Category: Regulation

  • The Foreign Influence Registration Scheme has sector-specific implications

    The Foreign Influence Registration Scheme has sector-specific implications

    The Foreign Influence Registration Scheme (FIRS) emerged out of the National Security Act 2023.

    The idea was that, by way of the mandatory registration of activities broadly defined as involving “foreign influence” on the UK, both the UK’s political system and wider civil society would be made both more transparent and, in the case of certain countries’ actions, less of a national security risk.

    The government published light-touch draft guidance for FIRS in September 2023, promising further detail ahead of implementation – including sector-specific guidance for research, academia and higher education.

    FIRS trap

    Nothing happened for a while, and then following the general election news emerged of a delay to the scheme, seemingly tied up with the question of Labour’s (still ongoing) “China audit” and a (hotly contested) claim that guidance wasn’t ready to go live.

    One particular sticking point has become whether China would be put on the “enhanced tier” of the scheme, a development which would enormously increase the scrutiny faced by all organisations – including universities – involved in partnerships or collaborations with Chinese institutions. The Conservatives were rumoured to have been considering it while in power, and more recently Labour has reportedly been “resisting” such a move.

    Fast forward to today, and there is still no decision over China – but the government has laid draft regulations placing Russia and Iran on the enhanced tier, announced that FIRS will come into operation from 1 July, and published sector-specific guidance for academia and research.

    The additional wrinkle for higher education is that when the Department for Education announced that the Higher Education (Freedom of Speech) Act would go ahead in revised form, it decided that the overseas funding measures in section 9 would be “kept under review” while FIRS was implemented and the interaction between the two was assessed.

    Tiers for FIRS

    You will be glad to learn that FIRS is not “a register of foreign spies” – we even get a short section in a fact sheet to make this clear. It is, however, a register of arrangements – and the individual or power who makes an arrangement with a foreign power (or controlled entity) has to let the Home Office know.

    At heart, FIRS is structured around two tiers: the “political influence tier” and the “enhanced tier”. All countries – except the Republic of Ireland – will be put in one or the other. And the difference between the two is vast.

    Political influence is restricted to specific “directions” from other countries to influence the UK’s political domain. So this involves things like elections and referenda (perish the thought), ministerial or departmental decision-making, political parties’ activities, or the actions of parliamentarians (including in the devolved nations). There’s also the wider concept of influencing “public life”, which includes certain kinds of communications and the disbursement of money.

    Where the Secretary of State deems it necessary to keep the UK safe or protect its interests, they will designate a foreign power (or part thereof) as being subject to the “enhanced tier”. This additionally requires the wider registration of “arrangements to carry out activities at the direction of a foreign power”, or activities carried out in the UK by specified entities controlled by a foreign power. In this case there is the possibility of a tailored approach to address particular risks.

    At each level, the requirement is that you register the activities to be carried out, their nature, their purpose, any intended outcomes – plus start dates, end dates, and frequencies where relevant. Of course registration will include passing on details of who is carrying out the activities, and which foreign power is directing them. Some of this information will be published – but this will be limited to what is needed to achieve the transparency aims of FIRS. Personal details, information that would prejudice personal safety or national security, and commercially sensitive information will not be published.

    Designating a country as being subject to the enhanced tier requires parliamentary approval – and as above this is currently being sought for Iran and Russia. How about China? As will be clear when we turn to some examples below, this is the big question when it comes to FIRS for UK higher education – China being moved up into the advanced tier would greatly complicate all kinds of educational and research initiatives.

    The Conservatives in opposition are pushing strongly for it, though they never bit the bullet while in power. Speaking in the House of Commons today, security minister Dan Jarvis said:

    For reasons that I completely understand, the shadow Home Secretary asked about China. He will recall the remarks I made to this House on 4 March, where I was very clear that countries will be considered separately and decisions will be taken by this Government based on the evidence. I said then, as I say again now, that I will not speculate on which countries may or may not be specified in future. That is the right way to proceed, and I hope he understands that.

    It’s likely the question will continue to recur, every time an issue involving national security and China (or other countries) rears its heads – we should expect calls in Parliament and in the press for a country seen as a national security threat to be moved over to the enhanced tier.

    Direction and production

    For the purposes of FIRS, “direction” implies a power relationship – a contract or conditional payment on the one hand, coercion or the promise of future benefits on the other. So for our purposes a genuine collaboration, or a very generic request, would not count as direction. Neither is something “direction” simply because it is funded by a foreign power.

    The actual registration and publication will be done by a special unit within the Home Office. This will also be the means by which the Secretary of State can issue “information notices” to get more information, or remind you to register activity should you be doing something that it is felt you should tell the Home Office about.

    FIRS is an information gathering tool – it doesn’t restrict anyone’s ability to do anything in and of itself, it simply requires that activity is registered appropriately. And it only applies where you are directed by a foreign power – anything else you do or say on your own behalf is not covered by these requirements.

    At FIRS I was afraid

    The meat of the higher education and research guidance (framed oddly as the “academia and research sector”) is a series of 34 examples, illustrating where registration is required and where it would not be. There’s a potential impact in every area of university and related activity – but rather than go through every example here it would make sense to pick out a handful of points to illustrate some key impacts on research, teaching, and SUs – both for enhanced and political tiers. If this stuff is your job, or becomes your job, chances are you’ll be getting to know these examples very quickly anyway.

    Teaching and recruitment

    Let’s start at the beginning (example 1) – the education department of country A (not subject to the enhanced tier) wants to build a relationship with a UK university: the university gets more students via promotion and enticements within country A, but it also has to lobby the UK government about a short-term visa study programme for students from country A.

    Clearly this is registerable – there’s an arrangement with country A, it is directed, and requires the use of political influence.

    A lot of the concerns that led to the requirements that went into the Higher Education (Freedom of Speech) Act were about the potential for foreign powers to influence what is taught at universities. In example 6, a student from country G (enhanced tier) is studying a human rights course at a UK university, which includes material on the oppression of an ethnic group in country G by its government. The country G embassy contacts the students, and requires them to change course – threatening to force them to leave the UK if they don’t.

    Here it is the student that is obliged to register – they have been obliged, with coercion used, by a foreign power, to change their course. What’s not at all clear is what would convince said student that this would be a good idea, or what protections would be available to them when they reported their own government to UK authorities.

    But what about universities reporting back to an enhanced tier government on student behaviour? Examples 15, 16, and 17 all deal with reporting back to country V: we learn that a student reporting back on their progress, or a university reporting back on results, is not registerable. However, where the student is coerced into organising a protest about a speaker critical of country V, this is registerable (again, by the student).

    Elsewhere on the enhanced tier regulations, there’s been an important concession (following consultation responses) regarding scholarships, which are now exempt from being registered. And importantly, activities carried out wholly at overseas universities – such as transnational education – will not require registration either.

    A Swiss cheese of foreign influence

    The more tedious and public end of the free speech debate has been concerned with otherwise low-profile, little known, escaping the public attention student activity. Student societies, students getting together in their own time, and reasonable debate. Almost entirely absent from the public but not policy discourse has been the regulation of research activity. Put bluntly, the ways in which other countries influence research into lethal weapons has had less political attention than which culture issue The Telegraph is upset about this week.

    The new guidance provides that agents of specified foreign powers will have to register under the enhanced scheme where they are “undertaking a research project directed by a specified foreign power or specified foreign power-controlled entity.” As we learn from the Minister of State for Security Dan Jarvis the current specified countries under the enhanced tier are Iran and Russia.

    This means that individuals directed by Iran, Russia, and whoever else comes under the future ambit of the scheme, would be required to register that they are being directed by these states and declare they are undertaking state directed activity. Somehow, this seems extremely unlikely to capture the full range of state directed activity even with the threat of a five year custodial sentence.

    The scheme is narrowly applied and broadly defined as to avoid capturing a broad swathe of activities. Under the political tier

    Registration would only be required under the political tier if the research formed part of an intentional effort by a foreign power to influence the UK’s democracy, for example, a specific area of government policy.

    This is a really high bar to clear. As we learn further in the guidance activity which is funded and directed by a foreign power will not necessarily count as political influencing activity if researchers are free to arrive at their own recommendations. In other words, it is possible to influence the terms of the debate but not its conclusions and remain outside the scope of the scheme.

    One of the oddities of the regulation is that “activity is only registerable where carried out in the UK.” This would seem to mean that where there are campuses abroad which included UK researchers, researchers from other countries, and researchers who would be a specified power within the UK, activity would be outside of this scheme.

    The political influence tier of activity is designed to capture activities which are directly aimed toward parliamentary mechanisms and procedures. Aside from any debate on whether the specified countries are broad enough this means that political but not parliamentary political activities are not covered either. The guidance specifically states that

    …any published research which intended to influence a political process would not require registration under the political influence tier, if it was clear on the research report that it was completed as part of an arrangement with a foreign power.

    The scope of the research element of the scheme feels very narrow. The examples make clear that a UK provider would need to register under the political scheme where they are lobbying the UK government to further the interests of a foreign power as part of a funding arrangement. An individual would need to register under the political tier where they are acting as an intermediary for selling the technologies of a foreign power. And under the enhanced tier UK universities cannot rely on the ambiguity of a relationship and would seemingly have to register where there are future potential income opportunities.

    It is also made clear that just because activities clear these schemes they do not get a clean slate for other legislation like the National Security and Investment Act. As long as a provider is not taking funding from a foreign power, and especially specific foreign powers, to direct research, funding, and influencing outcomes, they should not be impacted by FIRS. This does not mean they will not be impacted by the bureaucracy of every other scheme.

    FIRS is helpful in setting an obvious floor for what is in scope but the ceiling is cavernous. There is significant latitude for influencing UK politics outside of parliamentary procedures and without directing research outcomes. The participants in the research ecosystem will on the one hand favour the flexibility but will rue the potential for being personally liable for another addition to an increasingly complicated web of international research rules.

    Societies, SUs and CSSAs

    One of the major concerns floating around the press coverage and the think tanks has been the activities of student societies on campus – specifically (but not exclusively), Chinese Students and Scholars Associations (CSSAs).

    Last year a Henry Jackson Society report, Studying Abroad to Serve China, alleged that CSSAs are closely tied to and influenced by the Chinese government, presenting themselves as cultural organisations while actually being integral to China’s “United Front Work” strategy.

    Meanwhile, the Telegraph has published allegations of Chinese students facing serious repercussions, including detention and interrogation in China, after participating in protests or making critical comments about the Chinese government while studying in the UK – which involve CSSAs locally and nationally.

    Like plenty of religious, political and sporting groups on campus, societies of this sort will say that they affiliate to a national body. Many rarely discuss or disclose the ways in which overt or covert control or influence may be placed on their activities.

    The sector-specific guidance covers “student bodies, societies or associations” – but there’s a problem. It appears from the guidance that Home Office officials think that student societies are legally separate bodies from their students’ union. But in the vast majority of cases, they have no separate legal personality – they are part of the SU. That matters because it impacts who has the legal duty to register.

    For example, in a section designed to reassure universities about their own liability to register, the guidance says:

    Where a registerable arrangement is made by a student society of a university: the society is required to register.

    And across three case studies discussing different types of activity, there’s the same issue. So where one describes a society being directed by the government of a country to sign a petition and campaign against a UK government decision, the guidance says:

    The student society is required to register as they are in an arrangement with the government of Country P (foreign power) from whom they receive funding (direction) to undertake campaigning activities to influence a government decision (political influence activities).

    But legally, in most universities the student society doesn’t exist. It’s a part of the SU – placing the onus on the SU to register – and so places duties on underfunded student activities staff to risk assess and probe the activities of societies in ways that many will object to.

    Separate guidance for charities then puts onerous duties on the trustees in the usual way.

    The upshot is that CSSAs – and any other international society undertaking activity of this sort – will soon clock that they themselves are under no legal duty to register. Universities will also take comfort in guidance that makes clear “societies” are separate and have their own reporting duties.

    The buck lands on the SU – who will be thinking hard about disproportionate scrutiny over a group of students that share protected characteristics, and who may object to their treatment by the SU to the university under OfS’ new harassment expectations.

