ISL0004

Written evidence submitted by Professor G.R. Evans

University of Cambridge

Value for money: the assessment of quality and standards in the work of franchised providers

1. The title of the present Investigation directs it to ‘student loans issued to those studying at franchised higher education providers’, but the Committee is more broadly to ‘take evidence from the DfE, OfS and the SLC on subjects including effective oversight of the sector’.

2. These include the implications of franchising for the maintenance of the quality and standards of higher education in England. The PAC is to rely on the recent findings of the NAO in its own investigation, dated 24 January 2024, which include such concerns.[1]

3. A decade ago questions began to be raised about the conduct of  certain alternative providers which appeared to be over-expanding their intake of students because of the loan funding they brought with them. An NAO inquiry of 2014 was already intent on examining the resulting risk to taxpayers’ money.[2] The presumption when student fees were raised that loss resulting from student loans would not appear on the nation’s balance sheet was questioned as a ‘fiscal illusion’ in 2018.[3]  The resulting decision was to treat the loans as a cost to the taxpayer, bringing concerns raised into the area of the present PAC investigation into such financial risks,

4. A follow-up NAO inquiry published in October 2017 asking whether Government policy objectives were being met was framed before the current legislation came into force.  Nevertheless it pointed to problems with the quality and standards of provision among ‘alternative providers’. [4]

5. The Higher Education and Research Act (2017) s.2 [HERA] defines the ‘institutional autonomy’ it deems all higher education providers to possess in maintaining their quality and standards. Its features are listed principally in the terms established by the ‘Robbins’ Report of the Committee on Higher Education (1962)[5] and the Education Reform Act of 1988 s.202, with the addition of ‘the freedom of English higher education providers within the law to conduct their day to day management in an effective and competent way’. 

6. However the legislation does not address a question now before the PAC, that is whether some providers may be better qualified than others to act as ‘lead providers’ responsible for the quality and standards of providers they franchise. Nor could it foresee the potential consequences of recent developments affecting the registration of higher education providers by the Office for Students, such as the use of ‘split indicators’[6] and the consultation on the inclusion in higher education of Higher Technical Consultations, which may involve ‘partnerships’.[7]

7. Not all alternative providers offer the degree-level courses for which franchising is needed if they are to offer Level 6 courses leading to the degrees of a provider with dregree-awarding powers. In its 2014 Report[8] the NAO found that a third of the student population at alternative providers were seeking Certificate or Diploma qualifications at Levels 4 and 5 only, accredited by course providers such as Pearson.

8. Even at that level the DfE in its follow-up on the NAO’s concerns found evidence in 2017 that outcomes at alternative higher education providers were often unsatisfactory. They were found to have higher non-continuation rates than ‘the rest of the higher education sector’:

For the alternative provider sector as a whole, the non-continuation rate in 2014/15 was 25% compared with a sector benchmark of 22%. The non-continuation rate for HEFCE-funded [publicly-funded] providers is 10%,

9. Quality and standards shortcomings had been found even though since 2015 ‘all alternative providers must have had a successful Higher Education Review by the Quality Assurance Agency (QAA) in order to receive student support payments’ and the Department had ‘revoked designation for student support payments from three providers on the basis of concerns raised by the QAA’.[9]

10. Specifically, since January 2015, the Department had ‘investigated 14 providers where whistleblowers, data or engagement with partner organisations have raised concerns about quality of teaching’. Alternative providers’ were now to have designation for student funding ‘limited to one year and the Department undertakes annual checks to reconfirm designation’.[10]

11. In 2015 the Department, along with the Higher Education Funding Council for England, had established a joint Alternative Provider Intelligence Unit, which as at September 2017 had 16 staff members. [11] Between January 2015 and November 2016, this unit had considered 32 potential investigations and ‘overall’, the Department had ‘taken action against providers in more than 30 cases where its investigations or data on, for example, non-continuation rates, have identified providers who are not performing at expected levels.[12]

The multiple roles of the Office for Students and its responsibilities for the oversight of the quality and standards of providers

12.The creation of the Office for Students under HERA, has comprehensively altered the former process for the recognition of higher education providers. It now has responsibility for the registration of those higher education providers which meet its ‘Conditions of Registration’ and thus determines whether or not a provider’s students are eligible for SLC loans. The OfS conditions for Registration include  a provider ensuring that students can ‘ receive a high-quality experience’. Its Condition B joins that with ‘positive outcomes’ which are defined chiefly in terms of continuation into employment or further education.

