Responding to the industry and regulators committee report

We have responses from OfS and the government on the review of the work of the regulator. David Kernohan hopes for better times ahead

David Kernohan is Deputy Editor of Wonkhe

If you think back to early September, the notable thing about the House of Lords Industry and Regulators Committee report on the work of the Office for Students was how carefully written it was.

Neither the report, nor the inquiry that preceded it, revealed anything that we didn’t expect about England’s higher education regulator.


But both helpfully shifted the knee-jerk response to questions about the absolute state of OfS on from “universities don’t like being regulated” – both highlighted concerns with the drafting and implementation of the Higher Education and Research Act.

The four stand-out moments, as far as these things go, were:

  • the revelations about the place of students in the Office for Students (worse, somehow than we expected)
  • the criticism of the perceived closeness of the independent regulator to the government of the day (government peer, serial funder of Conservative MPs, and erstwhile OfS chair Lord Wharton of Yarm in particular)
  • the school playground level approach to the Designated Quality Body question
  • and the less splashy but deeply concerning suggestion that OfS didn’t really understand the financial problems the sector was facing.

If you were expecting a seasonal mea culpa from either the regulator or the government (in a response clearly written in DfE) on any of these, it is safe to say that you will be disappointed. But, as is the way of the committee report, unfulfilled recommendations are parliamentary question gold – or fuel to the long election campaign we are already becoming tired of. Though the majority of recommendations are batted back, they will live on despite this.

What a great question

The Office for Students is keen to let you know that it is very pleased to have attracted the attentions of the Industry and Regulators Committee – exactly what they teach you in “responding to informed criticism” school. Welcoming the “challenge”, and committing to intensify existing efforts on whichever number “relationship reset” we are currently on is the small change of the response industry.

Tellingly, and somewhat ironically, the wider concerns about the closeness between the regulator and government and the very idea of the chair of an independent regulator taking the government whip are both left for the department to answer to. Nothing, after all, says independence like passing on questions about independence to the government.

Elsewhere the message is straightforward – we are already working on this, and the committee’s (brave, noble, stunning) report will help us double down on such important work. A review of the way the student voice is brought into regulation is merely the most prominent example: the panel will become a forum, OfS will listen carefully to what students say and explain patiently why it can’t do anything for them.

The Department for Education gives the regulator full support. Of course it does. Even on the questions about independence (both of the regulator and the chair), we’re at the level of procedure and process rather than, for the want of a better word, vibes. There’s only been two direction letters this year. They’re all published. Transparency. And Wharton? – it’s up to him apparently.

Sharing the burden

What I was hoping to see was movement on regulatory burden and data burden – an easy, quick, cheap win by the standards of other problems the sector is facing. And, on that count, we can perhaps allow ourselves to become encouraged.

DfE promises us:

A longer-term piece of work, to deliver in summer 2024, to identify and set out the full scope of data burden across the HE sector from all arm’s length bodies, as well as the self-imposed regulatory burden which some HE providers adopt for a variety of reasons. It will also identify the cost to the sector of responding to each element of burden, as well as the benefit to each regulator or arm’s length body. This will allow the government to act more quickly to reduce unnecessary regulatory burden, identifying specific areas where focussed work is needed, and to maximise the costs reduction to the sector.

Now this is a hill we have marched up before – and the line on “self-imposed regulatory burden” suggests that the usual “war on woke” tropes will address the scourge of higher education providers taking the inclusivity of their wider offer seriously. But the existence of a deadline (election, of course, permitting) and what seems like a sensible remit. This will not be a resumption of the work of the taskforce (that work, apparently, is complete – I’m sure there’ll be a final report and recommendations published any day now).

Perhaps bringing less joy, we will see more work on graduate salaries:

To supplement the existing employment measures, the government has commissioned the Institute for Fiscal Studies (IFS) to develop a new way to measure graduate earnings at course level

Those of us with longer memories will recall the IFS involvement on what become the Longitudinal Educational Outcomes (LEO) dataset – nearly ten years on the cycle continues. The Office for Students has been commendably clear on not using salary data in regulation for sound statistical and reasons – though we are reminded that DfE has recent seen fit to: “ask the OfS to consider how they can take graduate earnings into account in their quality regime, recognising that many factors influence graduate earnings”

I’m also unsure (with a nod to Andy Youell) what they mean by a “course” here, and their way around the constraints of Kernohan’s Law.

Cossy livs

While the main framing of the committee review was an assessment of the efficacy of the regulator, a parallel line of questioning dealt with the increasingly apparent financial issues the sector is facing – ending with the memorable recommendation that the government comes up with a sustainable funding model for the sector.

Surely nobody expected that one to come off in this response – and we learn that the current model is (in a very 2017 turn of phrase) “strong and stable” and we get a very 2012 assertion that we can’t raise fee levels without disadvantaging young graduates (a good indicator, for me, that our funding system is not strong or stable)

Eyebrows may be raised at the repeated assertion that:

The government will set out its longer-term funding plans for the HE sector at or ahead of the next Spending Review

But as the last one was in 2021 and there is an election pending, I wouldn’t be holding your breath.

At the hearings the Lapworth/Warton double act stuck to earlier judgements on the broadly solid state of sector finances – both responses row back here a little, with this more clearly seen in the OfS’ comments:

[As] a result of the increasing risk profile for the sector, and in recognition of the challenges identified in the Committee’s report, we are continuing to evolve our approach to monitoring financial risk and will further develop our ability to stress-test the sector’s finances. We have commissioned an independent review of the financial information we collect from institutions each year and will be implementing changes to reduce data burden and align data collection more closely with particular risks. We are also changing the way we engage with the sector on these issues; for example, with an increased focus on sensitivity analysis.

Stress-testing is the kind of standard analysis that really should have been happening anyway (possibly in conjunction with the work of the old OfS foresight function that appeared to cease at the moment Michael Barber left). The independent review of finance data collection is an interesting development, as is the sensitivity analysis point that neatly illustrates the tightrope between accurate public statements and their impact on a provider that the regulator needs to walk.

A fair few very serious people are starting to talk about providers facing extreme financial pressure. The government quotes the existing formula on state intervention:

The government’s policy position is that, in the event of a financial failure, it would work with the OfS, the provider in question and other government departments to ensure students’ interests are protected, rather than to prevent a sector exit […] The OfS may probe a provider’s thinking about potential merger and acquisition options, where these may be in the interests of students, and will engage with providers considering such options where appropriate.

This doesn’t really get into the political and place questions that have always made this position questionable. Would the government really sit back and watch a major employer in a marginal constituency go down? Would it really see a deprived area lose its one major anchor institution?

And if the risks a provider is facing are due to government policy (even a policy of inaction, as we currently see on the falling value of tuition fee funding) how exactly should a provider or regulator manage these risks?

Another one?

There’s always a review of the Office for Students waiting in the wings – and the next one is a governmental arms-length body review that was due to start earlier this academic year. Unfortunately there is a bit of expectation management there too – the scheduled Public Body Review does not even have an independent chair yet, and though it will look at the conclusions of the Industry and Regulators Committee report it will have a tightly constrained remit:

while the independent lead reviewer will undoubtedly want to hear the views of the sector on the impact and challenges of regulation, the government does not consider that the review is the right place to focus on the strategic issues facing the sector. We expect the focus of the review to be on the OfS’s effectiveness in performing its regulatory functions and protecting the interests of students.

Oh well.

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