    Not only will the SU not have experience of what amounts to a whole new type of complex risk assessment, it will all happen in a way that actually discourages joined-up risk assessment and sensible concern over the sorts of things the HJS and the Telegraph alleges. You really couldn’t make it up.

    If you believe the allegations that swirl around CSSAs, there are major student welfare concerns here – both for students who might be “under surveillance” from their colleagues, and for students who might be being coerced into watching others and reporting them. If you’re less sure that what the Telegraph or the HSJ say is widespread or even real, then there’s welfare and harassment concerns that surround poking around and applying heavy scrutiny to a particular group of students. And in England, the moment you start to think about potential interactions with free speech requirements and OfS’ new harassment requirements a headache ensues given both seem to cover SUs and societies without directly regulating them.

    If nothing else, the guidance repeatedly states that it’s not that the activity is per se illegal – and if not, is it “free speech within the law” or does the influence chill free speech, and so on and so on and so on.

    It would certainly seem like a good time to consider whether those straight-line cuts to the SU’s already tight budget are wise if junior staff are about to start to have to offer training on these complexities – and front out difficult conversations with those running international student societies.

    Upshots

    All of these new duties kick in on July 1st – so there’s very little time to understand the implications and get houses in order. The question on China and its tier allocation will be one to watch – the allegations are unlikely to go away.

    There are several “foreign influence” offences, including a failure to register a foreign influence arrangement, and carrying out political influence activity where the overarching arrangement is not registered and the person knows that the activity is being directed by a foreign principal. The maximum penalty for failure to comply with the requirements of the political influence tier is 2 years imprisonment – and the maximum penalty in the enhanced tier is 5 years imprisonment.

    If there are those who are carrying out what is currently covert activity who are under pressure to keep it that way – whether through incentives, or threats, or both, there is a real question about the way in which those individuals might evaluate that against any rules put in by a university (or so) in pursuit of the scheme.

    More broadly, it’s yet another thing in terms of regulatory burden – and another one of those things where a duty is being placed on a public authority to do what many would argue is not their job to do at all, that they’re not sufficiently funded to do, and have not even been properly consulted on.

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  • DfE and OfS are running out of road on regulating a “free market” effectively

    DfE and OfS are running out of road on regulating a “free market” effectively

    On The Wonkhe Show, Public First’s Jonathan Simons offers up a critique of the way the higher education sector has been organised in recent years.

    He says that despite being more pro-market than most, he’s increasingly come to the view that the sector needs greater stewardship.

    He says that the theory of change embedded in the Higher Education and Research Act 2017 – that we should have more providers, and that greater choice and contestability and composition will raise standards – has worked in some instances.

    But he adds that it is now “reasonably clear” that the deleterious side effects of it, particularly at a time of fiscal stringency, are “now not worth a candle”:

    If we as a sector don’t start to take action on this, then the risk is that somebody who is less informed, just makes a judgment? And at the stroke of a ministerial pen, we have no franchising, or we have a profit cap, or we have student number controls. Like that is a really, really bad outcome here, but that is also the outcome we are hurtling towards, because at some point government is going to say we don’t like this and we’re just going to stop it overnight.

    Some critiques of marketisation are really just critiques of massification – and some assume that we don’t have to worry about whether students actually want to study something at all. I don’t think those are helpful.

    But it does seem to be true that the dominant civil service mindset defaults to regulated markets with light stewardship as the only way to organise things.

    Civil servants often assume that new regulatory mechanisms and contractual models can be fine-tuned to deliver better outcomes over time. But the constant tweaking of market structures leads to instability and policy churn – and bad actors nip around the complexity.

    Much of Simons’ critique was about the Sunday Times and the franchising scandal. But meanwhile, across the sector, something else is happening.

    Another one

    Underneath daily announcements on redundancies, senior managers and governing bodies are increasingly turning to data analytics firms to inform their academic portfolios.

    The advice is relatively consistent – close courses with low market share and poor demand projections, maintain and grow those showing high share or significant growth potential.

    But when every university independently follows that supposedly rational strategy, there’s a risk of stumbling into a classic economic trap – a prisoner’s dilemma where individual optimisation leads to collective failure.

    The prisoner’s dilemma, a staple of economic game theory, runs like this. Two prisoners, unable to communicate, have to decide whether to cooperate with each other or defect. Each makes the decision that seems best for their individual circumstance – but the outcome is worse for both than if they had cooperated.

    I witnessed it unfold a couple of weeks ago. On a Zoom call, I watched four SU officers (under the Chatham House rule, obvs) from the same region simultaneously share that their university was planning to expand their computer science provision while quietly admitting they were “reviewing the viability” of their modern languages departments.

    It did sound like, on probing, that their universities were all responding to the same market intelligence, provided by the same consultancies, using the same metrics.

    Each university, acting independently and rationally to maximise its own market position, makes decisions that seem optimal when viewed in isolation. Close the underperforming philosophy department. Expand the business school. Withdraw from modern languages. Double down on computer science.

    But when every university follows the same market-share playbook, the collective result risks the sector becoming a monoculture, with some subjects vanishing from entire regions or parts of the tariff tables – despite their broader societal value.

    The implications of coordination failure aren’t just theoretical – they are reshaping the physical and intellectual geography of education in real time.

    Let’s imagine three post-92 universities in the North East and Yorkshire each offered degrees in East Asian languages, all with modest enrolment. Each institution, following market share analysis, determines that the subject falls below their viability threshold of 40 students per cohort. Acting independently, all three close their departments, creating a subject desert that now forces students in the region to relocate hundreds of miles to pursue their interest.

    The spatial mismatch of Hotelling’s Location Model means students having to travel further or relocate entirely – disproportionately affecting those from lower-income backgrounds.

    And once a subject disappears from a region, bringing it back becomes extraordinarily difficult. Unlike a coffee shop that can quickly return to a high street when demand reappears, universities face significant barriers to re-entry. The sunk costs of hiring specialist staff, establishing facilities, securing accreditation, and rebuilding reputation create path dependencies that lock in those decisions for generations.

    The Matthew effect and blind spots

    Market-driven restructuring doesn’t affect all providers equally. Higher education in the UK operates as a form of monopolistic competition, with stratified tiers of universities differentiated by reputation, research intensity, and selectivity.

    The Matthew effect – where advantages accumulate to those already advantaged – means that elite universities with strong brands and secure finances can maintain niche subjects even with smaller cohorts.

    Meanwhile universities lower in the prestige hierarchy – often serving more diverse and less privileged student populations – find themselves disproportionately pressured to cut anything deemed financially marginal.

    Elite concentration means higher-ranking universities are likely to become regional monopolists in certain subjects – reducing accessibility for students who can’t meet their entry requirements.

    Are we really comfortable with a system where studying philosophy becomes the preserve of those with the highest A-level results, while those with more modest prior attainment are funnelled exclusively toward subjects deemed to have immediate market value?

    Markets are remarkable mechanisms for allocating resources efficiently in many contexts. But higher education generates significant positive externalities – benefits that extend beyond the individual student to society at large. Knowledge spillovers, regional economic development, civic engagement, and cultural enrichment represent value that market signals alone fail to capture.

    Market failure is especially acute for subjects with high social utility but lower immediate market demand. Philosophy develops critical thinking capabilities essential for a functioning democracy. Modern languages facilitate international cooperation. Area studies provide crucial cultural competence for diplomacy and global business. And so on.

    When market share becomes a dominant decision criterion, broader societal benefits remain invisible on the balance sheet. The market doesn’t price in what we collectively lose when the last medieval history department in a region closes, or when the study of non-European languages becomes accessible only to those in London and Oxbridge.

    And market analysis often assumes static demand curves – failing to account for latent demand – students who might have applied had a subject remained available in their region.

    Demand for higher education isn’t exogenous – it’s endogenously shaped by availability itself. You can’t desire what you don’t know exists. Hence the huge growth in franchised Business Degrees pushed by domestic agents.

    Collective irrationality

    What’s rational for an individual university becomes irrational for the system as a whole. Demand and share advice makes perfect sense for a single institution seeking to optimise its portfolio. But when universally applied, it creates what economists call aggregate coordination failure – local optimisations generating system-wide inefficiencies.

    The long-term consequences extend beyond subject availability. Regional labour markets may face skill shortages in key areas. Cultural and intellectual diversity diminishes. Social mobility narrows as subject access becomes increasingly determined by prior academic advantage. The public good function of universities – to serve society broadly, not just commercially viable market segments – erodes.

    But the consequences of market-driven strategies extend beyond immediate subject availability. If we look at long-term societal impacts, we end up with a diminished talent pool in crucial but less popular fields – from rare languages to theoretical physics – creating intellectual gaps that can take generations to refill.

    An innovative economy – which thrives on unexpected connections between diverse knowledge domains – suffers when some disciplines disappear from regions or become accessible only to the most privileged students.

    Imagine your small but vibrant Slavic studies department closes following the kind of market share analysis I’ve explained – you lose not just courses but cross-disciplinary collaborations that generate innovative research projects. Your political science colleagues suddenly lacked crucial language expertise during the Ukraine crisis. Your business school’s Eastern European initiatives withered. A national “Languages and Security” project will boot you out as a partner.

    Universities don’t compete on price but on quality, reputation, and differentiation. It creates a market structure where elite institutions can maintain prestige by offering subjects regardless of immediate profitability, while less prestigious universities face intense pressure to focus only on high-demand areas.

    In the past decade, some cross-subsidy and assumptions that the Russell Group wouldn’t expand disproportionately helped. But efficiency has done what efficiency always does.

    Both of the assumptions are now gone – the RG returning to the sort of home student numbers it was forced to take when the mutant algorithm inflated A-Levels in 2020.

    Efficiency in market terms – optimising resources to meet measurable demand – conflicts directly with EDI and A&P goals like fair access and diverse provision. A system that efficiently “produces” large numbers of business graduates in large urban areas while eliminating classics, philosophy, and modern languages might satisfy immediate market metrics while failing dramatically at broader social missions.

    And that’s all made harder when, to save money, providers are reducing elective and pathway choice rather than enhancing it.

    Choice and voice

    When we visited Maynooth University last year we found structures that allow students to “combine subjects across arts and sciences to meet the challenges of tomorrow.” It responds to what we know about Gen Z demands for interdisciplinary opportunities and application – and allows research-active academics to exist where demands for full, “headline” degrees in their field are low.

    In Latvia recently, the minister demanded, and will now create the conditions to require, that all students be able to accrue some credit in different subjects in different institutions – partly facilitated by a kind of domestic Erasmus (responding in part to a concern about the emigration caused by actual Erasmus).

    Over in Denmark, one university structures its degrees around broad disciplinary areas rather than narrowly defined subjects. Roskilde maintains intellectual diversity while achieving operational efficiency – interdisciplinary foundation years, project-based learning that integrates multiple disciplines, and a streamlined portfolio of just five undergraduate degrees.

    As one student said when we were there:

    The professors teaching the classes at other universities feel a need to make their little modules this or that, practical or applied as well as grounded in theory. Here they don’t have that pressure.

    And if it’s true that we’re trapped in a reductive binary between lumbering, statist public services on the one hand, and lean, mean private innovative operators on the other, the false dichotomy paralyses our ability to imagine alternative approaches.

    As I note here, in the Netherlands there’s an alternative via its “(semi)public sector” framework, which integrates public interest accountability with institutional autonomy. Dutch universities operate with clear governance standards that empower stakeholders, mandate transparency, enforce quality improvement, and cap senior staff pay – all while receiving substantial public investment. It recognises that universities are neither purely market actors nor government departments, but entities with distinct public service obligations.

    When Belgian student services operate through distinct governance routes with direct student engagement, or when Norwegian student welfare is delivered through regional cooperative organisations, we see alternatives to both market competition and centralised planning.

    They suggest that universities could maintain subject diversity and geographical access not through either unfettered market choice or central planning mandates, but through governance structures that systematically integrate the voices of students, staff, and regional stakeholders into portfolio decisions. The prisoner’s dilemma is solved not by altering individual incentives alone, but by fundamentally reimagining how decisions are made.

