The Office for Students is a regulator, a funder, and a political football

The government and the Office for Students (OfS) have each responded to the report of House of Lords Industry and Regulators Committee’s recent inquiry.

The report found the regulator lacks independence from ministers, at times implementing political priorities rather than regulating in the interests of students and for the long term health of the higher education sector.

The government’s response is disappointing – defending ministerial guidance given to the OfS to date, declining to make resigning a party whip a requirement for joining the board of a regulator, and finding no need to take further steps to ensure the OfS operates independently.

However, there are more promising signs in the response from the OfS, which accepted many of the inquiry’s recommendations and made commitments to increased transparency which should bolster both the integrity of decision making and universities’ confidence in the regulator.

There is more the OfS should do. The inquiry overlooked the contention caused by confusion around its dual roles as regulator and funding body. And the OfS’ response notably overlooked the role of its board when describing how it maintained its independence from the government. If ministers prove unwilling to step back from providing day-to-day steers then tackling these issues will be vital.

Unclear mandate

The OfS’ unusual role as both regulator and funding body creates confusion about its relationship to government and, in turn, the extent of its authority over higher education providers. As a regulator, the OfS would only be expected to take actions it can justify based on its objectives as set out in legislation. But as a funding body for a sizeable subset of the providers it licenses, it is reasonable for the OfS to attach more stringent conditions to grants to promote best practice and deliver on government priorities.

The problem is not that these two roles are performed by a single organisation but that, both on paper and in practice, they are not well distinguished. In legislation the OfS’ power to give funding support is set out alongside other powers, such as that to give authorisation to grant degrees. In guidance, the OfS says it views funding as a regulatory tool to deliver its priorities. Even for those providers it doesn’t directly fund, the OfS’s licensing function has important funding implications: providers have to be registered with the OfS in order for their students to access government loans, or to sponsor fee-paying international students for the purposes of immigration.

Minister for higher education, Robert Halfon, told the Lords committee:

I believe that it is perfectly within the right of the Government, given that they are funding HE through the taxpayer to a great extent, to have strategic priorities that they believe in and, therefore, to guide these institutions into what they think should happen.

To achieve this, government has reached for the regulator as its lever in the sector, calling for the OfS to intervene on specific policy issues, from cracking down on “mickey mouse” degrees to policing sexual harassment on campuses.

Mission creep

The government’s approach runs up against the jealously guarded institutional autonomy of most universities, which operate as independent charities rather than extensions of the public sector. The OfS is required to “have regard to” this under its founding legislation. But the way the legislation is drafted gives the regulator considerable discretion over how it defines and balances its objectives. The Higher Education and Research Act 2017 sets out functions the OfS must perform, as well as a list of duties it must “have regard to”, but with no overriding aim or order of priority. Given this flexible statutory basis, it is easy for the OfS to deprioritise institutional autonomy and justify mission creep as it sees fit.

In a context where ministers have taken a consistent and high-profile interest in the higher education sector, there has been some slippage between the OfS’ readiness to reflect government priorities in grant allocation, and its willingness to impose new conditions of registration on providers. For instance, after the higher education minister publicly criticised the decision of some universities not to dock marks for poor written English in 2021, the OfS quite reasonably felt obliged to respond – but it did so by publishing a report asserting to providers that the assessment of spelling, punctuation and grammar was mandated by its general registration requirements for course quality, explicitly referencing “reports in the press” as one of the factors prompting its review of this issue.

Clarify and communicate

The regulator could help smooth tensions with the sector and better establish its independence from government by being clearer about how it makes decisions. While the OfS argues that it already sets out its reasoning when it publishes outcomes to consultations, it has committed to explaining more fully how it approaches balancing its duties in individual decisions. This is a sensible first step. But it should also consider how it might more clearly distinguish its roles as funder and as regulator, and communicate what input from government and what expectations of universities are appropriate in each case.

In the context of significant political interest, it is necessary for the OfS to set out its own view of the limits to its role and purpose and to push back on ministers. To do so, and to build the public credibility this requires, the OfS needs the active support of its board. If there is a practical connection to be made between the political alignment of the OfS’ chair – who retains the Conservative whip in the House of Lords – and the regulator’s current difficulties, it is that such alignment makes the board less likely to act robustly – privately and publicly. The OfS’ response makes no mention of the role of its board in asserting its independence, but if it is serious about building credibility around its relationship with government then its board should reflect upon its role and responsibilities.

If ministers wish to generate headlines and make higher education a cultural battleground, that is their political choice. The regulator cannot stop them. But everyone involved should be clear about what is happening and what the dividing lines are between regulatory guidance and political debate.