Lord Hollick is Chair of the House of Lords Industry and Regulators Committee

The higher education sector in England faces a series of stiff challenges.

The government and the sector’s regulator in England, the Office for Students, are challenging the sector on the quality and value of its provision at the same time as the sector is experiencing serious financial headwinds.

These challenges are why the Industry and Regulators Committee launched an inquiry into the Office for Students (OfS) in March, leading to our report’s publication today.

Not sustainable

Our key finding is that the current funding system for higher education is not sustainable and represents a looming crisis that, without further action, will threaten the quality of provision and the future of providers. Providers now make a loss when teaching domestic students and conducting research, leading to a dependence on cross-subsidy from international and postgraduate students, whose fees are not capped. This dependence comes with risks and appears worryingly complacent in an increasingly competitive international environment.

We do not share the OfS’ view that the sector’s finances are sound and feel that the regulator should be sounding the alarm far more strongly. The government should urgently review the funding of higher education and put in place a stable, long-term model.

Quality concerns

The OfS’ approach to assessing the quality of higher education is also a concern, shifting away from international standards and potentially damaging the sector’s global standing. During the establishment of the OfS, the sector received reassurance that quality and standards would be overseen by an independent designated body with the confidence of the sector, a role taken on initially by the Quality Assurance Agency for Higher Education (QAA).

The circumstances of the QAA’s de-designation from the Designated Quality Body role earlier this year, and the OfS’ involvement in this, remain disputed and unclear, despite our efforts. The OfS has now taken on the Designated Quality Body role itself. However, the QAA has the confidence of providers and a strong international reputation, whereas the OfS does not and appears to have prioritised its own convenience and control over maintaining the independent oversight envisaged by parliament. The OfS should work to align its assessments with international standards and allow an independent body to perform the DQB role.

Relationship counselling

Despite its role as a body to protect the interests of students, it is unclear how the OfS defines these interests. This has led to a perception that these are defined by ministerial priorities, as shown by the OfS’ focus on freedom of speech, and on spelling and grammar. We were also deeply concerned to hear allegations that the OfS had issued veiled threats regarding the future of its Student Panel because panellists raised issues of importance to students. The OfS should co-create more of its work with students, report annually on how student input has driven its activity and conduct detailed scoping work on what constitutes the student interest.

The OfS’ relationship with higher education providers is also unsatisfactory. The regulator’s approach has been distant and combative, appearing to punish providers rather than support them towards compliance. This has led to a micromanaging regulatory framework that focuses heavily on gathering large amounts of data, generating a significant burden for providers without engaging them to understand their circumstances. It is welcome that the OfS has recognised this problem recently and is attempting to engage more with providers. We urge it to further rebalance its approach, which should reduce the need for extensive, poorly targeted, data collection.

Sector politics

Although the OfS is meant to be an independent regulator, a large portion of its work appears to be driven by political and media priorities. There is a well-worn path between newspaper reports, ministerial letters and new regulatory burdens imposed by the OfS, for instance in relation to written English assessments. That the chair of the OfS continues to take the Conservative whip in the House of Lords does not help this impression of undue proximity. The government should stop issuing extensive guidance to the regulator and instead provide clear, strategic policy for the sector, something it has failed to do.

A fundamental reason for the OfS’ establishment was to ensure that students received value for money for their studies. We welcome the OfS’ focus on this area, having found that the information students receive when they apply for courses can differ greatly. The OfS should ensure that students receive consistent, digestible information, including on approximate contact hours, accommodation and course-related costs, and the likely cost of student loan repayments.

However, value for money is difficult to measure, and the OfS’ approach to student outcomes is too simplistic and narrow, zeroing in on short-term employment outcomes for graduates. As these outcomes are affected by many factors and are outside of providers’ control, this approach could penalise institutions that take on students from disadvantaged backgrounds, running counter to efforts to improve access and participation. It also underplays benefits that are unrelated to employment. The regulator should conduct work to assess the broader value of higher education.

Arbitrary and unclear

Overall, we have found that the OfS listens far too little to students and the higher education sector, and far too much to the government. Its approach often seems controlling, arbitrary and unclear. At such a crucial time for higher education it is vital to have a regulator that has a clear picture of what is going on in the sector and is free to speak truth to power. Put simply, the Office for Students requires improvement and must do better.

Read the report, “Must do better: the Office for Students and the looming crisis facing higher education” on the Industry and Regulators Committee pages on the House of Lords website or by following @HLIndustryCom on twitter.

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