash flow and surplus for 2021-22 have improved compared to 2020-21. However, the sector is forecasting a decline in financial performance and strength in 2022-23, with costs increasing at a faster rate than income and a significant dip in the income and expenditure surplus.
3. In 2021-22 total higher education course fees and education contracts were reported at £22.5 billion, an increase of 8.8 per cent compared with 2020-21 (£20.6 billion). Fee income is forecast to increase to £29.3 billion by 2025-26, with a 17.5 per cent forecast rise in student numbers between 2021-22 and 2025-26 across all levels of study. However, this trend varies significantly between different universities and colleges.
4. Total non-EU (overseas) tuition fee income was reported at £7.8 billion in 2021-22, an increase of 25 per cent compared with 2020-21 (£6.3 billion). This is consistent with strong growth in overseas fees in recent years. At an aggregate level, non-EU fee income as a proportion of total income is forecast to increase from 19.3 per cent in 2021-22 to 24.0 per cent in 2025-26, highlighting the sector’s increasing reliance on fees income from non-EU students to sustain their activities.
5. Overall cash holdings and short-term investments are reported to be £16.6 billion for 2021-22, improving by 10 per cent since 2020-21.

The committee asked in evidence sessions about business models that involved overreliance on income from international students. I agree with those concerns and can tell you that we have recently written to 23 providers that particularly rely on income from Chinese students to ensure they understand these risks and have contingency plans in case of a change in recruitment patterns.

We will continue to prioritise our work on financial sustainability, focusing on ensuring students are protected in the event of a provider is exposed to significant financial risk. We have published a set of three case studies[4] which explain how we have approached these issues in relation to individual providers.

Annex C

European quality expectations

As Lord Wharton said during his evidence, the international reputation of the higher education sector is important, including because of the significant trade contribution the sector makes to the UK. That reputation is based on the excellent teaching and research of universities and colleges rather than on the particular quality assurance processes that we use. It is, however, important that international partners and prospective students understand that the sector is well-regulated in relation to quality and the OfS will continue to make that case in the UK and beyond.

In relation to the quality assurance frameworks in place in Europe, the OfS has been an affiliate member of the European Association for Quality Assurance in Higher Education (ENQA) since 2018 because we want to be part of discussions about the international quality landscape. However, we think the European model needs modernising to accommodate more diversity in the way different national systems operate. We have written to the European Quality Assurance Register for Higher Education (EQAR) on some of these points but have not yet received a response.

The main issues for us stem from a mismatch between European expectations and the approach set out in HERA. For example, the European approach does not properly accommodate risk-based regulation, which is an obligation placed on the OfS by the legislation. In addition, accreditation focuses on a particular quality agency and its work, rather than on the quality system in a country as a whole. This means, in our context, EQAR has been looking at the QAA and its work, rather than looking in the round at arrangements in England[5] and so it has not considered important parts of the regulatory system.

You heard about two specific issues in other evidence sessions that I did not manage to address directly in my evidence. I wanted to do that now:

1. Students on assessment teams.
   We agree that it is important to build students into our approach to quality and we have done that in several ways. For example, the TEF panel has 20 student members, including a student deputy chair. These students are built into the decision-making process on the same basis as academic members, testing the evidence and reaching judgements for each provider. This involvement of students in assessing quality is not taken into account in EQAR’s judgement about compliance with European frameworks because it is focused narrowly on the QAA’s work, which does not include the TEF.
   We plan to consider whether it is appropriate to go further and involve students in other aspects of our work on quality, but we think the arguments can be complex. For example, if we are concerned about whether a provider’s approach to assessment is rigorous and the marks awarded to students are appropriate, we need an academic to look at students’ assessed work and give us an expert judgement. It is less obvious that students could provide that sort of professional judgement on academic standards.

2. Publication of assessment reports.
   Unlike some regulators, the OfS does not have a duty to publish information about our activities and the original legislation did not make any provision for publication. We asked ministers to resolve that issue and Parliament amended HERA to give us a publication power in 2022. Importantly, that is a power not a duty.
   We have a general policy that we would normally expect to publish reports on quality but we cannot say we would always do so because we have to properly exercise the discretion the legislation gives us. We have to consider the mandatory factors set out in HERA, turning our minds to the interests of students, providers, the public, and thinking about any serious and prejudicial impact on a provider resulting from publication.
   Publishing a quality assessment report that is critical of a provider may well give rise to serious prejudicial impact. It is therefore particularly important that we fulfil our duty to balance those different interests in each case. Our understanding of the issues in relation to the QAA’s EQAR registration is that reports should always be published. The terms of the legislation in place in England mean that it is not possible for us to agree to that policy approach.

30 May 2023

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