When the Higher Education Funding Council for England (HEFCE) closed in 2018 and its duties were carved up and distributed between the Office for Students and Research England, we have inadvertently wound up the very function that the sector and the government now need most.
As the sector struggles to find genuinely collaborative solutions to a perfect storm, we are weaker for not having the brokerage that HEFCE once provided between institutions themselves, and also between the sector and government.
We miss working closely with an organisation that understood the sector and its individual institutions intimately, so that it could both provide useful evidence and insight to shape government policy and corral us to develop and deliver new innovative approaches to programme delivery, technological developments or systems-level challenges.
The introduction of HERA 2017 exacerbated what competitive threads already existed in the sector, threads HEFCE often helped to overcome through its stewardship.
We are now confronted by the genuine problem of trying to identify opportunities for collaboration from within a formal and competitive marketplace, forces within which have been intensifying more recently due to volatile immigration policy, rising operational costs and reduced student demand in some areas, to name a few challenges currently around.
It’s a problem that the Department for Education’s HE Reform package should actively seek to resolve to usher in a new era that moves the sector towards greater collaboration in the national interest.
Defining the problem
In September 2015, then Minister for Universities and Science, Jo Johnson, delivered a speech proudly talking about a record number of students accepted into the UK’s universities, stating “we have no target” for “the right” size of the higher education system, but believe it should evolve in response to demand from students and employers, reflecting the needs of the economy’.
He went on to talk up the level of demand and credited the 2012 reforms as being a key driver of change:
This government values competition. We want a diverse, competitive system that can offer different types of higher education so that students can choose freely between a range of providers. Competition not for its own sake, but because it empowers students and creates a strong incentive for providers to innovate and improve the quality of the education they are offering.”
In many ways, those reforms and that competitive market led to growth in tuition fee income and student numbers, which contributed to investment in our facilities, community and civic agendas, mental health and student support.
There are of course some restrictions placed on that market by government to temper it (not least price caps), though there remain many ways in which it is expected to compete, perhaps particularly as institutions seek to attract students.
So, when a competitive market starts to falter, perhaps because of restrictions to a key source of demand (like international students) or funding (like a frozen tuition fee), government should consider interventions to address market failure.
Indeed, HERA2017 allows scope for even the regulator to address market failure, so it’s not a lack of imagination on the part of the founding legislation preventing this course of action.
The role of the Office for Students
Amongst its general duties, as set out in the HERA, OFS is intended 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.
OFS was created to regulate the competitive market. The nod to “having regard to the benefits from collaboration” is difficult to administer in the current regulatory approach.
There is certainly plenty of evidence of how the OfS has invested in regulatory strategies and compliance, but much less of how it has used its scope to intervene where competitive barriers are too great to achieve a necessary goal like securing the sector’s financial footing.
It could be argued this approach reflects an unnecessarily narrow interpretation of the powers and duties put forward in HERA 2017.
Collaboration
OfS could do more to align its relationships and approaches with a collaboration agenda. The burden of regulation could be reduced. Its focus could shift to fostering creative and collective thinking about responses to the vulnerabilities mentioned previously, alongside monitoring regulatory compliance in a risk-based, outcomes-oriented way.
Indeed, the UK’s own Regulator’s Code steers regulators to prioritise both ensuring compliance and providing support to grow. Given the current state of finances, highlighted just last week in OFS’s Financial Sustainability Report, it would be very welcome and appropriate for a rethink on how and what OFS could be doing to work purposefully with institutions to design responses to these critical risks.
Where competition divides, we convene
It is not down to OFS to solve this crisis, though we see a major role for them to play if we could reimagine a more effective regulatory approach for the sector. The reason we’ve author this as sector body leaders is because we recognise that our organisations may also have a role to play in this work.
Sector organisations like GuildHE, AHUA and others are well-placed to convene a wide variety of colleagues to help carve solution-oriented paths forward on behalf of the sector while navigating political sensitivities and delivering broader public benefits.
Rocks and hard places
The government now finds itself wedged between the desire to drive economic growth and the prospect that parts of the HE sector are weakening under the strain of protracted under-funding, with many already closing courses and actively shrinking their institutions, which will themselves deliver increased levels of unemployment and lower numbers of the types of skills graduates the economy will increasingly demand in the years ahead.
UUK’s Blueprint, and the follow-on Transformation and Efficiency Taskforce, has done a good deal of the mental heavy-lifting for us all, exploring what steps the sector can take together, beyond or without an increase in teaching funding or tuition fee levels.
But there is so much more to do – more thinking, more activating, and more effort to ensure that those beyond UUK’s membership are included and considered in any reimagining or business case developments that may provide useful paths forward. To be effective and complementary to the work UUK have done so far, we must be inclusive and expansive in what we consider possible.
Many of us have experience in securing benefits through collaborative solutions. Joint procurement initiatives have been successful, as shown by the Southern Universities Purchasing Consortium (SUPC).
Their 2023/23 impact statement shows they spent £2.4b through their agreements last year, generating £116.1m in cashable savings while embedding sustainability, ethics and innovation in their collaborative procurements.
GuildHE’s Research consortium demonstrates the tangible benefits of collective purchasing by providing services such as an open-access research repository and HIVVE impact tracker, which not only offers services at discounted rates, but also extends access to smaller institutions that would otherwise be unable to afford them.
Eating the elephant one bite at a time
We can build on these efforts to inform the art of the possible. Brokerage efforts, designed and delivered by our organisations working in partnership, could facilitate opportunities to reduce the risk of market failure or the need for acquisitions.
If successful, those efforts could give rise to collaborative initiatives that deliver real national and regional impacts, thereby underpinning the value of HE to local communities and, increasingly important, local politicians, some of whom not only reflect a laissez-faire attitude towards university closure, but also make statements about immigration and international students that courts further damage to us all.
The growing concern about the financial state of our sector has led the OFS to recommend recently that a special administration regime for HE institutions be established, building (unknowingly or otherwise) on arguments that have been swirling for years about the need to establish a restructuring fund or regime to support institutions at risk of failure. The time is now to help create solutions to avoid needing such a regime, but to support those going through it if we can.
We put our heads together and share this thinking outward as a call to arms for all those working on behalf of our higher education institutions.
We also make clear that the anticipated HE Reform package must acknowledge the tensions created and fostered by the current competitive market if it intends to plot a practical path forward towards prosperity.
Like OFS, we are not the whole solution, but we can be an important part of a vision which reinvests in higher education as the most impactful force within our democratic society to foster economic growth, deliver improved outcomes for society, and secure a legacy as global leaders – one we can all be proud of.