    Other alternatives include better-targeted funding initiatives for strategically important subjects regardless of market demand, proper cross-institutional collaboration where universities collectively maintain subject breadth, regulatory frameworks that actually incentivise (rather than just warn against extremes in removing) geographical distribution of specialist provision, new metrics for university performance beyond enrolment and immediate graduate employment and better information for prospective students about long-term career pathways and societal value when multiple subject areas are on the degree transcript.

    Another game to play

    Game theory suggests that communication, coordination, and changing the incentive structure can transform the outcome.

    First, we need policy interventions that incentivise the public good nature of higher education, rather than just demand minimums in it. Strategic funding for subjects – and crucially, minor pathways or modules – that are deemed nationally important, regardless of their current market demand, can maintain intellectual infrastructure. Incentives for regional subject provision might ensure geographical diversity.

    Universities will need to stop using CMA as an excuse, and develop cooperative rather than competitive strategies. Regional consortia planning, subject-sharing agreements, and collaborative provision models are in the public interest, and will maintain breadth while allowing individual institutions to develop distinctive strengths.

    Flexible pathways, shared core skills, interdisciplinary integration – all may prove more resilient against market pressures than narrowly defined single-subject degrees. They allow universities to maintain intellectual diversity while achieving operational efficiency. And they’re what Gen Z say they want. Some countries’ equivalents of QAA subject benchmarking statements have 10, or 15, with no less choice of pathways across and within them. In the UK we somehow maintain 59.

    At the sector level, collaborative governance structures that overcome the coordination failure means resource-sharing for smaller subjects, and student mobility within and between regions even for those we might consider as “commuter students”.

    OfS’ regulatory framework could be reformed to incentivise and reward collaboration rather than focusing primarily on institutional competition and financial sustainability. Funding could reintroduce targeted support for strategically important subjects, informed by decent mapping of subject (at module level) deserts and cold spots.

    Most importantly, universities’ governing instruments should be reformed to explicitly recognise their status as “(semi)public sector bodies” with obligations beyond institutional self-interest – redefining success not as market share growth but as contributing to an accessible, diverse, and high-quality higher education system that serves both individual aspirations and collective needs.

    Almost every scandal other than free speech – from VC pay to gifts inducements, from franchising fraud to campus closures, from grade inflation to international agents – is arguably one of the Simons’ deleterious side effects, which are collectively rapidly starting to look overwhelming. Even free speech is said by those who think there’s a problem to be caused by “pandering” to student consumers.

    Universities survive because they serve purposes beyond market demands. They preserve and transmit knowledge across generations, challenge orthodoxies, generate unanticipated innovations, and prepare citizens for futures we can’t yet imagine.

    If they respond solely to market signals, the is risk losing what makes them distinctive and valuable. That requires bravery – seeing beyond the apparent rationality of individual market optimisation to recognise the collective value of a diverse, accessible, and geographically distributed higher education sector.

    It doesn’t mean running provision that students don’t want to study – but it does mean actively promoting valuable subjects to them if they matter, the government intervening to signal that quality can (and does) exist outside of the Russell Group, and it means structuring degrees such that some subjects and specialisms can be studied as components if not the title on the transcript.

    It also very much requires civil servants and their ministers to wean themselves off the dominant orthodoxy of regulated markets as being the best or only way to do stuff.

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  • Five regulatory process points you may have missed from the University of Sussex decision

    Five regulatory process points you may have missed from the University of Sussex decision

    We’ve covered elsewhere the implications for policy related to academic freedom and freedom of speech stemming from the Office for Students’ decision to fine the University of Sussex for breaches of ongoing registration conditions E1 and E2.

    The publication of a detailed regulatory report also allows us insight into the way in which OfS is likely to respond to future breaches of registration conditions. It is, effectively, case law on the way OfS deals with concerns about higher education providers in England – and while parts of your university will be digesting what the findings mean for academic freedom policies, others will be thinking more widely about the implications for regulation.

    The University of Sussex, perhaps unsurprisingly, wishes to challenge the findings. It is able to challenge both the regulatory decisions and the amount of the fines at a first tier tribunal.

    As always, appeals are supposed to be process based rather than just a general complaint, so the university would have to demonstrate that the application of the registration conditions was incorrect, or the calculation of the fine was incorrect, or both. As above, there is no meaningful defence of the way the fines were calculated or discounted within the judgement so that would feel like the most immediately fertile ground for argument.

    Here’s some of the points that stood out:

    How and why was the decision to investigate made?

    We are told that, on 7 October 2021, the OfS identified reports about an incident at the University of Sussex. This followed the launch of a student campaign at the University of Sussex the previous day – which involved a poster campaign, a masked demonstrator holding a sign, and a hashtag on social media – calling for Kathleen Stock (a professor in the philosophy department) to lose her job.

    This was widely covered in the media at the time, and sparked commentary from interest groups including the Safe Schools Alliance UK and the Free Speech Union. The OfS subsequently contacted the university seeking further information, before starting a full investigation on 22 October 2021. However, despite significant public interest, the decision to start an investigation was not made public until a statement by an education minister in the House of Lords on 16 November (when we were told that the Department for Education was notified on 11 November).

    Kathleen Stock resigned from her role at the university on 28 October – six days after the start of the investigation, and substantially before the public announcement. She noted that “the leadership’s approach more recently had been admirable and decent”, while the university claimed to have “vigorously and unequivocally defended Prof Kathleen Stock’s right to exercise her academic freedom and lawful freedom of speech, free from bullying and harassment of any kind”.

    What’s not clear from this timeline is the nature of the notification on which the Office for Students was acting: the regulatory framework in place at the time suggested OfS would take action on the basis of lead indicators, reportable events, and other intelligence and sources of information. There are no metrics involved in this decision, and we are told the provider did not notify the OfS so there was no reportable event notification.

    We are left with the understanding that “other sources of information” were used – these could be “volunteered by providers and others, including whistleblowers”. Perhaps it was the same “source of information” that caused then Minister Michelle Donelan to shift from backing the university response on 8 October to calling for action on 10 October?

    We also know that – despite OfS’ insistence that it “does not currently have a role to act on behalf of any individual” – it appears that the only person to submit a “witness statement” to OfS was Stock. If OfS was concerned generally about the potential for a chilling effect on academic speech, would it not want to speak to multiple academics to confirm these suspicions? Doesn’t speaking to just one affected individual feel a little like acting “on behalf” of that individual?

    Finally – sorry to bang on – we don’t know who at OfS made the decision to conduct an investigation or on what basis. Can, say, the director of regulation just decide (based on a story in the press, or general vibes) to investigate a university – or is there a process involving sign-off by other senior staff, ideally involving some kind of assessment of the likelihood of a problem being identified within a reasonable period of time? If I were an internal auditor I would also want to be very clear that the decision was made using due process and free from political or ideological influence (for instance I’d be alarmed that someone was content for then-chair James Wharton to posit an absolutist definition of free speech in the Telegraph) shortly after the investigation started.

    Why did it take so long to investigate and make a decision?

    The only clue we are given in the regulatory report is that this is a “complex area”. OfS requested a substantial amount of documentation from Sussex – it even used a “compliance order” to make sure that no evidence was destroyed. However, it does not appear that OfS ever visited the provider to speak to staff and students – in other regulatory investigation reports, OfS has been assiduous in logging each visit and contact. There is none of that here – we don’t know how many interactions OfS had with Sussex, or on how many occasions information was requested. Indeed, OfS appears not to have visited Sussex at all. Arif Ahmed told us:

    “There may have been occasions where the university wanted to meet in person and communication was done in writing instead

    Various points of law are referred to in the regulatory report : it is notable that none of this is new law requiring additional interpretation or investigation (the new Higher Education (Freedom of Speech) Act had not even left the House of Commons committee stage at this point). It shouldn’t really take a competent lawyer that knows the sector more than a few weeks to summarise the law as it then stood and present options for action.

    The investigation into the University of Sussex was mentioned in the Chief Executive’s report from the 2 December 2021 Board meeting, and it turned up (often just as an indication that the investigation was ongoing)

    If OfS was able to fine a university for a breach of an ongoing registration relating to academic freedom, why do we need the Higher Education (Freedom of Speech) Act?

    Well, quite. On our reckoning, the Act would have made no difference to the entire affair, save potentially for a slight chilling effect on students being empowered to exercise their own freedom of speech, and a requirement for both providers and OfS to promote free speech. The ability of the OfS to reach the conclusion it reached, and to instigate regulatory consequences, suggests that further powers were not necessary to uphold freedom of speech on campus – despite the arguments made by many at the time. There is nothing OfS could have done better, or quicker, or more effectively had the Act been in force. Sussex, in fact, had a freedom of speech policy at the time, something that the regulatory report fails to mention or take account of.

    It is curious that the announcement of the investigation came at the start of a long pause in parliamentary activity on the Higher Education (Freedom of Speech) Act – at that time we were keenly anticipating a report from the House of Commons committee stage, but we got no action at all on the bill until it was carried forward into the next session of parliament.

    How was the amount of the fine arrived at?

    There is a detailed account of the process by which it was decided to fine Sussex £360,000 for a breach of registration condition E1, and £225,000 for a breach of registration condition E2. It appears thorough and convincing, right until the point that you read it.

    OfS appears to be using a sliding scale (0.9 per cent of qualifying income for “failing to uphold the freedom of speech and academic freedom governance principle”, 0.5 per cent of qualifying income for “a failure to have adequate and effective management and governance arrangements in place”, an additional 0.2 per cent for not reporting the breach, a 0.2 per cent reduction for taking mitigating action…) and although Regulatory Notice 19 takes us through the process in broad terms we don’t get any rationale for why those proportions apply to those things.

    It’s all a bit “vibes based regulation” in truth.

    It is to be welcomed that OfS reduced its initial calculation of a £3.7m (1.6 per cent of qualifying income) fine to a more manageable £585,000 – but why reduce to that amount (by a hair under 85 per cent) purely because it is the first fine ever issued for this particular offence? What reduction will be applied to the next fines issued under registration conditions E1 and E2? If none, why not – surely “sufficient deterrence” is possible at that amount so why go higher?

    The documentation covers none of this – it is very hard to shake the impression that OfS is pulling numbers out of the air. When you compare the £57,000 (0.1 per cent) fine issued to the University of Buckingham for not providing audited accounts for two years (something which would have yielded something altogether nastier from Companies House you do have to ask whether the Sussex infractions were 1.5 percentage points more severe at the initial reckoning?

    Are the wider implications as the regulator intends?

    There are so many questions raised that will now be hurriedly posed at universities and higher education all over England – and my colleague Jim Dickinson has raised many of them elsewhere on the site. He’s had enough material for four pieces and I’m sure there will be many more questions that could be explored. Why – for example – should the regulator have a problem with “prohibiting the harmful use of stereotypes”? Is there a plausible situation where we would want to encourage the harmful use of stereotypes?

    It would also be worth noting the many changes to the policy that appears to have caused the initial concern (the Trans and Non-Binary Equality Policy Statement) between 2018 and 2024. Perhaps these changes demonstrated the university dealing with a rapidly shifting public debate (conducted, in part, by people with the political power to influence culture more generally) as seemed appropriate at each point? So why is OfS not able to sign off on the current iteration of this policy? Why is it hanging a hefty fine on a single iteration on what is clearly a living document?

    There’s also a burden issue.Is it the position of the regulator that every policy of each university needs to be signed off by the academic council or governing bodies? Or are there any examples of policies where decisions can be delegated to a competent body or individual? A list would be helpful, if only to avoid a burdensome “gold plating” of provider-level decision making.

    Beyond the freedom of speech arguments

    There are 24 ongoing conditions of registration currently in force at the Office for Students – a regulatory report and a fine (or other sanctions) could come about through an inadvertent breach of any one of them. Many of these conditions don’t just apply to students studying on your campus – they have an applicability for students involved in franchised (and in some cases validated) provision around the world.

    We should be in a position where the sector can be competently and reliably regulated, where providers can understand the basis, process, and outcomes of any investigation, and that these are communicated promptly and clearly to the wider public. On the evidence of this report, we are a long way off.



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  • We can all share the credit

    We can all share the credit

    I remain in two minds about credit transfer.