13. OfS Registrations are divided into two categories: of ‘Approved fee-cap’ or ‘Approved’.  Both have similar benefits except that those only ‘Approved’ are not eligible forpublicly-funded teaching or research grants for infrastructure funding.  The Approved fee-cap providers may change fees up to the statutory fee limit if they have an approved ‘access and participation plan’.

14. The grant of degree-awarding powers now also lies with the OfS under HERA. These powers include at s.50 provisions for allowing validation of the taught courses of a franchised provider by a franchising or ‘lead’ provider which has degree-awarding powers. An update on its exercise of degree-awarding powers was published by the OfS on 27 July 2023,[13] and it has published a list of the  taught degree-awarding powers it has awarded between 2019 and 2023. In some cases these are awarded on a temporary or on a time-limited basis.[14]

15. The OfS  added a concern about the protection of quality and standards in a note dated October 2023:

There is an argument that to be able to apply for Full DAPs, the provider should have been in a ‘validation’ partnership with its awarding body and that a partnership based on programmes franchised to the provider by the awarding body does not enable the provider to demonstrate an understanding of setting and maintaining academic standards.

It acknowledges that in practice ‘the categories “validated” and “franchised”, as used by various awarding bodies, can be elastic’. It:

will therefore place the burden of proof on the provider to show that (whatever the formal status of their relationship with their awarding body) they satisfy the overarching criterion and meet the detailed criteria and sub-criteria.

16. Speaking  in the Commons on 26 April 2017 as the present legislation was being framed, Gordon Marsden mentioned ‘the issues that have arisen in the United States with private providers, from the criticisms Baroness Wolf has levelled at a similar process in Australia and from the issues involving BPP and the Apollo group three or four years ago’ as reasons why the safeguards being put into the current Bill were ‘entirely necessary.’   

17. In his view the necessary safeguards should include the provision that the new Office for Students should ‘be advised’ by an ‘independent designated quality body’, 

It is important that the OFS is advised in the way I have described; after all, in the first few years of its existence, it will—whether we take the term neutrally or not—be a creature of the Government, but one that is on probation and on trial.[15]

18. Under HERA ss. 23-8 the OfS has responsibilities for ‘quality and standards’ replacing the former ‘assessment’ duty of the Higher Education Funding Council for England according to which it had made the Quality Assurance Agency its designated body.  The OfS continued to rely on the QAA as the designated body for the purpose.

19. In July 2022 the QAA announced its intention to withdraw as the ‘designated provider’ for this purpose because the Office for Students’ provisions were not compliant with European Standards.[16] In January 2023 the OfS described its provision for the ‘assessment’ of quality and standards in the light of the possibility that it could do this itself instead of appointing a designated body.[17] Unable to identify a suitable replacement OfS took over the task itself from 1 April 2023.[18]

20. The OfS continues to make the required provision for itself.[19]  It has begun to publish reports of its Quality Assessment visits,  concentrating on the Business and Management courses almost universally offered by alternative providers and representing by far the majority choice of their students.

21. It has begun to find some areas of concern on:

the advice of independent academic experts who carried out assessments for the OfS during the 2022-23 academic year. These assessments included on-site visits, with the teams considering a range of evidence, including from staff and students.

The OfS would then consider whether any regulatory action is appropriate. For example:

At the University of Bolton, the assessment team found areas of concern.

At London South Bank University, the assessment team found no areas of concern.

Reports published today set out findings for each of these providers.[20]

22.The NAO Investigation published in January 2024 notes that in October 2023 the:

OfS announced that, for the first time, in prioritising the providers it planned to review, it would consider partnership arrangements between lead providers and franchised providers,

but that meanhile:

OfS does not have powers to impose sanctions on providers that are not registered, including franchised providers.

23. It also states that:

OfS does not currently publish information for unregistered franchised providers, and users cannot distinguish providers where a lead provider has multiple franchising partnerships. This, along with many courses at franchised providers being new or small, may make it hard for prospective students to understand more about potential courses.

24. Fuller information concerned specifically with franchising has emerged in the recent NAO investigation. [21] It records that during that ‘the 2021/22 academic year, 114 (28%) out of the 413 providers registered with OfS had created partnerships with a total of 355 franchised providers’.

25. It points out that there may be sub-franchising by franchised providers:

‘lead providers can create any number of partnerships, with one having 28 franchised providers.Franchised providers can themselves create partnerships, with 31 franchised providers also acting as lead providers during that year.

