While Bridget Phillipson is in a letter writing mood…

In the mix are things like non-refundable deposits and compulsory extras such as meals, nappies and suncream. Nearly three quarters of parents say they are using savings to cover extra charges, while more than one in four say cost remains the biggest barrier to accessing the childcare they need.

The CMA has confirmed it will develop a formal proposal for its board next month, and the government has also asked it to investigate the role of private equity and other ownership models in the childcare market.

Early years sector bodies have given the referral a cautious welcome while arguing it addresses the wrong end of the problem. Tim McLachlan of the National Day Nurseries Association said most providers report that hourly rates “do not cover their costs,” while Neil Leitch of the Early Years Alliance warned that “years of underfunding” meant additional charges were difficult for many providers to avoid – with some passing costs on, in Leitch’s words, only as a last resort to prevent closure.

The sector’s message to the CMA is essentially that scrutiny of fees needs to be matched by a sustainable funding settlement, or any crackdown risks destabilising provision rather than improving it.

You could, of course, argue that a devilishly similar set of issues face students and their families in higher education – and that the government’s own logic in referring childcare to the CMA applies with at least equal force.

Hidden charges that undermine the headline offer? The tuition fee is £9,790, but systematic analysis of university websites finds sector-wide reliance on cost of living figures that are years out of date, no standardised disclosure of mandatory course costs, and a market in ancillary charges – materials, software, field trips, gowning, graduation photography – that students discover only after committing.

Compulsory extras driving parents to drain savings? NUS research published earlier this year found 86 per cent of parents contributing financially to their child at university, many having had no idea they would need to, with the parental income threshold for maximum maintenance frozen since 2008 at a level that now excludes families on around 60 per cent of median earnings.

And the sector’s message to any scrutiny body – that fee structures reflect funding inadequacy rather than profiteering, and that a crackdown without a sustainable settlement risks destabilising provision – will sound familiar to anyone who has heard a VC explain why contact hours have fallen, modules have been cut, and class sizes have grown.

The childcare sector’s argument is that hidden charges are a symptom of underfunding, not a cause. In higher education, that argument has been running for decades, and it hasn’t stopped the problems.

The CMA may well end up touching on those core funding questions in childcare – it is, after all, being asked to examine ownership models and cross-subsidy dynamics as well as hidden fees. The same would be true in higher education.

A market review that found the participation cost problem was partly structural – that exclusive nomination deals, frozen thresholds and inadequate maintenance create conditions in which sharp practice becomes rational – would still be a market review worth doing.

Because even within a sector under genuine financial pressure, the evidence suggests that some of what is happening is not distressed providers reluctantly passing on unavoidable costs, but institutions making active choices about what to disclose, what to charge, and how to present a headline price that bears diminishing resemblance to what students actually pay. A funding crisis and sharp practice are not mutually exclusive. Both can be true at once.

Which raises an obvious question. The Secretary of State for Education wrote the childcare letter. She runs the department that funds, regulates and sets policy for higher education. The CMA has direct enforcement powers under the DMCC Act that it has not yet used against a university. In England, OfS is consulting on new consumer protection conditions that would benefit materially from independent evidence about how the market is actually functioning.

None of that adds up to an obvious reason why a similar letter about higher education couldn’t be written. So I had a stab.

You never know. The CMA might just end up concluding that the “market” in HE can’t be made to work in accordance with their theories on competition and choice.

26 May 2026

Dear Sarah Cardell,

This government is committed to widening opportunity and to building an economy in which talent, not background, determines where people end up.

Following decades of expansion in higher education participation, over 40 per cent of young people now enter university – a transformation that has driven social mobility and supported the skills base on which growth depends.

Yet the system that was designed to open doors is, for too many students, closing them. Students who arrive at university are discovering that the costs of participation – not just tuition, but accommodation, materials, equipment, activities and the basic infrastructure of student life – are running far beyond what they were told, and far beyond what public support covers.

The market model that underpins English higher education was built on the premise that informed, mobile consumers would drive quality and value. The evidence is that the model is not working.

