OfS unveils registration condition on subcontracting

The E conditions have reached double figures.

New Office for Students ongoing condition E10, on subcontracting, runs broadly along the lines of the plans put out for consultation last year. We now have a finalised condition, alongside guidance and a summary of consultation responses, which will take effect from 31 March 2026 – just a few days time.

In a nutshell, E10 requires that (outside of a small number of exemptions) where a provider has one or more subcontractual teaching arrangements, and the total number (headcount) of students taught via these arrangements exceeds (or is planned to grow beyond) 100 or more, it needs to maintain a single subcontracting information source (SIS) — and then actually operate in accordance with it, with the capacity and resources to do so.

The SIS will contain a strategic subcontractual rationale (why a provider is involved in subcontracting), details of its approach to assessing potential new arrangements, details of board-level oversight for such activity, and information on various policies and adaptations thereof (on complaints, whistleblowing, conflict of interest, admissions, monitoring and so on) relating to subcontractual activity.

Ignoring the substitution of headcount for FTE – an alignment with the parallel DfE measures that will require that providers delivering subcontractual HE to more than 300 individual students register with OfS), and attempt to forestall a possible boom in part-time franchise activity – there’s nothing in those paragraphs that will be a surprise to anyone who engaged with the consultation last summer.

The big surprise is that originally OfS gave itself powers to make directions – a means to require providers to do (or not do) things where the regulator has concerns. But it has decided not to include these. The reason on one level is simple: OfS already has the ability to do this via specific conditions of registration (it already restricts Leeds Trinity University, for example, in expanding franchise operations), fines (like the one it gave Leeds Trinity University at the same time it got the specific condition), and the rest of the regulatory enforcement toybox.

This end of the new regime for subcontractual activity relates to lead provider oversight, and OfS has already satisfied itself that it has powers to get stuck in as needed. But the other name on the minds of OfS’ vast and supremely vigilant legal team will be Oxford Business College, a provider OfS has never regulated.

OBC was de-designated by the Secretary of State as a provider that can receive public funds, after a string of truly horrifying revelations about teaching and the student experience. De-designation is a nuclear option that brought any chance of future subcontractual HE delivery to an end. But, in her understandable keenness to act, the Secretary of State did not follow the correct procedure, leading to an embarrassing loss in court and an attempt by OBS to sue the government for “substantial damages”.

OfS is famously reluctant to face legal risk, having had quite the run in with Bloomsbury College and being engaged in a very unpromising battle with the University of Sussex. It is understandable that OfS would rather rely on tried-and-tested powers, and make efforts not to tip the wink to DfE that it has broad-ranging powers to sort out any arrangement that ministers don’t like.

The reason DfE even got involved in the Oxford Business School thing was because it was a provider designated by the secretary of state for HE funding – the fuss came with the decision to de-designate with extreme predjudice. This makes it curious that – alongside schools, FECs, sixth forms, and various parts of the public sector – designated institutions fall into the exempt partnership category as does TNE. As we already have a high profile example of a designated provider causing concern, and because TNE is largely unregulated at this point this is perhaps a curious decision.

The transparency measure in E10 will generate real heat when it lands. Providers will be required to publish, in their audited accounts, an average fee retention percentage per student – broken down by each partnership in scope. For the first time, anyone will be able to see systematically how much universities are keeping from the fees of subcontracted students.

This terrified respondents. Some argued it would fix pricing across the market, or push the sector towards standardised low-risk commercial terms. One even claimed the Competition and Markets Authority would object – OfS checked and found no such guidance. Others warned it would damage working relationships with delivery partners, with one respondent arguing that commercial confidentiality “underpins partnership working.”

OfS held firm, concluding that the benefits of transparency to students outweigh the risks. But the timing blunts the impact – the first data won’t appear until accounts for financial years ending after 1 July 2026 are published, probably early 2027 at the earliest.

For contracts already in force when E10 takes effect, the requirement to comply is softened. Rather than requiring that existing contracts enable full compliance with the SIS, providers only need to take “all reasonable steps” to get there. That might sound minor – but some consultation responses revealed that existing contracts don’t even allow lead providers to access student data or conduct on-site inspections at delivery partners!

OfS, to its credit, took these responses as further evidence of how bad oversight actually is. But the practical effect is that some of the worst arrangements may continue operating while providers slowly work through contract break points and renegotiation timelines that could, in some cases, run for years. New contracts signed after 31 March 2026 must comply absolutely – but for existing ones, the gap between policy intent and operational reality could be significant.

Validation arrangements are explicitly excluded from E10. Students in validation arrangements have a contractual relationship with the delivering provider, not the validating one — so they fall outside the definition of a relevant subcontractual arrangement. OfS knows this is a loophole. The consultation outcomes say it’s:

mindful that validation arrangements are an area of the sector where we may observe changing provider behaviours where a small number of providers may seek to avoid regulatory scrutiny.

The only tripwire is a new reportable event requiring providers to notify OfS when a partnership changes from a subcontractual to a validation arrangement. That’s OfS watching the door – but it’s reactive rather than preventive. In December, IHE’s chief executive Alex Proudfoot said that providers teaching full programmes to thousands of students should “invest in transitioning from a franchised to a validated model.”

On the DfE side, the 300-student registration threshold applies per legal entity. There’s no aggregation for connected parties – no provision to count students across companies under common ownership. Forty per cent of DfE’s own consultation respondents flagged the risk that providers would split into subsidiaries to stay below the threshold. E10 can’t address this because it only regulates lead providers. And DfE’s requirement, without connected-party aggregation, creates a clear incentive to fragment.

E10’s minimum content requirements include a line requiring the SIS to cover how the provider “oversees the work of” external recruitment agents – “either directly or via its partner.” There’s no ban on per-student commissions, no mandatory agent quality framework, no requirement to disclose agent relationships or payments. The government promised action on agents dating back to January 2024, and the Agent Quality Framework remains voluntary and limited to international recruitment. The sharp end of the exploitation that drives inappropriate enrolment is not addressed here.

Over on the Post-18 Project, Mark Leach’s paper set out how ESFA’s 2020 reforms to FE subcontracting addressed identical problems to the ones E10 is supposed to fix – volume controls, geographic restrictions, programme integrity requirements, published rationales – and were implemented within eighteen months.

E10 does none of this. A documentation and transparency regime bolted onto a system where the structural incentives remain entirely intact will not, on its own, stop bad things happening.

The question posed back in October remains unanswered – if the problem is non-specialist franchised provision delivered by for-profit private colleges with continuation rates that OfS itself says are unacceptably poor, why is the Department for Education still funding it?