26. It also notes that franchised (mainly alternative providers), had doubled their student numbers between 2018 and 2022 while eight of the franchising providers ‘were responsible for 58% of all students at franchised providers’.

The former auditing of ‘collaborative arrangements’ by the QAA

27. The Quality Assurance Agency formerly carried out ‘audits of collaborative provision’ in England and Northern Ireland where it did not find it ‘practicable to consider an institution's provision offered through partnership arrangements as part of the Institutional audit’. These audits were designed ‘to provide public information about the maintenance of academic standards and the assurance of the quality of learning opportunities provided for students’. [22] They made possible the audit of non degree-awarding higher education providers themselves and also the effectiveness of the collaborative or partnership arrangements with providers which had degree-awarding powers.

28. These were carried out:

under contract to the Higher Education Funding Council for England and the Department for Employment and Learning in Northern Ireland to provide evidence to meet their statutory obligations and assure the quality and standards of academic programmes for which they disburse public funding. [23]

29. The method was ‘revised in 2006 following recommendations from the Quality Assurance Framework Review Group’ and again in 2009.  No counterpart has been created by the Office for Students.

Conclusion

30. The recent NAO ‘study on the controls over loans issued to students at franchised higher education providers’,[24] describes franchising arrangements as ‘commercial’. In this connection it explains that ‘franchise partnerships can be financially beneficial, particularly for the lead provider’.

31.The SLC pays the tuition fees associated with students at franchised providers to lead providers and the DfE and OfS need not be informed of the agreement between the two as to the ‘amount’ to be ‘shared’. There is no regulation of the basis of the decision. However, OfS told the NAO that it understood ‘that some lead providers retained between 12.5% and 30% of the tuition fees they received:

In 2021/22, 72% of students at franchised providers were registered with lead providers classing themselves as having an income of £200 million or less, compared to 43% of all students registered with providers.

Therefore the financial neediness of franchised providers with alternative providers conspicuous among them also seems to encourage them to enter into franchising arrangements which could bring them income in this way through student fees:

32. However the NAO also suggests public interest ‘reasons’ why ‘lead providers’ may enter into such arrangements which are not ‘commercial’, including to access specialist teaching or local areas’. It notes that the DfE had told it:

‘that it recognises the value of franchised provision in helping to broaden higher education participation’, noting the that nearly half the students at franchise providers were ‘aged 31 years or over at the start of their course, compared with 18% of all students’.

33. It seems unlikely that the protection of quality and standards has a place as a reason for entering into a franchising relationship on either side. On the contrary it is likely to present a risk and it certainly adds substantially to the burden on the lead provider in a franchising arrangement.

34. The risk is the greater because of the multiple powers and responsibilities of the Office for Students. It is responsible for Registering higher education providers; the assessment of quality and standards at higher education providers; and  the grant of degree-awarding powers.  This places considerable responsibility on a single body. 

35. The OfS has itself been the subject of a  recent critical Report by the House of Lords Committee on Industry and Regulators:

Must do better: the Office for Students and the looming crisis facing higher education[25]

This considered the performance of the Office for Students since its inception includes a chapter on ‘quality, standards, choice and competition’ and finds a range of failures by the Office for Students in areas where franchising appears to need further thought.

36. The NAO stresses in its 2024 report on franchising that the lead provider retains responsibility for aspects of a provider’s conduct which go to its protection of quality and standards.

the course content and quality; student wellbeing; outcomes for those studying with franchised providers; and confirming to SLC that students have registered and are attending their courses, so remain eligible for student funding. The lead provider must also notify SLC of any students withdrawing or circumstances changing which may impact their loan entitlement.

37.  There are  at present no accepted or stated requirements in the franchising relationship to ensure that lead providers carry out these responsibilities. The OfS ’ does not have powers to impose sanctions on providers that are not registered, including franchised providers’ and ‘does not currently publish information for unregistered franchised providers’, many of which are ‘new or small’ and may prove to be short-lived. It is therefore not empowered to identify or punish behaviour which may undermine the quality and standards of such providers.

37. The present imperfect arrangements leave students and ‘graduates’ of franchised providers at risk of their qualifications proving to be valueless in the long-term. It therefore seems important that the present PAC investigation too should consider the quality and standards of providers involved in franchising alongside the concerns being raised about financial fraud. The  restoration of a provision comparable to the QAA’s Collaborative Audits might help to bridge the gaps in protective provision.

February 2024