Some students face greater challenges than others. Students from lower-income backgrounds, first-generation entrants, disabled students, and students from Black, Asian and minority ethnic communities are disproportionately exposed to the gap between the experience they were promised and the one they can afford.

Students in areas where the private purpose-built student accommodation market dominates, or where exclusive nomination agreements funnel them towards a single high-cost provider, face fewer choices and higher prices than students elsewhere.

International students, whose presence cross-subsidises the domestic student experience at many institutions, face specific vulnerabilities – including visa-linked deposit structures, agent commission dynamics and CAS-linked contractual arrangements – that sit largely outside the existing consumer protection architecture.

The Competition and Markets Authority plays an important role in promoting competition and protecting consumers and has taken forward a range of important work to help tackle the cost of living. The CMA’s predecessor body, the Office of Fair Trading, conducted a market study of higher education in England in 2014, identifying information asymmetries, lock-in effects and regulatory gaps that prevented the student market from delivering for students.

That work led to real changes. But the problems it identified have not been resolved – they have intensified and multiplied, alongside entirely new categories of harm that did not exist at the time of that review. More recently, the CMA’s guidance on unfair commercial practices and price transparency under the Digital Markets, Competition and Consumers Act 2024 has created a changed legal landscape to which the higher education sector has been slow and uneven in its response. I am grateful to the CMA for its continued engagement with government on these issues, and building on this, would like to request that the CMA considers conducting a review of the higher education and student housing markets in England.

The government announced in the Post-16 Education and Skills White Paper that the Department for Education would lead work to improve quality, value and student outcomes in higher education.

As part of this work, we must ensure that the higher education and student housing markets are functioning in a way that is fair to students and supports providers to operate sustainably. The Office for Students is consulting on a new regulatory condition – Condition C6 – that would require universities to treat students fairly, replacing the existing requirement to merely “have regard to” consumer protection guidance.

A CMA review would provide the independent evidence and analysis necessary to assess how far the higher education and student housing markets operate in a way that meets the government’s objectives, and to provide recommendations that can inform both the OfS’s regulatory development and any wider government action.

We want to make sure that students across England – whatever their background, wherever they study, and whatever their circumstances – can access, afford and complete higher education on terms that were honestly described to them.

We also want to make sure that providers are able to operate sustainably on the basis of genuinely competitive, transparent markets rather than information asymmetries, lock-in effects and exploitative ancillary arrangements.

I would welcome CMA views on how the higher education and student housing markets as a whole are working. As an independent authority it is of course for the CMA to scope any work it chooses to undertake, but I would be particularly interested in CMA views on:

The impact of market practices on students and providers, including:

• the structure and transparency of tuition fees and the additional mandatory costs that students face beyond the headline fee (course materials, equipment, studio and bench fees, field trips and residentials, software, professional membership, graduation);
• the accuracy and currency of cost of living information published by universities, where systematic analysis has found sector-wide reliance on figures that are years out of date – including transport costs, food estimates, accommodation benchmarks and utility figures – presented to prospective students as current guidance on which to base major financial decisions, in what appears to constitute a material omission under the DMCC Act 2024;
• the systematic misrepresentation of the public support students and families will actually receive, where the parental income threshold for maximum maintenance loan has been frozen since 2008 – meaning a system calibrated to support families on below-median incomes now withdraws support from families earning around 60 per cent of the current median – and where government guidance describes parental financial contributions as an afterthought while the system structurally depends on them, with evidence that 86 per cent of parents are contributing financially to their child at university, many having been unaware they would need to do so;
• drip pricing and partitioned pricing practices in fee presentation, including the treatment of fee increases on deferral, where a student who accepts an offer and subsequently defers faces a higher fee than the one on which their decision was based;
• pressure-selling practices at Clearing, where time pressure, emotional vulnerability and the absence of a cooling-off period create conditions that fall well short of the informed decision-making the market model requires;
• waiting list fees, non-refundable deposits and guarantor insurance and administrative charges in the accommodation market that function as fees by another name;
• the use of exclusive nomination agreements and other arrangements that restrict student choice of accommodation and funnel them towards high-cost providers; and
• the growing market in ancillary services – printing, catering, transport, welfare, graduation gowning and photography – where universities hold dominant positions relative to their own students and where exclusive supplier arrangements mean students have no realistic alternative

