Green Paper: six questions about regulation

Wading through the flood of analysis of the recent Green Paper, I find that there are still some key policy questions left hanging by the dissection so far. I’m interested in the answers to six questions regarding the detail of the proposals under consideration.

1. Timing of quality assurance and Teaching Excellence Framework reviews

The results of the first round of Teaching Excellence Framework (TEF) decisions are expected to be announced in 2016 to impact higher education providers’ (HEP) fees for the 2017/18 academic year. A HEP must achieve a Quality Assurance Agency (QAA) judgement of “meets” or “exceeds expectations” to qualify for TEF level one and the commensurate increase in their fee cap tied to inflation.

The timing of TEF level one decisions may create a race for institutions to complete their reviews or launch appeals to ensure their eligibility for the initial fee increase. A HEP which has already been assessed to not meet expectations will need to put their improvement plan into hyper-drive to ensure a positive QAA re-assessment in time for a Spring 2016 announcement of TEF-approved HEPs. One could also expect some HEPs to manipulate the timing of an upcoming QAA review to help guarantee a positive TEF assessment (for example, delay QAA review in the interest of depending on an earlier positive assessment). QAA reviewers may find this next period of higher education review (HER) particularly fraught with pressure.

2. Fee differentiation

We now have confirmation of the government’s intention to link performance in TEF to increasing student fees beyond the existing £9000 annual cap in England, foreshadowed by the 2015 Budget (p.59). In and of itself, this is not a bad thing. One imagines there being an argument for seeing fee differentiation on the basis of programs versus entire institutions once TEF reaches maturity. There are examples in Canada on how you can manage this while still retaining central control over fees and private and public student loan debt.

However, in the case of Canadian examples, differentiation was not simply a matter of student demand. The relative “cost to educate” of a course is often coupled with assumptions around graduates’ “future earning potential” to help guide reasonable fee increases. Could these elements find their way into course fee differentiation in a new TEF-driven fee environment? Furthermore, one could expect growing pressure on the repayment conditions for student loans as the government assesses the impact of growing fees.

3. Participation in TEF

The Green Paper suggests that HEPs’ participation in the TEF could be voluntary. If a HEP decides that the reporting requirements of the TEF are too burdensome, a HEP may be able to decline review.  Equally, if the anticipated outcome of the proposed independent panel review is less than flattering, presumably a HEP could also decline participation.

The TEF takes a lesson from the Research Excellence Framework (REF); you don’t have to participate but there is an incentive to do so.  In the case of the REF, the incentive is access to public research funds and support for research. Does a 0.1% inflationary increase to fees adequately incentivise participating in TEF? TEF may be used as a kite mark to signal quality to international and domestic students, however will strong higher education brands (e.g. Oxbridge) feel the need to participate? Will TEF ultimately lead to increased pressure on government to fully liberalise fees to incentivise HEP pursuit of the highest TEF designations?

4. Student protection

Universities UK’s report on the future of higher education regulation, Quality, equity, sustainability: the future of higher education regulation, makes a sensible recommendation around student protection. The report suggests that the primary regulator be given the powers of a ‘receiver’ in the event a HEP fails or withdraws from the UK without adequate provisions for students. The Green Paper helpfully echoes this recommendation, but to override existing bankruptcy legislation which could advantage other creditors, a new HE bill may need to ensure students are always given priority over other creditors. Such a move would have an added benefit of ensuring investors in new HE providers were serious about long term provision otherwise risk losing investment if their HEP fails. However, investors in new providers may find this approach to HEP bankruptcy problematic.

5. Independence of quality assessment and TEF review

Many other reviews of the English higher education regulatory architecture have flagged the need for separation of quality oversight from funding and financial regulation, including material from Universities UK, the Higher Education Commission and the Russell Group. The main argument for separating these regulatory responsibilities is avoiding a conflict of interest. A funder who also oversees quality could overlook quality issues arising from underfunding. Equally, a regulator reporting to government could use quality oversight as a weapon for applying undue political pressure on autonomous HEPs.

If the Green Paper’s proposed primary regulator, the Office for Students, is coordinating TEF, can the TEF reviews really be independent? Could the independent panels be protected from government intervention if the regulator who coordinates the panels reports directly to government? Furthermore, would an Office for Students with direct responsibility for quality oversight meet HEP expectations of co or self-regulation?

6. Market orientation

It is important to recognise the Green Paper proposals for what they are: an attempt to reconfigure English higher education regulation from a supply-side, system-focus to a demand-driven and market-focus. This includes assumptions on HEPs failing or choosing to leave the market. However, the assumptions made by the Green Paper take a short-sighted view of students’ relations to HEPs.

There is an underlying assumption that higher education is a commodity consumed by students paying for their education.  Notwithstanding competing views on the veracity of this perspective, a student’s interest in the quality of their course does not end at graduation.  Students, as graduates, have an abiding interest in the quality of their HEP well beyond their time as students.  The value of a graduate’s degree is linked to the continued existence, and success, of their awarding HEP. Employers and graduate schools will consider the value of the HEP as it currently exists, not as it may have existed at the time of the student’s enrolment.

Students are aware of this and will consider the likelihood of their HEP’s continued success beyond their graduation when choosing a HEP. The proposals made by the Green paper do not really address this enduring relationship between graduate and HEP. Consequently, it is likely that older HEPs will continue to enjoy a significant advantage over newer, untested HEPs due to their higher probability of failure in the new higher education market environment.