    The sector is so split on the issue it can seem at once both an intractable issue never to be fully realized and an obvious enough mechanism to promote access and mobility.

    In reality, it’s somewhere between the two and, today, a new report from QAA looks at where we might find that common ground. After looking at what the current state of play on credit transfer is last year, this year we’ve delved into why it is that way and what might instigate change.

    Hierarchies of need

    Credit transfer is the process by which a provider recognises the credit a student has accrued at another institution, exempting them from modules they’ve already undertaken elsewhere. The Lifelong Learning Entitlement (LLE) doesn’t require credit transfer, but it will fall far short of its vision if more isn’t done to facilitate transfer between institutions.

    The current financial precarity of much of the UK’s higher education sector has also brought into sharper focus the value for students of being able to transfer their credit and their studies between providers – whether prompted by the threat of course closures, the movement of key teaching staff, or even the prospect of institutional collapse.The latest Office for Students board papers tell us that this has happened recently in the case of the Applied Business Academy.

    Last year’s Student Academic Experience Survey found that more than a fifth of students said they would, with the benefit of hindsight, have chosen a different institution or/and course. Smoother processes of credit transfer would make it possible for those students to change courses midstream. Those mechanisms wouldn’t just reinforce their rights as consumers; those opportunities should enhance their satisfaction, their chances of completion and academic success, and their employment prospects.

    Credit transfer is more important for some providers than for others. The Open University receives over 6,000 applications for credit transfer every year. At multiple specialist providers, credit transfer accounts for more than 10 per cent of their annual intake.

    Some providers may feel sufficiently confident in the profile of their provision to welcome an open system of credit transfer that would result in their net gain. Others have concerns about the administrative burden posed by credit transfer, the logistical complexities caused by the unpredictability of shifting student numbers, and its impacts on institutional autonomy and their academic brands.

    In short, it seems clear that a one-size-fits-all approach wouldn’t fit all, or indeed suit anyone. So, what might work? We thought it might be a good idea to ask.

    Mission: Improbable

    QAA’s latest research, published today, involved a survey of sector perspectives, and a series of stakeholder conversations and focus groups involving representatives both of providers and of professional statutory and regulatory bodies (PSRBs).

    Those we engaged in this research overwhelmingly agreed that credit transfer is a valuable tool for students and can underpin lifelong learning. The advantages most cited were the flexibility it provides and its impact on widening participation, particularly for returners to learning – as well as the practical benefits for students who can gain qualifications and learning in a shorter time and at a lower cost, by removing the need to duplicate learning unnecessarily. The benefits also extended to institutions, particularly as an instrument to promote retention and improve completion rates.

    The idea of a sector-owned framework was also welcomed by our participants, with 84 per cent agreeing it would be helpful to achieve credit transfer at scale. But our participants were rather less optimistic about the possibility of a more formal integrated sector-wide system of credit transfer. The providers themselves tended to consider this prospect unrealistic, while sector organisations were more likely to welcome the idea.

    While participants were positive about the effectiveness of institutions’ individual approaches, their responses expressed concerns around transparency, resourcing and cultural resistance. Though our stakeholders largely agreed that credit transfer was a valuable route and necessary to facilitate lifelong learning, they often doubted the feasibility of delivering it at scale.

    The art of the possible

    Action on credit transfer falls into three (fairly) neat buckets, each with its own level of impact and compromise.

    For starters, there’s some low hanging fruit that would make this process work more smoothly for applicants. Our participants observed that applicants often don’t realise credit transfer is an option – and that its processes are difficult to understand. We’d therefore recommend that providers embed greater transparency and promotion of credit transfer – and agree a sector-wide terminology to explain it.

    But there’s little point making the policies more accessible if what applicants find there isn’t great. We also have to work to improve the policies themselves. We’d recommend the development of a sector-owned good practice guide to the key principles of credit transfer policy; student engagement in determining the information required and how it should be presented; and that providers consider routes through which forms academic credit can be automatically recognized for transfer.

    The greatest challenge is to develop multi-institutional initiatives to ease transfer between providers. There are pockets of the sector where this would be welcome, and others where it would be hard to get it off the ground. We’re not recommending hard enforcement on credit transfer – frankly, the sector has enough to be getting on with – but some level of accountability through regional consortia or partnerships, a charter of best practice, or folding its focus into existing regulatory processes would be a start.

    What’s clear is that credit transfer remains in limbo until we get a clearer direction from the government on just where the LLE is going. It might help the policy’s ambitions, but without a better sense of what the government wants the sector to achieve, it’s understandably falling down the list of priorities.

    To move beyond this impasse, the government needs to make clear where the strategic imperative is for action, so the sector can get to work on addressing the cultural and practical barriers.

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  • The franchise problem may not have a quick answer

    The franchise problem may not have a quick answer

    So everyone is (still, after more than a decade) agreed that student loan fraud and poor quality provision is a huge mark against the practice of franchise provision.

    Moreover, we’ve generally come to the conclusion that something needs to be done – and although an investigation will be helpful, that something needs to be fairly swift and concrete action.

    Most people are assuming that this will take the form of a requirement to regulate franchise partners, via compulsory registration by the OfS, or some other regulatory change.

    Didn’t we try something like that before?

    The government is currently consulting on whether all institutions in England delivering higher education to more than 300 students should register, at some level, with the regulator.

    This in itself is far from a new idea. When the Department for Education first consulted on what became the Office for Students regulatory framework, providers had the option to register in the “Registered basic” category – a third category that simply recognised that an institution was providing higher education in England.

    This category will provide a degree of confidence for students that is not present in the current system with providers in the Registered basic category being able to let students and other bodies know that they are recognised by the OfS as offering higher education courses.

    As registration in this category was intended to be optional there would need to have been a benefit to registration, and there would be no way of assuming that all England’s higher education provision was covered. On franchise arrangements in particular, the initial proposals suggested that:

    the delivery provider [in a franchise arrangement] will not normally be required to register. If it chooses to register, the Registered basic category will normally be the most suitable category because the lead provider is responsible for compliance with all required registration conditions for the Approved and Approved (fee cap) categories.

    For many in the sector responding to these ideas, these assumptions offered little to protect students or the system as a whole. In summarising the consultation responses, the government reported that

    there were widespread calls for the Registered (basic) category to carry additional conditions to protect students’ interests, such as transparency, student protection plans, student transfer and electoral registration conditions. Respondents were concerned that students at those providers in the Registered (basic) category would be at risk of assuming greater protection than will be provided in that category

    The combination of the limited oversight offered to those in the “Registered basic” category (which was configured pretty much as a list of people who had paid OfS £1,000), and the additional burden that that any more active requirement would place on smaller providers, meant that OfS concluded that:

    we have decided to remove the Registered (basic) category from the published regulatory framework. The effect of this decision is to avoid misleading students about the protections available at Registered (basic) providers

    But that wasn’t the end of it. OfS also noted (and this is worth setting out in full):

    we recognise that unregulated providers will continue to operate, as they would have done even if the Registered (basic) category had been included (albeit, possibly, in lesser numbers). We are concerned with all students, not only those at registered providers, and remain committed to the policy intention set out in the regulatory framework consultation – to improve transparency and student protection at those higher education providers that are currently unregulated. We shall therefore give priority to developing our understanding of providers and students in the unregulated parts of the sector, to determine how we can most effectively have a role in protecting the interests of students at these providers

    At the time, when franchise arrangements were considered at all by ministers, they were painted as an unnecessary rigmarole for exciting new entrants to the market. Speaking to Universities UK in 2015, then higher education minister Jo Johnson famously said:

    Many of you validate degree courses at alternative providers. Many choose not to do so. I know some validation relationships work well, but the requirement for new providers to seek out a suitable validating body from amongst the pool of incumbents is quite frankly anti-competitive. It’s akin to Byron Burger having to ask permission of McDonald’s to open up a new restaurant.

    So how’s all that going, then?

    Byron Burger, of course, entered administration twice in three years. In contrast, the franchise model in higher education never looked short of cash or interest. The Office for Students never used its own “validation powers” (section 51 of the Higher Education and Research Act allowed the OfS to get involved in academic partnerships directly, as kind of a response to the argument that delivering courses on behalf of a competitor in order to enter the sector was anti-competitive). Instead, it commissioned the Open University to be (effectively) a validator of last resort for FE colleges on others seeking to enter the HE market (this arrangement is set to conclude in July 2025).

    When the Higher Education Funding Council for England closed in March 2018, it directly funded 313 higher education providers, while having at least an awareness of 816 places in England where higher education was being delivered. The Office for Students currently has a funding and regulatory arrangement with 425 providers – for the current regulator, there is no regulation without funding. The impact assessment published alongside HERA implied that in 2024-25 there would be 631 in either the Approved or Approved (Fee Cap) registration category – postulating 1,131 institutions delivering higher education in England in total.

    The postulated rush to register did not happen, even when DfE closed the old “specific course designation” route to regulated and funded provision for alternative providers in August 2019. As sector interest group Independent HE has documented, the Office for Student registration process was generally experienced as expensive and cumbersome: where providers have been actively seeking regulation and oversight, it has been very difficult to obtain. Indeed, when OfS faced pressure to get more actively involved in securing sector finances, it was able to unlock significant internal resources by “pausing” registration.

    By closing the “specific course designation” route, and making full registration slow and difficult, OfS has incentivised smaller providers to enter the least regulated (and riskiest, for students and public funds) part of the higher education sector. If that constitutes “developing an understanding” of the unregulated part of the sector, one has to question what this “understanding” actually is.

    The other end

    The financial pressures currently engulfing the sector has encouraged many established providers to get involved in franchising arrangements – they get to keep a portion of the fee income related to students involved in such arrangements. In return, they are expected to provide oversight of quality and standards on courses leading to awards bearing their names, and handle all of the regulatory requirements relating to those students.

    The numeric threshold approach to regulation (wherein a provider faces further investigation if the proportion of students continuing on their course, completing their course, and progressing into employment or further study, falls below a minimum) does mean that such provision is regulated, after a fashion. There is an open investigation on franchising at Leeds Trinity University, and we understand that current quality-related investigations are focused in part on franchise provision.

    Where the Student Loans Company spots evidence of potential fraud (or when OfS is notified of a concern) usually but not always involving a franchise arrangement, both OfS and DfE may become involved in an investigation. A recent uptick in such cases has led OfS to set out expectations in more detail.

    For these reasons most providers that franchise out provision are assiduous in ensuring what is being delivered is of a decent quality. However, the market incentives – at least in the short term – are stacked in the other direction. Some larger providers are increasingly reliant on income relating to students studying within franchise arrangements, and the demand for such relationships gives franchise providers the ability to shop around. Where an awarding organisation has attempted to impose more stringent quality requirements, there have been instances where the delivery partner has simply ended the partnership and entered a new relationship that offers less work and/or more cash.

    What regulatory tools are actually workable?

    So when something bad is identified, there’s always a subset of the population who think that there should be a law (or at least, regulation) to stop it happening. It’s an attractive idea, until you start to think about implementation. There are many trade offs.

    Option one: ban all franchise provision

    In other words, you would decree that unless you have degree awarding powers, you shouldn’t be delivering higher education. You would, in practice, have to ban all new recruitment to franchised courses and allow for some form of teach-out, unless you want to face a mass legal action. On a teach out, with no likelihood of any new students, the quality of provision would fall even further as providers withdraw funding and interest.

    Meanwhile, a fair number of large providers rely on franchise income to make ends meet. So factor in the closure of a few universities – with further pressure on other providers to offer teach out – as that part of the sector slowly becomes unviable. Which would be a shame for all those students working hard at FE colleges (franchising pretty much started as a way to support FE colleges delivering HE in hard-to-reach areas), and at the quality and specialist end of franchise provision, and for on campus students at providers heavily involved in franchise provision.

    To be clear – you may not value some of the providers involved, or some of the courses students are enrolled on. But if either disappeared you would need to come up with a way to look after the interests of the legitimate students involved.

