Small providers: life at the pointy end of the Office for Students

If you’re a small provider registered with the Office for Students (OfS) life started to look a little harder recently. We’ve been reeling from the publication of the proposed fee bands for OfS registration.

The fees proposed in the consultation processes have risen sharply for all providers (by 18%, on average), but the Department for Education’s impact assessment is relatively silent about the disproportionate impact these fees will have on the smaller provider and their students. Stated starkly, when the per-student cost is considered, smaller institutions will be paying at least thirty times the fee paid by large universities.

Mark 12:17

A cursory glance at the DfE’s impact assessment statement would seem to allay these concerns: after all, the policy objective of the funding model is to “allocate costs fairly” and to “take some account of provider size.” Clearly, the introduction of fee bands based on institutional size is intended to tug the forelock to such sentiment. But let’s take a closer look.

The institutional fee bands published on March 11th range from a low of £12,000 (for institutions with 25 students or less), to a high of £186,800 (for institutions over 20,000). For the smallest institution, this means a cost per student of £500. For the largest institution, the cost would be, at the very most, under £10 per student.

Why is the per-student rate significant? First, since the Office for Students is about students (as we are repeatedly told), one might think that the impact on the student would be considered. And since institutions, large and small, are increasingly fee-driven, it is students who will bear the brunt of these costs.

A careful examination of policy decisions helps unpack the agenda, and explain the direction of travel. The funding model for the Office for Students sees the source of revenue to run the OfS move away from being a government responsibility. HEFCE, and OFFA were fully taxpayer funded: the OfS will be largely provider-funded. So, the first shift of responsibility is from Government to provider.

Matthew 13:12

The second direction of travel sees a cross-subsidy from small providers to large providers: the DfE’s date notes that “no HEI would be paying more than 0.7% of their total income in OfS registration fees.” But providers that have 300 or fewer students would be “spending between 4% and 7 %of their income on registration fees.” The goal of the exercise, “to take some account of provider size,” seems to have been lost along the way. Is it too cynical to suggest that it is the larger providers who have the ear of government? Whose interests are being protected?

Let me be generous and suggest that the effect on small providers may be an unintended consequence of the new scheme: that the government does not fully appreciate the effect of its actions. The Impact Assessment Study offers the optimistic view that “70% of [the affected providers, with under 300 FTE] would be eligible for the Micro Provider Subsidy”, which sees registration fees discounted to zero. Yet the small print indicates that such providers must have no more than ten employees, with a balance sheet below £320,000 – and even the tiniest of entities will struggle to get under that limbo-like bar.

Colossians 3:11

The tiny Leo Baeck College, established sixty years ago to train Rabbis, teachers, and lay leaders in the reformed Jewish tradition. Despite having less than 30 HE students, with an output of 4-5 rabbis per year, it still would not meet the standard of a micro provider. Indeed, the data provided in the report itself (table 7) only allows for 9 current providers to be registered as micro-providers – far, far below the optimistic projection of 70% of providers under 300 FTE.’

Why does this matter? Inevitably, this will see some small, niche providers cease operations. In the past, the Government has celebrated such closures, with the narrative that it is ridding the sector of bogus colleges – but that is only a part of the story. Small providers include art, music, drama colleges; faith-based colleges; colleges for nannies; colleges for needlework. We would be the poorer for the loss of these institutions. It is not creating the much-vaunted “level playing field” in HE: the field is still sloping. Life at the pointy end of the OfS just got a little more uncomfortable.

3 responses to “Small providers: life at the pointy end of the Office for Students

  1. An alternative point of view is that the size of a provider doesn’t significantly impact on the role OfS has in regulating providers, that actually some (not all) smaller providers need more oversight than larger providers because of the higher risk profile inherent in some smaller providers. Perhaps there needs to be a different model for subscription fees that takes account of not just size but of risk, may be this would relieve the burden on some of the providers mentioned by Peter above.

  2. The question is whether DfE and OfS are serious about implementing a model of regulation which prioritises student choice within a diverse sector. Given such a premise, is it logically (or ethically) defensible that individual students be penalised for choosing certain types and sizes of institution, or should a flat per-student fee (which would be in the low two digits) go towards the overall maintenance of England’s regulatory architecture and risk management processes, with every student contributing equally? The alternative is surely to distort the marketplace by disincentivising certain models and behaviours.

  3. Thank you Peter for producing such a measured critique of applying the market place to higher education and the consequences for diversity of provision. At a time when we celebrate the increasing diversity of our nation it seems crazy to threaten the survival of institutions which have promoted this for many difficult years.

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