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Explainer: new-look regulation on cards for higher education

How will regulation be tied to funding in future? Lecture via Matej Kastelic/

Universities in the UK face a shakeup in the way they are regulated if proposals set out by the government in a new green paper go ahead as planned.

Alongside plans for a Teaching Excellence Framework, to reward those universities home to the best teaching, the government aims to remove the long-established ties between regulatory authority and how much each university receives from the state. Instead, higher education is moving to a position found in many other sectors – where regulatory agencies operate under clear legal purposes, irrespective of how much money they hand out.

Personally, I welcome the proposal to merge the Higher Education Funding Council for England (HEFCE) and the Office for Fair Access (OFFA) into a new Office for Students (OfS), and also to require institutions to make provision for consumer protection for students in the event of closures.

The Higher Education Commission, whose inquiry and subsequent report I co-chaired with Lord Norton in 2013, strongly argues for such measures. The move towards a more level regulatory playing field for providers, so that alternative providers are treated in ways similar to the well-established institutions who get their funding from HEFCE, is also strongly supported by the Commission.

New ways to award degrees

Alternative providers could get an alternative way of handing out degrees. Frannyanne/

The green paper actually goes further than the Commission did here. It rather imaginatively explores ways in which alternative university providers may be able to achieve degree-awarding powers and university title more readily and independently than now.

The paper’s proposal to consider the creation of an awarding and validating body that hands out degrees – without having to pass through a conventional university – is redolent of the approach of the old Council for National Academic Awards (CNAA). This worked well for the polytechnics in the 1970s and 1980s in guiding them to governing autonomy, degree-awarding status, and eventual university title. This suggestion should do much to speed up the competitive strength of the alternative providers as desired by the government.

Whether such a body is best situated within the new Office for Students, as proposed by the green paper, is more debatable. Perhaps it would be better if such an agency had clearly-defined autonomy and organisational “clean hands”, away from the other pressing concerns of the OfS.

Not radical enough?

In many ways, the document is rather conservative and could have taken the opportunity to highlight more radical options. For example, perhaps the Student Loans Company could also be folded into the OfS so that the money is commonly located.

There is also no real hint of the government’s view on whether the Quality Assurance Agency (QAA) – which currently monitors quality in universities – should be abolished or retained. The green paper argues that, as a sector-owned body, it has no real authority or responsibility for QAA (leaving this matter to HEFCE and, in future, the new regulator). But this is rather ducking the issue. It is an important policy matter that we need to hear more about publicly from the Department for Business, Innovation and Skills (BIS).

The green paper also, commendably, aims to free up institutions that became universities after 1992 – known as post-1992 universities – to dissolve themselves and to transfer their assets. No doubt the aim is to aid mergers and possible amalgamations, including with new alternative higher education providers.

BIS suggests that the current “public interest” provisions in governance arrangements will still be required. Rather bizarrely, however, it suggests that if a university was not meeting this public interest, the sanction would be an impact on “continuing grant funding” for an institution. Yet, with the thrust of the green paper moving the sector away from regulatory authority that is linked to funding allocations, this is jarring.

The green paper also suggests that responsibility for the allocation of teaching grants, currently held by HEFCE, could move more directly to BIS rather than to the new OfS. This would enable government priorities to be reflected in any funding decisions.

Ghosts in the green paper

It is worth noting that the ghosts at this feast of a green paper (it is stultifying in its length), are the Comprehensive Spending Review and Autumn Statements to be made by chancellor George Osborne on November 25.

Questions remain on whether there are any assumptions being made in BIS and the Treasury about the savings that may accrue from the creation of the new OfS. There is also a possible danger that planned reductions in expenditure could restrict the regulatory functions and powers of the new regulator.

The proposals suggest institutions will pay for their regulation through a subscription model. BIS estimates that this will save £25m, perhaps a rather modest if unwelcome contribution by the higher education sector to reducing the national public expenditure deficit.

Although we find that regulators in other sectors, such as the press, are often funded through a subscription or levy on those being regulated, this is often accompanied by at least a modicum of co-regulation between the agency and the sector itself.

In this instance, the government envisages the OfS as operating much as HEFCE has done, as a statutory body with the “intermediary” role very much balanced towards the interests of government. If institutions – as subscribers – start to pay for the privilege of being regulated, will the OfS regard institutions as its “customers”? After all, this is the overall tenor of the higher education reforms.

In which case, how much is the regulatory function likely to be compromised by customers being “at the heart of the system” and bridling at any regulatory reining-in of their activities?

You take consumerism far enough and you can begin to regret what you wished for.

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