    Option two: selectively ban some franchise provision

    Take all the drawbacks of option one, but also add in the difficulty of reliably and consistently distinguishing the kinds of provision you want to see supported in this way from that which you want rid of. You could use metric thresholds in a B3-esque way, you could attempt to do something clever with subject areas, or even base the ban directly on your suspicions of fraudulent activity. You’d have to be absolutely certain, mind – such decisions will almost certainly end up in court (you are dealing with a lot of higher education income, and it is unlikely you will get it dead right every time). Even something as straightforward as a subject area (“business studies”) is notoriously tricky to define when you get down to actual course content.

    Option three: require all providers involved to register with OfS

    Even assuming OfS has the capacity to quickly register a load of providers currently delivering franchise provision, there has to be a question as to how quickly and how well the regulator can then act where there is low quality provision. Back in 2024 we got a promise that the next round of OfS quality investigations would have a particular focus on franchise provision (from last time this story cropped up) – as yet we’ve not even seen reports, much less regulatory action.

    It’s looks like this has been one of many casualties of the regulator, at the urging of the government, throwing as much effort as possible behind addressing the financial issues the sector has been facing (we’re also expecting findings from the investigation into the academic partners of Leeds Trinity University that kicked off more than a year ago)

    Option 4: continue with tripartite enforcement

    OfS, DfE, and SLC already work together (increasingly regularly) to act on evidence and information relating to student finance fraud. One approach to address the problems as reported – which encompass value for taxpayer funding in the wider sense of good quality provision as well as the more specific fraudulent and criminal examples – would be to continue to reinforce and prioritise this collaboration and data sharing. There have been some steps taken to ensure that OfS is gathering and using the appropriate data, and that the three organisations are able to work together in using regulatory or financial sanctions to deal with concerning situations.

    However, this is what we are doing currently, and it would appear that the rate of success is not yet high enough. There were recommendations in the NAO report that cover stuff like risk management, drawing on evidence, and agreeing responsibilities: all of which are examples of basic stuff that is not being done consistently or well. That’s a worry.

    Option 5: number controls

    There is a case for number controls for franchised provision, linked to a regular (ideally cyclical rather than risk based) quality engagement. Where there is good and useful franchise provision we should be happy to let it expand, where there are even mild concerns we should be happy to constrain recruitment. And there is no way that the kind of rapid scale up of activity we’ve seen at some providers can be done without compromising quality – there should be an absolute proportional limit on expansion.

    Last time this story did the rounds, Jim made a compelling case for a 25 per cent of total provision cap similar to that used by the ESFA to regulate franchise FE provision in 2020. There’s not a lot of the current HE sector that would be hit by such a rule, but there are a handful of prominent examples for whom a higher ratio is pretty much existential (yes, you could argue that such institutions may not be viable anyway, but how does that help students or the wider sector?). There would need to be a time delay on full implementation, and support and guidance for those that need to rapidly downsize existing operations. Again, you might need to consider teach out arrangements as well.

    So where next?

    If you’ve set up, as the government in England has over the last decade, a fairly open market for higher education provision based on students as consumers having enough information, you need to regulate in the interests of the consumer (in this case both the individual students and the taxpayer). It’s neither unexpected or unprecedented for schemes with incomplete safeguards and developing approaches to regulation to be at risk of fraud – and it is essential to be able to quickly identify and act where it is happening.

    For me, the speedier collection and use of data around franchise provision – regarding the student experience, student outcomes, and the financial and operational approaches involved – is essential. There should be specific and regular data submission points for lead providers involved in franchise provision – this should be assessed quickly and action taken where there are causes for concern. OfS already has a notification system, which should be better promoted – it should also work with other bodies who collect information about the student experience. As much data as possible should be published: transparency is a valuable tool in avoiding murkier practices.

    I’m not convinced of the benefit of a full regulatory relationship with franchise providers. OfS does need to know who they are and keep some records as to which delivery providers have been problematic in the past – but in terms of incentives it makes more sense to regulate the lead partner. And number controls, while far from universally popular, would help in this case.

    You’ll note that none of this requires new legislation – we should take with a grain of salt the claim that OfS does not have the powers to act in these situations, it absolutely does. However the regulator may not have the capacity to act as quickly or as decisively as it may like – so there may need to be additional money available from DfE to build these capabilities.

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  • Policy change can help manage the demand for graduate knowledge and skills

    Policy change can help manage the demand for graduate knowledge and skills

    “Our universities have a paramount place in an economy driven by knowledge and ideas.”

    These are the opening words of the 2016 white paper Success as a Knowledge Economy, which created the funding and regulatory architecture governing English higher education today. The arrangements are founded on a broad faith in the economic benefits of generating and communicating knowledge.

    This vision assumes that an increasing supply of university graduates and research, coupled with open markets that reward enterprise, leads to endogenous economic growth. That can happen anywhere because ideas are boundless and non-rivalrous, but particularly in England because our universities are among the best in the knowledge business.

    English higher education has grown by integrating the development of specific skills for the workplace alongside universally applicable knowledge. This is clear from the progress of most English universities from institutes established for professional and technical training towards university status, the absorption of training for an increasing range of professions within higher education, and the way in which universities can now articulate the workplace capabilities of all graduates, regardless of their discipline.

    Notwithstanding this, the reforms proposed in 2016 emphasised knowledge more than skills. By that time, most of the cost of teaching in English universities had been transferred to student tuition fees backed by income-contingent loans. So, the reforms mostly focused on providing confidence for the investments made by students and the risks carried by the exchequer. This would be delivered through regulation focused on issues important to students and the government, whilst positioning students as the pivotal influence on provision through competition for their choices.

    Universities would compete to increase and improve the supply of graduates. This would then enhance the capacity of businesses and public services to capitalise on innovation and new technologies, which would yield improved productivity and jobs requiring graduates. That is a crude characterisation, but it provides a starting point for understanding the new imperatives for higher education policy, which are influenced by challenges to this vision of nearly a decade ago.

    From market theory to experience in practice

    Despite an expansion of university graduates, the UK has had slow productivity growth since the recession of 2008–09. Rather than the economy growing alongside and absorbing a more highly educated workforce, there are declining returns for some courses compared with other options and concerns that AI technologies will replace roles previously reliant on graduates. Employers report sustained gaps and mismatches between the attributes they need and those embodied in the domestic workforce. Alongside this, ministers appear to be more concerned about people that do not go to university, who are shaping politics in the USA and Europe as well as the UK.

    These are common challenges for countries experiencing increasing higher education participation. The shift from elite to mass higher education is often associated with a “breakdown of consensus” and “permanent state of tension” because established assumptions are challenged by the scale and range of people encountering universities. This is particularly the case when governments place reliance on market forces, which leads to misalignment between the private choices made by individuals and the public expectations for which ministers are held to account. Universities are expected to embody historically elite modes of higher education reflected in media narratives and rankings, whilst also catering for the more diverse circumstances and practical skills needed by a broader population.

    In England, the government has told universities that it wants them to improve access, quality and efficiency, whilst also becoming more closely aligned with the needs of the economy and civil society in their local areas. These priorities may be associated with tensions that have arisen due to the drivers of university behaviour in a mass market.

    In a system driven by demand from young people, there has been improved but unequal access reflecting attainment gaps in schools. This might not be such a problem if increasing participation had been accompanied by a growing economy that improves opportunities for everyone. But governments have relied on market signals, rather than sustained industrial strategies, to align an increasing supply of graduates with the capabilities necessary to capitalise on them in the workplace. This has yielded anaemic growth since the 2007 banking crash, together with suggestions that higher education expansion diminishes the prospects of people and places without universities.

    In a competitive environment, universities may be perceived to focus on recruiting students, rather than providing them with adequate support, and to invest in non-academic services, rather than the quality of teaching. These conditions may also encourage universities to seek global measures of esteem recognised by league tables, rather than serving local people and communities through the civic mission for which most were established.

    Market forces were expected to increase the diversity of provision as universities compete to serve the needs of an expanding student population. But higher education does not work like other markets, even when the price is not controlled as for undergraduates in England. Competition yields convergence around established courses and modes of learning that are understood by potential students, rather than those that may be more efficient or strategically important for the nation as a whole.

    Navigating the new policy environment

    After more than a decade of reforms encouraging competition and choice, there appears to be less faith in well-regulated market forces positioning knowledgeable graduates to drive growth. Universities are now expected to become embedded within local and national growth plans and industrial strategy sectors, which prioritise skills that can be deployed in specific settings ahead of broadly applicable knowledge. This asks universities to consider the particular needs of industry, public services and communities in their local areas, rather than demand from students alone.

    Despite these different imperatives, English higher education will continue to be financed mostly by students’ tuition fees and governed by regulatory powers designed to provide confidence for their choices. We suggest four ingredients for navigating this, which are concerned with strategy, architecture, regulation and funding.

    The government has promised a single strategy for post-16 education and a new body, Skills England, to oversee it. A more unified approach across the different parts of post-compulsory education should encourage pathways between different types of learning, and a more coherent offer for both learners and employers. But it also needs to align factors that influence the demand for graduates, such as research and innovation, with decisions that influence their supply. That requires a new mindset for education policy, which has tended to prioritise national rules ahead of local responsiveness, or indeed coherence with other sectors and parts of government.

    Delivery of a unified strategy is hampered by the fragmented and complex architecture governing post-16 education. Skills England will provide underpinning evidence, both influencing and drawing on Local Skills Improvement Plans (LSIPs), but it remains uncertain how this will be translated into measures that influence provision, particularly in universities. A unified strategy demands structures for convening universities, colleges, employers and local authorities to deliver it in local areas across the country.

    That could be addressed by extending the remit of LSIPs beyond a shopping list of skills requirements and enhancing the role of universities within them. Universities have the expertise to diagnose needs and broker responses, aligning innovation that shapes products and services with the skills needed to work with them. They will, though, only engage this full capability if local structures are accompanied by national regulatory and funding incentives, so there is a unified local body responsible for skills and innovation within a national framework.

    Regulation remains essential for providing confidence to students and taxpayers, but there could be a re-balancing of regulatory duties, so they have regard to place and promote coherence, rather than competition for individual students alone. This could influence regulatory decisions affecting neighbouring universities and colleges, as well as the ways in which university performance is measured in relation to issues such as quality and access. A clear typology of civic impact, together with indicators for measuring it, could shift the incentives for universities, particularly if there is a joined-up approach across the funding and regulation of teaching, research and knowledge exchange.

    Regulation creates the conditions for activity, but funding shapes it. Higher education tends to be a lower priority than schools within the Department for Education, and research will now be balanced alongside digital technologies within the Department for Science, Innovation and Technology. A new Lifelong Learning Entitlement and reformed Growth and Skills Levy may provide new opportunities for some universities, but any headroom for higher education spending is likely to be tied to specific goals. This will include place and industry-oriented research and innovation programmes and single-pot allocations for some MSAs, alongside the substantial public and private income universities will continue to generate in sectors such as health and defence. In this context, aligning universities with the post-16 education strategy relies on pooling different sources of finance around common goals.

    Closer alignment of this kind should not undermine the importance of knowledge or indeed create divisions with skills that are inconsistent with the character and development of English higher education to date. The shift in emphasis from knowledge towards skills reframes how the contributions of universities are articulated and valued in policy and public debate, but it need not fundamentally change their responsibility for knowledge creation and intellectual development.

    This appears to have been recognised by ministers, given the statements they have made about the positioning of foundational knowledge within strategies for schools, research and the economy. We have, though, entered a new era, which requires greater consideration of the demand for and take-up of graduates and ideas locally and nationally, and a different approach from universities in response to this.

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  • The Office for Students reviews TEF… again

    The Office for Students reviews TEF… again

    The Office for Students has been evaluating the last iteration of the Teaching Excellence Framework (TEF), which happened in 2023.

    The 2023 TEF was a very different beast to previous iterations, focusing more on qualitative (submissions from providers and students) evidence and less on the quantitative experience and output measures. But to be clear, this work does not appear to assess the impact or likely effects of these changes – it treats the 2023 exercise very much as a one off event.

    We get an independent evaluation report, written by IFF research. There’s the findings of a survey of students involved in preparing the student submissions (aspects of which contribute to a student guide to evidence collection for TEF), findings from a survey of applicants (conducted with Savanta), and an analysis of the estimated costs to the sector of TEF2023. The whole package is wrapped up with a summary blog post, from OfS TEF supremo Graeme Rosenberg.

