The public accounts committee report on alternative providers

If the House of Commons Public Accounts Committee had published the results of the latest enquiry into alternative higher education providers earlier, OfS and DfE would have seized upon the findings as further justification for the new approach to regulation.

Despite improvements made since the last time PAC investigated the way alternative providers are regulated, there is still work to be done – and the OfS was shaping up to be just the sort of “toothy” new regulator to do the job. For the first time, the majority of institutions delivering HE in England would we both known to, and regularly providing data to, the regulator.

Timing is everything

The scale of this part of the sector is worth bearing in mind. As today’s PAC report says, counting just DfE regulated institutions:

“In 2017 there were 112 institutions termed ‘alternative providers’ offering higher education. These institutions do not receive government grants directly, but do access public funding through student loans which are used to pay their fees. In the 2015–16 academic year, around 34,000 students attending alternative providers received student loans, and Government paid out £417 million in tuition fee loans, maintenance loans and grants to alternative providers and their students.”

Though most of the report deals with APs currently regulated by DfE – it also touches on the wider pool of institutions that would have featured in the proposed “Basic” category of the register – with regulation in the interest of students brought to the unregulated masses. There have been a number of cases of payments made with respect to students at ineligible institutions – and a better record of institutional details in these cases would help greatly. But “Basic” – the category that would have included ineligible institutions – is no more.

The consultation on the regulatory framework prompted much consideration of the place of “Basic” registration, with many calling for more conditions to be placed on these institutions, rather than less. But OfS effectively washed its hands of the challenges that surround keeping such a list, though it still commits to developing its understanding of providers and students in this part of the sector. As was set out in paragraph 48 of the “narrative response” to the consultation responses:

“We recognise that unregulated providers will continue to operate, as they would have done even if the registered (basic) category had been included (albeit, possibly, in lesser numbers). We are concerned with all students, not only those at registered providers, and remain committed to the policy intention set out in the regulatory framework consultation – to improve transparency and student protection at those higher education providers that are currently unregulated.”

Figures and benchmarks

The PAC’s short and tightly-argued report makes the case for a more interventionist approach.

“[N]on-continuation rates (the rate of students who do not return for a second year of study) have reduced from 38% in 2012–13 to 25% in 2014–15. However, rates in the rest of the sector are much lower at 10%. To date, when imposing sanctions the Department has primarily focused on each provider’s performance against its individual benchmark, rather than a target non-continuation rate for the sector as a whole”

The suggested policy response – setting a sector benchmark – is perhaps a dream too far. Neither OfS nor DfE seems keen on this approach. Factors other than institutional type – such as socio-economic background and previous educational attainment – are well known to be a predictor of students failing to return after their first term or year. There is clearly more that could be done to support such students, with the fact that they are overly-represented in non-traditional institutions perhaps a secondary factor.

The SLC has made some progress regarding the repayment of loans to students at ineligible institutions (those not permitted to receive funding via the student loan system), but the figures are still startling.

“The Student Loans Company has recovered only £11 million of the £45 million of ineligible payments it has made since 2010–11“ – but since 2015 “a further £10 million has been paid out to students or providers who are not eligible for student loan funding.”

Again, the regulatory expertise of OfS is promoted as a solution to this issue – which might be tricky when it will not be directly regulating the institutions in question.

Real-time data challenges

The collection of timely and reliable data is difficult enough for institutions currently funded by HEFCE. For smaller and less well-established providers the problem is much bigger. We are currently accustomed to an annual cycle of data returns, but with the move to a dashboard approach to identifying problems – then intervening early – this will need to become far more frequent. Alternative providers of the type discussed are likely to be in validation arrangements with more established institutions – allowing the regulator to see at least some data – but being off-register minimises the direct reporting of financial issues, for example.

The committee considered the example of LCCM, not long after Wonkhe’s own coverage was published. At the committee, DfE reported that this had been an example of where its oversight had worked well – a problem was identified, a mitigation (an action plan) was put in place, and a last-minute measure undertaken (contact with the Open University as validator to begin to identify alternative arrangements).

However, DfE had known about issues at LCCM since 2016, and through careful monitoring and support facilitated an arrangement where students have been able to continue their studies.

But the issue of data still remains. The PAC – perhaps unused to the principle of institutional autonomy – showed surprise that real-time access to providers’ internal systems was not available. Perhaps this is a battle that the regulated part of the sector will soon face with the expected debate around the OfS data plan.

A data deficiency means DfE has historically relied on whistleblowers in the majority of cases where serious fraud has been suspected. Investigations by Panorama and others have highlighted dubious links between agents, providers, and (in one case) awarding bodies – in order to maximise benefits for either students or institutions. This is the “chancer’s charter” that the press has covered, and cries for proper regulation to ensure that the reputation of many high-quality private providers is not tarnished by the unfortunate actions of a few.

The current approach of OfS towards institutions ineligible for funding puts students at such institutions at more risk rather than less, and also increases the chances of such investigations yielding similar stories in the future.

There is a regulatory job that urgently needs doing. The question now is how and where the sector’s newest regulatory body will get involved.

A previous version of this article suggested that institutions with designated courses would not be required register with OfS. We’re happy to confirm that this is not the case – institutions with designated courses will feature on the register.

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