Blog: OfS regulatory framework

18 December 2017

Our head of policy Sarah Stevens blogs on the Office for Students (OfS) regulatory framework:

The closing date to respond to the range of consultations on the new Office for Students (OfS) is fast approaching, and taking the opportunity to feedback on the proposed regulation framework will be a top priority for many in the sector.

Registration with the OfS will be critical for the continued operation of most higher education providers. Access to quality-related and competitive research funding, teaching grants and student finance, as well as the ability to award degrees, hold University Title, and receive a Tier 4 licence to recruit international students, are all contingent on registration in the Approved (fee cap) category. Institutions will, therefore, need to understand how they can meet the initial and ongoing requirements to retain these vital benefits.

The opportunity…

The new regulatory framework presents an opportunity to design and implement an efficient and effective approach to regulation, one which supports the future success of this country’s world-leading HE system for the benefit of students, communities and all citizens.

The principles on which the new regulatory framework is based are laudable: a commitment to act in the interests of students first and foremost; to take a risk-based and proportionate approach; and to protect institutional autonomy – enabling providers to innovate and determine their own approaches to deliver excellent outcomes. If these principles can be applied in practice, we should be well on the way to realising the positive opportunities presented by the new approach to regulation.

A risk-based approach…

The protection and promotion of students’ interests is of paramount importance to the work of the regulator. Prioritising widening access and supporting participation, maintaining a high quality bar, and protecting students from poor provision (or at the extreme, the risk of institutional exit), is the right approach.

However, the differing requirements placed on providers across the registration categories risk undermining the regulator’s ability to ensure that all students are protected. Student protection plans, for example, do not apply to registered basic providers. Appropriate safeguards must be put in place to protect students, regardless of the type of provider they are studying at.

And where the regulator judges that a provider poses a very low risk to students, regulatory burdens should be lifted, meaning that more institutional resources can be devoted to activities that benefit students, instead of being spent on regulatory compliance. Rather than applying the full range of initial and ongoing conditions to all providers, the regulator should make a judgement about which conditions to apply, based on its risk assessment of each individual provider – as committed to in the Act (clause 7(1)).

To support providers to deliver across the four fundamental objectives of the OfS (access, quality, consumer protection and value-for-money), the regulator also needs to ensure providers retain autonomy; to respond to changing priorities, introduce new innovations, and take a holistic approach to investing in quality across their particular mission.

The “how” as well as the “what”…

The consultation documents focus on what the OfS can (and will) do, but there is rather less detail on how things will be done.

We know the OfS will take advice from the designated quality body and from UKRI (on research matters), and that it will require providers to increase the amount and frequency of their data reporting. It will also collect other types of qualitative and quantitative evidence of providers’ performance, through; access and participation plans, value for money statements, self-assessments on governance, financial forecasts, and so on.

But too little detail is provided about how the OfS will use this information to make decisions about providers’ compliance with their registration conditions. Who will make the decisions, what expertise will they have, how transparent will their decision-making be, and how will they be accountable? How will consistency be ensured? What contextual information will be considered and how will this be weighted against raw data on performance?

Addressing this issue is particularly important given the absence of fixed thresholds in assessing performance. As it stands, the proposed regulatory framework appears to provide the OfS with a very significant amount of discretion in its decision-making, and there is a risk this could lead to an unpredictable regulatory environment, and ultimately undermine the success of English HE.

How the OfS will work with UKRI to maintain oversight of the financial sustainability and health of the sector is another key issue, given the move away from one organisation with responsibility for both teaching and research. Whilst helpful assurances are given on this in the consultation, formal mechanisms need to be proposed, debated and published right from the start, to ensure a joined-up approach.

Providing answers to these questions will be critical to ensuring that the regulator has the confidence of students and the sector.

Demonstrating value for money…

The lack of information on the projected running costs of the OfS is also a concern. The Act requires the OfS to use its resources in an efficient, effective and economical way. It is therefore important that the regulator is accountable for its costs and seeks to achieve value for money. After all, the costs of meeting the registration fees levied on providers will indirectly fall on students and taxpayers through tuition fees.

Currently, there are no mechanisms which enable providers to hold the new regulator to account and ensure it runs efficiently. Withholding payment of registration fees would be a breach of a registration condition, and so is not an option.

Introducing mechanisms to ensure the regulator is efficient in its operations would be helpful. One way to do this is by placing reasonable limits on rises in the registration fees paid by providers. Maximum annual increases in registration fees should reflect the broader funding environment for providers (for example, being capped so they never increase more than percentage increases in the headline tuition fee rate).

More broadly, giving providers and students a formal opportunity to comment on the value for money which the regulator is delivering, perhaps through a standing committee or regular consultation, would help them to hold it to account transparently.

All of this would enable providers to increase their own efficiency (in line with the expectations of the regulator), maximising the use of their funds across their core missions to underpin excellent teaching, research and innovation.

In developing a regulatory framework which works to ensure the future success of the sector, it is vital that the new regulator takes a truly risk-based approach to regulation, drawing on expertise from other organisations and from within institutions, and is itself seen to be accountable, transparent and efficient.

This blog was first published online by Wonkhe.

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