    Of all this, the blog post is the only bit that touches on what most of us probably care about – the future of the TEF, and the wider idea of the “integrated quality system”. Perhaps predictably, OfS has heard that it should

    “build on the elements of the TEF that worked well and improve on areas that worked less well for some providers.

    The top-line summary of everything else is that OfS is pleased that TEF seems to be driving change in institutions, particularly where it is driven by student perspectives. There’s less confidence that the TEF outcomes are useful for prospective students – the regulator wants to explore this as a part of a wider review of information provision. And while institutions do find TEF valuable, the cost involved in participation is considerable.

    How much does TEF cost then?

    It cost OfS £3.4m, and the mean estimate for costs to the wider sector was £9.96m. That’s about £13.4m in total but with fairly hefty error bars.

    What else could the taxpayer buy for £13.4m? There’s the much-needed Aylesbury link road, an innovation hub in Samlesbury near the new National Cyber Force headquarters (promising jobs paying upwards of £3,000 according to the headline), or enough money to keep Middlesbrough Council solvent for a while. In the higher education world, it’s equivalent to a little under 1,450 undergraduate annual tuition fees.

    The sector numbers come from a survey involving 32.3 per cent of providers (73: 52 higher education providers, 21 FE colleges) involved in the 2023 TEF conducted in September and October 2024 (so significantly after the event). It looked at both staff costs and non-staff costs (stuff like consultancy fees).

    As you’d probably expect, costs and time commitments vary widely by institution – one provider spent 30 staff days on the exercise, while for another it was 410 (the median? 91.6). Likewise, there was variation in the seniority of staff involved – one institution saw senior leaders spend a frankly astonishing 120 days on the TEF. Your median higher education provider spent an estimated £37,400 on the exercise (again, huge error bars here). It is asserted that Gold rated providers spent slightly more than Silver rated providers – the data is indicative at best, and OfS is careful not to assert causality.

    We also get information on the representations process – the mechanism by which providers could appeal their TEF rating. The sample size here is necessarily tiny: 11 higher education providers, 8 colleges – we are given a median of £1,400 for colleges and £4,400 for higher education providers.

    Was it worth it?

    The picture painted by the independent IFF evaluation is positive about the TEF’s role in driving “continuous improvement and excellence” at providers. The feeling was that it had encouraged a greater use of data and evidence in decision making – but in some cases these positive impacts were negligible given the volume of the input required. Students were also broadly positive, citing limited but positive impacts.

    The evaluation also made it clear that the TEF was burdensome – a large drain on available staff or student resource. However, it was generally felt that the TEF was “worth” the burden – and there was a broad satisfaction about the guidance and support offered by OfS during the process (although as you might expect, people generally wanted more examples of “good” submissions – and the “woolly” language around learning gain was difficult to deal with, even though the purpose was to drive autonomous reflection on measures that made sense in a provider context).

    One of the big 2023 cycle innovations was a larger role for the student submission – seen as a way to centre the student perspective within TEF assessment. This wasn’t as successful as OfS may have hoped – responses were split as to whether the process had “empowered the student voice” or not – the bigger institutions tended to see it as replicating pre-existing provider level work.

    Students themselves (not many of them, there were 20 interviews of students involved in preparing the submissions) saw this empowerment as being limited – greater student involvement in quality systems was good, but largely the kind of things that a good provider should be doing anyway.

    But the big question, the overall purpose, really needs to be whether TEF2023 raised the value of the student experience and outcomes. And the perspective on this was… mixed. Commonly TEF complemented other ongoing work in this area, making it difficult to pick out improvements that were directly linked to TEF, or even to this particular TEF. Causality – it’s difficult.

    If we are going to have a big, expensive, exercise like TEF it is important to point to tangible benefits from it. Again, evidence isn’t quite there. About half of the providers surveyed used TEF (as a process or as a set of outputs including the “medals” and the feedback) to inform decision making and planning – but there were limited examples of decisions predicated on TEF offered. And most student representatives were unable to offer evidence of any change as a result of TEF.

    Finally, I was gratified to note that coverage in “sector publications like Wonkhe” was one key way of sharing good practice around TEF submissions.

    The value to applicants

    Any attempt within the sector to provide a better experience for, or better outcomes for students is surely to be welcomed. However, for a large and spendy intervention the evidence for a direct contribution is limited. This is perhaps not surprising – there have been numerous attempts to improve student experience and outcomes even since the birth of the OfS: by the regulator itself, by other sector bodies with an interest in the student experience (the Quality Assurance Agency, Advance HE, the sector representative bodies and so forth) and autonomously by institution or parts of institutions.

    Somewhat curiously, the main evaluation document has little to say about the realisation of TEF’s other main proposed benefit – supporting applicants in choosing a provider to study at. Providers themselves are unsure of the value of TEF here (feeling that it was unlikely that applicants would understand TEF or be able to place due weight on the findings of TEF) though there is some suggestion that a “halo effect”, drawing in part from the liberal use of logos and that job lot of gold paint, could help present a positive image of the provider. It is a hell of a reach, but some noted that the fact that institutional marketing and recruitment efforts used TEF and the logos presents evidence that someone, somewhere, thinks it might work.

    The thing to do here would be to ask applicants – which OfS commissioned Savanta to do on its behalf as a separate exercise. This research was based on six focus groups covering 35 prospective students aged between 17 and 20 and applying to England. In four of these groups, participants had heard of the TEF – in two they had not – and in every case the applicants had ended up applying to silver rated universities.

    This is backed up by what initially looks like a decent survey instrument – a big (2,599 respondents, covering various existing online panels, and weighted via the use of quotas on age, gender, ethnicity and post fieldwork by provider type, mode of study, domicile, and neighbourhood participation marker) survey conducted in April and May of 2024. The headline finding here is that 41.7 per cent of applicants (n=798) had seen TEF ratings for any university they had looked at.

    Somewhat mystifyingly, the survey then focuses entirely on the experience of those 333 applicants in using the TEF information, before asking whether applicants may think TEF would be important in applying to university of the whole sample (52.2 per cent reckoned they would be important, despite a fair number of these applicants not having even noticed the ratings).

    Can I just stop here and say this is a weird methodology? I was expecting a traditional high n survey of applicants, asked to rate the importance of various factors on application choices, ideally with no prompting. This would give a clearer picture of the current value of TEF for such decisions, which is what you would expect in evaluation. That’s not to say that the focus groups or a specific awareness or use survey wouldn’t be a valid contribution to a proper mixed methods analysis – or as a means of generating a survey instrument for wider use.

    Even so, participants in the focus groups were happy to list the factors that affected their choices – these included the obvious winners like location, course content, and graduate outcomes, plus a “significant role” for the cost of living. Secondary (less important) factors included university reputation, teaching quality, and other personal preferences. Though some of these factors are covered within the TEF exercise, not one single applicant mentioned TEF results as a primary or secondary factor.

    For those that had heard of TEF it was seen as a “confirmatory tool rather than a decisive factor.” Applicants did not understand how TEF ratings were determined, the criteria used, or what the meaning of – say – gold rather than silver meant when comparing providers.

    The focus groups chucked the supplementary information (panel statements, submissions, the data dashboard) at applicants – they tended to quite like the student statements (viewing these as authentic), but saw the whole lot as lengthy, overcomplicated, and lacking in specificity.

    I enjoyed this comment on the TEF data dashboards:

    I feel like there is definitely some very useful information on this page, but it’s quite hard to figure out what any of it means.

    On the main ratings themselves, participants were clear that gold or silver probably pointed to a “high standard of education,” but the sheer breadth of the assessments and the lack of course level judgements made the awards less useful.

    There was, in other words, a demand for course specific information. Not only did applicants not mention Discover Uni (a government funded service that purports to provide course level data on student outcomes and the student experience), the report as a whole did not mention that it even existed. Oh dear.

    Unlike IFF, Savanta made some recommendations. There needs to be better promotion of the TEF to applicants, clearer ratings and rationales, and a more concise and direct presentation of additional information. Which is nice.

    What to make of it all

    Jim will be looking at the student submission aspects in more detail over on the SUs site, but even this first reading of the evaluation documents does not offer many hints on the future of the TEF. In many ways it is what you would expect, TEF has changed mainly when OfS decided it should, or when (as with the Pearce review) the hand of the regulator is forced.

    While providers are clearly making the best of TEF as a way to keep the focus on the student experience (as, to be clear, one stimulus among many), it is still difficult to see a way in which the TEF we have does anything to realise the benefits proposed way back in the 2015 Conservative manifesto – to “recognise universities offering the highest teaching quality” and to allow “potential students to make decisions informed by the career paths of past graduates.”

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  • Competition law is a constraint to collaboration in HE but it need not be an impediment

    Competition law is a constraint to collaboration in HE but it need not be an impediment

    There has been much discussion in recent months about financial pressures in the higher education sector and what could be done by stakeholders in the sector – government, regulators and higher education institutions themselves – to address these.

    One such proposal is a strategy of “radical collaboration” between institutions, ranging from mergers to federations, or shared services and centrally operated services. Indeed, the Office for Students (OfS) has cited radical collaboration as a likely response to the financial challenges in the sector:

    Where necessary, providers will need to prepare for, and deliver in practice, the transformation needed to address the challenges they face. In some cases, this is likely to include looking externally for solutions to secure their financial future, including working with other organisations to reduce costs or identifying potential merger partners or other structural changes.

    This notion of radical collaboration goes beyond the traditional practice of academically driven collaboration. Instead, in this context radical collaboration refers to deeper, more extensive and far-reaching strategic collaboration, involving institutions working together to achieve a strategic shared mission and/or efficiencies. This might include, for example, curriculum sharing, or collaborating on a regional basis where institutions collectively decide which is best placed to deliver particular courses or subject areas.

    While the notion of “radical collaboration” may present a potentially appealing way of responding to the challenges that the sector is facing, there is, however, a significant tension between the principles of such transformational integration and the principles of competition law. As things currently stand, many forms of greater integration between institutions, particularly in relation to curriculum mapping and sharing the provision of courses, would breach the competition rules.

    UK competition law and higher education

    Competition laws seek to safeguard free and fair competition between “undertakings” (ie any entity that is engaged in economic activity) for the benefit of consumers, with the aim of creating competitive markets which benefit from the efficient allocation of resources; innovation; lower prices; increased choice; and better-quality products and services for customers.

    Competition laws therefore prohibit agreements and understandings between independent “undertakings” that have, as their object or effect, the prevention, restriction or distortion of competition. Some agreements are regarded as being so harmful to competition in their nature that they are prohibited outright, for example, agreements between competitors to fix prices, share markets, limit output, or co-ordinate or rig tenders. These types of agreements are highly likely to attract vigorous enforcement action by the competition authorities, including the imposition of substantial fines. A finding that an organisation has breached competition rules (or even an allegation of a breach) would inevitably lead to negative publicity and reputational harm.

    While the higher education sector may not bear all the hallmarks of a traditional, fully competitive market, it does fall within the scope of the UK’s competition law regime. Higher education institutions are “undertakings” for the purposes of competition law because they are engaged in “economic activities”; they provide education and other ancillary services to undergraduate and postgraduate students, create jobs which benefit their local and the national economy, as well as develop new products and services.

    Moreover, higher education institutions have to compete to “win” students, competing to a certain extent on price, in the context of international or postgraduate provision, but primarily on non-price factors of competition, such as choice of course/course content; quality of provision; reputation; and the range and quality of ancillary services, such as sports provision, accommodation and other student services. Higher education institutions also compete in “upstream” labour markets to attract and retain talent (ie teaching and research staff).

    Collaboration between sector participants can undoubtedly be positive and pro-competitive. Such arrangements may be permitted by competition law if (among other things) the collaboration produces efficiencies which benefit consumers. For example, when properly structured, benchmarking exercises or arrangements between institutions to share facilities can lead to the more efficient allocation of resources. However, collaboration between sector participants which dampens or reduces the levels of competition that would otherwise exist between them, and/or which produces no clear benefits for consumers, risks breaching the competition rules.