Supply-side dynamics, including:

• the geography of affordable student accommodation and the emergence of cold spots where affordable supply has been crowded out by the purpose-built student accommodation market;
• the regulatory gap created by the exemption of purpose-built student accommodation from the Renters’ Rights Act 2025, where the codes of practice that justify that exemption have in practice proved inadequate as a substitute for statutory protection;
• cross-subsidy dynamics in which international student fees and high-margin ancillary revenues mask unsustainable core provision;
• the mid-course quality degradation that is now documented at scale across the sector – including larger class sizes, reduced contact hours, course and module closures, reduced library access and diminished student support – that represents a systematic reduction in the product after purchase with no price adjustment, no meaningful consent and no effective exit route for affected students;
• the role of different types of provider in the market, including the growing franchise sector where students may not be able to identify their legal counterparty, Student Protection Plans do not bite cleanly down the chain, and complaints pass between delivery partner, validator and redress scheme without resolution;
• the dynamics of the private PBSA market including rent growth, investor return expectations, and the relationship between accommodation costs and the maintenance loan settlement; and
• the concentration of market power in accommodation in individual university towns and cities

How the demand side is able to drive positive outcomes, including:

• the extent to which prospective students can make well-informed choices given the persistent absence of comparable information on contact hours, staff-student ratios, class sizes, total costs of attendance, and long-term graduate outcomes adjusted for intake characteristics;
• the particular information disadvantage faced by prospective students – especially international students, first-generation entrants and those from lower-income backgrounds – who rely on university-published cost of living estimates when making decisions and whose vulnerability the DMCC Act 2024 explicitly recognises as attracting higher duties of care;
• the adequacy of the maintenance support system as a basis on which students can make rational decisions about participation, given that the parental income threshold determining maximum support has been frozen since 2008, that the threshold for a student under 25 to be classified as independent is set at a level many students cannot meet despite lacking meaningful parental support, and that the interaction of these features with rising living costs means the effective support many students receive is substantially lower than publicly stated maximum figures imply;
• the specific vulnerabilities of international students given the interaction of agent commission structures, visa-linked deposit arrangements, CAS allocation management practices – where students have committed sunk costs on the basis of offers that cannot be fulfilled – and Home Office “proof of funds” figures benchmarked to the inadequate domestic maintenance loan rather than to actual student costs;
• the position of students with SEND, mature students, care-experienced students and other cohorts whose ability to exercise consumer choice is structurally constrained;
• the effectiveness of the complaints and redress architecture in delivering timely, accessible outcomes for students, including the fragmentation of responsibility between the Office for Students, the Office of the Independent Adjudicator, the CMA itself, Trading Standards, and the Department for Education, which evidence suggests leaves students navigating a regulatory system in which each body declines individual cases on the grounds that another body is responsible, and in which systemic harms therefore go unaddressed; and
• the role of students’ unions in providing independent rights information and advice, and the barriers they face in doing so

I would particularly welcome CMA recommendations that recognise the fiscal context we are operating in, and that are deliverable within the overall funding envelope. By investigating these issues, I envisage that the CMA will be in a position to give a rounded assessment of how the higher education and student housing markets are working, and any areas for development.

To enable the work to inform the development of the OfS’s new consumer protection condition and the government’s wider programme on higher education quality and value, I would be grateful if the CMA were to engage closely with my officials, and colleagues across government including the Department for Housing, Communities and Local Government on the student housing dimension, to share emerging findings and insights throughout the course of any work it decides to take forward. I would welcome any final report by Spring 2027.

While this work would be carried out independently, government resources and expertise will be available to ensure the CMA has access to the best possible information and analysis, including OfS regulatory data, OIA casework patterns, and the evidence base developed through the OfS’s consumer protection consultation. Along with my colleague the Chief Secretary to the Prime Minister, I look forward to hearing your response to this request.

The Rt Hon Bridget Phillipson MP

Secretary of State for Education