    A clear understanding of where the line is drawn between collaboration which promotes competition and delivers consumer/student benefits, and collaboration which reduces or distorts competition, is therefore important. If this boundary is not well understood, or the boundary itself is not appropriately drawn, the competition rules could act as a barrier to the very innovation and collaboration which the OfS and the government are relying upon to alleviate some of the pressures facing the sector. Indeed, in an interview last week, vice chancellor of Cardiff University Wendy Larner commented that competition law was preventing the kind of collaboration on course provision that she felt was necessary.

    Competition regulation from OFT to CMA

    More recent regulatory scrutiny of the sector has focused on consumer law aspects. Nonetheless, the Competition and Markets Authority (CMA) and its predecessor, the Office of Fair Trading (OFT), have reviewed mergers between higher education institutions – for example, the University of Manchester / Victoria Manchester / University of Manchester Institute of Science and Technology merger in 2005. And in 2014, the OFT conducted a call for evidence in order to gain a better understanding of how choice and competition were working in the higher education sector in England in response to policy developments that sought to foster the development of a competitive market.

    The OFT’s report, following the call for evidence, noted that the most “serious and prevalent” concerns raised by stakeholders related to the extent to which fears of breaching competition law might hinder beneficial cooperation between institutions. However, the report also noted that despite “many generic references” by stakeholders to the potential (perceived) tensions between collaboration and competition, “there were no substantive examples that would justify, because of their relevance and/or novel nature, the production of specific OFT guidance beyond that already available.”

    That said, the report also noted that there was scope for the (then incoming) CMA to highlight that:

    • cooperation which delivers countervailing consumer benefits (ie benefits to students) may not pose a problem – examples given included benchmarking data; academic partnerships; sharing facilities; joint procurement activities.
    • where cooperation between higher education institutions can promote efficiencies, collaboration should be allowed to take place.

    The OFT’s report was published a decade ago at a time when the sector was arguably in a different place. The types of collaborative activities identified by the OFT in its report as being beneficial and delivering benefits to students were very much the more traditional forms of cooperation and certainly some way removed from the radical collaboration concepts being discussed at present.

    It also appears to be the case that a lack of concrete examples demonstrating where the competition rules had, in practice, posed a barrier to beneficial collaboration influenced the OFT’s thinking. It is perhaps for this reason that the OFT’s findings were limited to acknowledging that cooperation which results in efficiencies should be allowed to take place and reminding institutions of the possibility of relying on an individual exemption from the competition rules.

    An individual exemption involves the institution(s) in question conducting a self-assessment of whether the proposed agreement restricting competition will benefit consumers to an extent that outweighs the harm to competition. In practical terms the notion of relying on a self-assessed individual exemption may not be attractive to many institutions. Four cumulative criteria must be met for the exemption to apply and, if the agreement is challenged, the party relying on the exemption bears the burden of proof for substantiating, with specific evidence, that the exemption criteria are met.

    Undertaking the self-assessment process in advance of entering into any agreement around radical collaboration would be a significant, evidence driven compliance exercise involving financial and economic modelling. However, even if institutions (and their advisors) were to conclude that it is likely that the exemption criteria are met, there would always be the risk that the CMA or a court might take a different view of the evidence and would disagree. Institutions may not be prepared to proceed with a high-stakes radical collaboration against this backdrop of uncertainty.

    Moreover, the criteria for individual exemption include the requirement that an agreement must improve production or distribution, or promote technical or economic progress, “while allowing consumers a fair share of the resulting benefit.” Consumers in this scenario means students. In other words, to rely on the exemption, any benefits accruing to the participating institutions from the collaboration must be passed on to a sufficient extent to the students. It would have to be demonstrated, with evidence, that the collaboration would result in lower prices, or better choice and quality, for students. It would not be enough for participating institutions to demonstrate that benefits merely accrue to them.

    It is also worth remembering that the CMA may offer non-binding views on the application of the competition rules to “novel” questions. The CMA has in fact expressed that it is open to hearing from the sector, perhaps in response to the vice-chancellor of Cardiff University’s critical comments.

    While seeking a non-binding view on a proposed form of radical collaboration may sound appealing, it is open to debate whether some of the collaboration proposals which have been mooted are genuinely “novel” in competition terms. For example, an agreement between competing institutions about who will offer certain courses would almost certainly be characterised as market sharing, a serious breach of the competition rules.

    What will it take to get things moving

    There’s an argument to be made about whether a wider national agenda from government on driving forward radical collaboration in higher education is needed, which takes into account the competition law issues. Similar questions to those facing higher education were recently debated in the competition law community in the context of how the competition rules apply to sustainability agreements – agreements between industry participants which are aimed at preventing, reducing or mitigating the adverse impact that economic activities have on the environment, or assist with the transition towards environmental sustainability. Specifically, a number of organisations had voiced concerns that the fear of inadvertently breaching the competition rules was preventing beneficial sector and industry collaborations aimed at delivering sustainability goals.

    In response, a number of competition authorities – including the CMA – proactively published guidance to help organisations apply the competition rules to sustainability agreements and collaborations. The CMA published its Green Agreements Guidance in October 2023 containing a clear statement of intent, along with practical and user-friendly guidance, that competition law should not impede legitimate collaboration between businesses that is necessary for the promotion or protection of environmental sustainability.

    The guidance also sets out welcome details of an open-door policy, by which businesses considering entering into an environmental sustainability agreement can approach the CMA for informal guidance on their proposed agreement if there is uncertainty on the application of the guidance. This policy also provides some reassurance that the CMA would not expect to take enforcement action against environmental sustainability agreements that correspond clearly to the principles set out in the guidance.

    To date the CMA has published two opinions under its open-door policy. These in turn form the beginnings of a body of decisional practice which will help inform organisations, as well as advisors, on the CMA’s approach to collaboration in this area, aiding self-assessment and informed decision-making.

    Given the extensive challenges facing the higher education sector, and the passage of time since the OFT’s call for information in 2014, this might be an opportune moment for the CMA to consider the specific issues facing the sector and to engage with the sector more extensively on how the competition rules apply in the sector.

    Taking steps to support a viable, flourishing higher education sector which, among other public goods, boosts economic growth, would undoubtedly be aligned with the government’s growth mission and, in turn, aligned with a key pillar of the CMA’s strategy of driving productive and sustainable growth. To the extent that the competition rules are perceived by institutions as presenting a barrier to collaboration that would deliver benefits to students, and where there are examples which show this, there may now be a case for specific higher education focused guidance, similar to the approach taken to the Green Agreements Guidance. Clear guidance, including worked examples on how the individual exemption should be applied and understood in the context of the higher education sector, could be a positive and welcome step forward.

    In a recent speech interim Executive Director for Competition Enforcement at the CMA Juliet Enser noted the work of the CMA in ensuring that its enforcement activities do not have a chilling effect on pro-competitive collaborations between competitors, referring to the sustainability guidance and the CMA’s work on competitor collaborations in the pharmaceutical sector. Enser said “where we are convinced on the evidence that there is a real risk, that absent our providing appropriate comfort, the economy will lose out on beneficial collaboration then we are prepared to act.”

    This is a positive statement from the CMA, signalling a proactive willingness to engage. In turn, the higher education sector could seize upon this invitation and commence a dialogue with the CMA, providing examples and evidence of where clarity on the application of the competition rules to the sector is needed, so that stakeholders can work towards pro-competitive collaborations which may ultimately benefit students, the higher education sector and the economy at large.

    This article is published in association with Mills & Reeve. Join us on Tuesday 4 March 12.00-1.00pm for Connect more, a free online event exploring the potential for more system-wide collaboration in higher education in England. Find out more and register here.

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  • New legislation in Scotland increases the SFC’s powers, but only up to a point

    New legislation in Scotland increases the SFC’s powers, but only up to a point

    Post-school reform in Scotland continues to chug along, following last month’s announcement of the preferred future shape of the funding body landscape.

    Today sees the legislation that will enact the changes introduced in Holyrood: the Tertiary Education and Training (Funding and Governance) (Scotland) Bill.

    We’ve been over how responsibilities for further education student support and apprenticeships and skills funding will shift around, and the bill also contains expected changes to the governance arrangements of the Scottish Funding Council (SFC), as well as some technical changes relating to fees and private provision.

    But what’s emerged as perhaps the more pressing question for the higher education sector is how the legislation will change SFC responsibilities and powers, as these apply to its work with universities. The legislation sets out the route the Scottish government will take here, and it’s a fairly balanced one – we are still a long way from an England-style “boots on the ground” regulatory environment, likely to the relief of many.

    Tell us about your finances

    Much of what the bill will do legislatively is through modifications to the Further and Higher Education (Scotland) Act 2005. Section 22(4) of this gives the SFC various powers to “pull” information from universities – or strictly, from their governing bodies – but only where the funder knows that the information exists, or may exist.

    The new legislation aims to create a landscape in which post-16 education bodies must “proactively notify SFC of certain developments of which the SFC might otherwise be unaware” in what the bill’s policy memorandum characterises as a “push” of information – a responsibility to notify the funding council of things it would not have known otherwise. Those who are more used to other UK systems will probably be thinking of “reportable events”.

    It’s suggested that notifications would likely be sought in the following kinds of situation:

    • Where a university is planning voluntary or compulsory severance (so no daily refreshing of the QMUL UCU cuts tracker for the SFC)
    • Where a university has reached a certain threshold in a rapidly worsening financial viability situation
    • A major data breach, such as resulting from a cyberattack.

    But exactly how this will work is not specified on the face of the legislation – it would be determined by ministers via the laying of regulations, with consultation and an affirmative procedure in the Scottish Parliament, “given that they could potentially place significant obligations on post-16 education bodies.” But this does mean that there is a lack of clarity on exactly what the bill is going to mandate.

    Part of the rationale for beefing up the legislation from what was previously anticipated (and let’s be honest, what was in the consultation) seems to be that ministers have not received enough clarity about the financial challenges being faced by certain universities and colleges. When the policy memorandum notes that “there can be challenges for SFC in getting information from post-16 education bodies about their financial sustainability,” you feel that really the issue is about ministerial oversight and the sense of having active levers to pull. This is given an explicit tweak elsewhere in the bill (again, quoting the policy memorandum):

    New section 15A(2) allows the Scottish Ministers to seek information and advice from the SFC relating to post-16 education bodies, this could be an individual body or the bodies as a whole. Section 15A(3) requires the SFC to respond to any such request from the Scottish Ministers and the SFC may also offer information proactively when it considers it appropriate to do so. This is necessary because unforeseen circumstances may arise of which the Scottish Ministers might otherwise be unaware (and so would not know to enquire).

    So what are you going to do about it?

    Also in the 2005 Act is provision for the SFC to “secure the promotion or carrying out of studies designed to improve economy, efficiency and effectiveness in the management or operations of any fundable body” – but no such power exists where the matters are not related to financial support.

    The new legislation would amend this, with the intention of making the SFC able to “address a broader range of matters to assist with performance improvement.” So in scope for an efficiency study would now be the needs and interests of learners:

    The policy intention is that the SFC could, particularly where notified of certain adverse circumstances (such as course closures), instigate studies or reviews of the impact on students and learners so that assistance could be provided to ensure they are not negatively impacted. For example, if a college was heading towards needing to close courses before students could complete them, the SFC could help to make arrangements for the students to continue their education at different colleges.

    Bringing the student interest in scope sounds sensible in theory, but there remains the question of what changes on the ground, beyond the production of a study. The 2005 Act allows the SFC to attend and speak to an institution’s governing body – the new section 15(4) of this bill will extend this to the issuing of a set of written recommendations.

    So the SFC will be able to recommend setting specific improvement targets, or requiring the development of an improvement plan. And it will now even be able to publish these, “where there is wider interest amongst institutions, or the public, in the recommendations and they are not sensitive.” But it won’t be obliged to.

    And what if its recommendations are ignored?

    As with the SFC’s right to address meetings, already provided for in section 16 of the 2005 Act, there is no corresponding duty on the fundable body to do anything in response to the recommendations. However, as a matter of good governance and practice, the Scottish Government would expect the fundable body to consider them appropriately.

    But beyond these recommendations, in the legislation as it stands there would be proper statutory powers for the SFC to influence educational institutions’ behaviour, through the issuing of guidance, which currently is “purely administrative” (though presumably always very welcome). The Tertiary Education and Training Bill will change this, so that institutions must have regard to the guidance, in the carrying out of their funded activities (note that “have regard to” is quite woolly language – something that the Office for Students has exploited frequently within the way HERA was drafted). But the SFC will have to consult both ministers and institutions in issuing guidance.

    It could have been otherwise

    Various alternative approaches were considered and rejected. The use of codes of conduct (“for example to address concerns around breaches of fair work conditions”) was felt to potentially lead to complex interactions with other requirements, and diminish autonomy. Plus there would have been a need for “appropriate enforcement mechanisms,” which is a whole other question.

    More powers of audit and investigation were also considered and not taken forward, which would have been a move towards a “more interventionist SFC.” Likewise for stronger enforcement and intervention action, including serving enforcement notices or the removing, suspending, or appointing of officers or governing body members.

    But this would have been “a fundamental change to SFC’s role which requires more careful consideration” – and would have gone way beyond what was originally consulted on.

    There’s still a long way to go here – Universities Scotland is already noting the “new, very broadly defined provisions regarding the monitoring of the financial sustainability of institutions,” and raising concerns that too much change in the relationship between the SFC and universities (or universities and the Scottish government) could jeopardise the classification of universities in the Office for National Statistics classification.

    The Scottish government seems to be aware of this particular risk – but there are certainly MSPs keen for the SFC to become more “interventionist”, and the legislation now faces a complicated passage through a Parliament in which the SNP does not hold a majority. The ministerial statement to Holyrood launching the bill saw Ross Greer of the Scottish Greens concerned about whether the SFC would have the ability to intervene in matters relating to fair work – higher education minister Graeme Dey said he would be happy to discuss the issue further.

    For now the legislation aims at a delicate balancing act between juicing up the SFC’s role and preserving universities’ autonomy. The next question is whether this persists in the face of deeper scrutiny and parliamentary compromises.

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  • When OfS reopens its register, there will be implications for everyone else

    When OfS reopens its register, there will be implications for everyone else

    The process may be paused right now, but if you are thinking of registering with the Office for Students (by choice, or following the requirement for larger franchise providers to get on board) the game is changing.

    The Office for Students has issued a consultation on two new initial conditions of registration.

    Interested parties have until 23 April to offer feedback, with the overwhelming majority of conditions due to come into force from August – at the point where OfS is planning to resume registration activity following the current pause.

    This will have a particular impact on providers who are currently planning (or preparing to restart) submissions quashed when the pause started. Expectations and requirements will change – and while OfS hopes to primarily assess documents a provider will already have, these things do tend to be tailored to fit requirements.

    C5: Treating students fairly

    New condition C5 replaces C1 (consumer law) and C3 (protection plans) as initial conditions – an assessment will be based on identifying behaviours that constitute unfair treatment of students (there is a list) from documents providers already have.

    There are implications from that one that reach far beyond new applications to the register – Jim Dickinson has covered those in detail elsewhere on the site.

    E7: Effective governance

    This new initial condition replaces the current E1 (on public interest governance) and E2 (on management and governance), though those two remain as ongoing conditions. OfS offers a rationale:

    We are increasingly finding that newly established providers (with less experience of delivering higher education) are less sure about what is required in terms of the self-assessment we ask for at registration. This leads to inefficiencies in the assessment.

    Providers have been engaged in substantial back-and-forth conversations with OfS about what is expected during registration. The regulator has noted that people are describing existing documents where it would be quicker to submit them, and has spotted that what is submitted can often be poorly written and excessively tailored to paint a rosy (and hopefully successful) picture.

    Some applicants have been borrowing and adapting plans and documentation from other providers that are inapplicable (a small, single subject, provider using processes developed for a traditional, multi-faculty, university) – in part because of perceived expectations that newly established providers need to have the same range of processes and policies.

    So the self-assessment aspect will go – the plan is that providers should submit actual governance documents, a five year action plan, and other bits on the knowledge and experience of those involved.

    One surprising shift is that there will no longer be an explicit test of “public interest governance” (the Nolan principles and suchlike) in the registration process. OfS reckon that the strengths of the rest of these new requirements, plus the continued inclusion in ongoing condition E1, makes up for this.

    Ditto the absence of the (largely toothless) student protection plan – the line being that this should be visible to students via the documentation provided, which is a win for all those applicants who read governance documentation before they decide where to apply. See Jim’s piece for more detail.

    Documentation

    So what would you now need to submit:

    • The governing body’s terms of reference (or similar), which would cover purpose, membership, appointment procedures, responsibilities, decision-making procedures, meeting frequency and the arrangements for reviewing effectiveness
    • Establishing documents – like a Royal Charter or articles of association
    • A scheme of delegation (or anything else useful) about who makes decisions and how
    • Documentation pertaining to risk and audit – the operations of the committee responsible is given as one example
    • A policy on conflict of interest

    These are, to be clear, governance documents, not detailed operational arrangements – although of course such policies would need to be operationalised for ongoing conditions E1 and E2.

    In assessing these documents, OfS intends to look at the “appropriateness of arrangements”, bearing in mind a provider’s size, complexity, context, and business plan.

    Oh yeah, you need a five year business plan too. The regulator hasn’t been impressed with what has been seen so far.

    Some providers applying for registration have not been able to demonstrate that they have sufficient understanding of how the higher education sector operates. This can result in a provider making unrealistic assumptions in its planning, such as overestimating its ability to recruit students in a competitive market, which can pose risks to the ongoing viability of the provider and cause associated harm to students.

    Part of being sufficiently equipped to deliver higher education is preparing to meet the relevant regulatory requirements. We have encountered issues where newly registered providers were not sufficiently aware of the regulatory framework and so did not have robust plans in place to meet ongoing requirements

    And there’s a telling indication that problems multiply pretty quickly when the plans get hit with a dose of operational reality.

    Where a provider does not have robust plans in place, it may encounter financial challenges after registration. Providers have at times taken steps to address this without fully considering the risk of doing so, for example:

    a. Rapidly entering into new partnership arrangements because of the unexpected withdrawal of a current partner without having the governance and management processes needed to manage this change properly.

    b. Employing financially incentivised external recruitment agents to meet recruitment targets that are too ambitious.

    c. Taking out additional unplanned borrowing to fund unanticipated expenditure.

    All of these behaviours can result in negative consequences for students and taxpayers

    Being objective

    Who could possibly have foreseen, eh? Going forward OfS would like business plans to be comprehensive and clearly written – and demonstrate an understanding of the sector, of managing risks, and of the conditions of registration.

    It’s all standard stuff (objectives and targets and how to achieve them, risks and how to manage them, regulatory compliance) over a challengingly long five-year period. OfS’ assessment will not be based on the targets themselves, but whether the provider can deliver these in practice given their resources and prevailing sector conditions. As an overriding primary consideration the plans need to focus on the interests of students.

    There’s no expectation that there will be an assessment of the objectives in and of themselves (or whether they are a proper thing for the provider to pursue), and OfS would not endorse these objectives – it’s more a matter of understanding a provider’s chosen approach in looking at the plans it has to deliver. A neat distinction.

    People who need people

    So who will be delivering these plans? The new condition would set out key knowledge and expertise for the chair of the governing body, accountable officer, and where applicable, the person with overarching responsibility for financial management and an independent member of the governing body. There’s a sensible sounding list on pages 30-33, but the big shocker is that these would be assessed via an interview with OfS officers!

    Yes, you read that right: 30 to 60 minutes based on key questions allowing said knowledge and experience to be demonstrated. On one level it feels sensible to talk to the people involved as a way of establishing the credibility of plans, but the feeling that OfS is appointing (or approving the appointment of) your chief financial officer is a hard one to shake.

    In contrast the “fit and proper persons” test is pretty much as expected, with additional requirements to supply new information (if you are disqualified as a director or trustee, or declared bankrupt) during the course of the application process. This is a welcome admission that these processes can take a long time to work through.

    You’ve probably spotted that OfS and government are now very focused on fraud in the sector – and assessment of arrangements to prevent fraud will focus on an institution’s track record where it has already been delivering higher education as part of a franchise or partnership arrangement.

    Other requirements for registration applications

    Got all that? Well strap in, there’s more.

    There’s the new C5, the new E7, and OfS intends to beef up their financial information requirements from August 2025 too.

    Financial viability and sustainability is currently assessed via initial condition D – providers already submit full, audited, financial statements for up to three years alongside four years of forecasts and a commentary on these. OfS has noted that new registrants tend to defer their first year of recruitment (setting up a HE provider is hard!) and substantially under recruit when they do – with current financial and recruitment pressures this isn’t going to improve any time soon.

    The new requirement is an addition to the template, which allows a provider to model financial viability against different yet plausible scenarios: zero growth over four years and 40 per cent below forecast followed by three years of zero growth for those currently delivering HE – zero growth followed by 80 per cent below forecast for the next three years for those entirely new to the sector.

    These aren’t set in stone – OfS reserves the right to tweak them based on emerging sector issues. And we may also get an alternative for providers whether the business model is not predominantly balanced on higher education provision.

    The commentary to this new table would let the provider set out mitigations, or provide evidence that these scenarios are unrealistic. But even so, there is a risk here that condition D becomes the hard one to pass – OfS reckon this is fair enough given short– and medium– term challenges to the sector. Although one cannot help but think of the many existing registered providers that would not pass these tests.

    By OfS request

    There’s another welcome recognition that applying for registration takes ages in the requirement for a provider to submit updated finances, student numbers, and commentary in the late stages of application by OfS request. While this makes sense in that the regulator isn’t relying on year-old (and the rest…) numbers this is a hard sell for those prospective registrants now expecting to submit similar data twice – although it could be argued that this gets them used to regular submissions while registered.

    Likewise, if the financial year turns over during the registration process you’ll need to put an extra batch of audited financial statements in for that year.

    And, wonderfully, OfS wants an ownership and corporate structure diagram too – it’s been finding some structures “complex”, poor thing.

    If your provider is or has been under investigation by another regulator – or awarding organisation, professional body, funding body, statutory body, and so forth – you’d better believe that OfS wants to know about that up front too. Apparently it keeps finding out about such things midway through the assessment process – and it does tend to be relevant, even if it is not an automatic fail.

    The rules are for the 60 months proceeding application, any investigation that closed or opened during the application period is something OfS wants to know about: a brief description, the responsible body, the dates, and the findings and/or outcomes.

    And if you are looking forward to the exciting world of “reportable events”, something similar now applies during registration. If stuff happens (there’s a long and familiar list on page 42) then you’d best drop OfS a note within 28 days.

    Finally, from January 2026 you won’t be able to reapply within 18 months of an unsuccessful registration application. This “double jeopardy” rule is a new one, and it looks like it is aimed at ensuring that OfS capacity is not clogged with resubmissions of poor quality applications where identified weaknesses are not addressed. We learn that 40 per cent of applications don’t comply with the existing guidance.

    There is the possibility of individual exemptions from this rule, for example where there have been IIT problems or where information that was not available for reasons outside of the provider’s control is now available.

    How this will be done

    The changes to application requirements were done via the same “manner of application” loophole – section 3(5) of HERA – that was used to pause the registration process. It is, as we said at the time, a reach in terms of legislative interpretation but it is difficult to argue against many of the principles here.

    It is regrettable that the same group of providers that have been forced to delay or resubmit applications due to the pause will now have to do considerable extra work to get these into the new format.

    While the principle of assessing existing documents rather than new ones is a good one, the reality of this is not as neat as regulators sometimes think. For an expected influx of new registrations – the franchise thing, and whatever ends up happening with the lifelong learning entitlement is expected to flush out at least a few – it makes sense to have all this in order. But there are always winners and losers with these things, and the losers have lost several times in a row here.

    The only other disappointment is probably that these new approaches will apply only to new registrations – there’s clearly a lot of benefit to similar approaches (especially for C5 and the financial requirements) to be extended to existing registered providers, and it is likely that there is more to come on that front.

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