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Turf wars, new providers and spending reviews – and how there are 118 fewer higher education providers in England than there were meant to be in 2020

  • 19 November 2020
  • By Nick Hillman

This is an extract from a speech delivered by Nick Hillman, the HEPI Director, to the GuildHE Council this morning.

1. Turf wars

In the past few years, the pace of change in higher education policy has been enormous. Whether it has been driven by wider political upheaval, or new legislation or changes to the regulation of providers, we have probably just lived through the busiest five years the sector has ever seen. And that would have been true even without Brexit and COVID.

So the first point I want to note is that I do not see that pace of change slowing down, not least because there is currently something of a turf war going on in higher education policy. Take last week’s story about admissions to higher education institutions. On Monday, UCAS set out their stall; on Friday, Universities UK set out their slightly different stall; and on Saturday, the Secretary of State for Education made a clearer statement about shifting to post-qualification admissions than he has before. Meanwhile, the Office for Students is waiting in the wings, having temporarily paused their own admissions review.

It was a mite odd for a couple of reasons. First, not one of these organisations – UCAS, Universities UK, the Government and the Office for Students – has yet made up their mind about exactly what form of post-qualification system they want or how it should operate. So the announcements were like a Polo mint, with a hole in the centre.

Secondly, and more importantly, the episode shows there is a question over where power now resides when it comes to major features of higher education policy, like admissions. Is it with the Government, or institutions (whose autonomy on admissions is enshrined in primary legislation), or the main admissions body or the sector’s principal regulator? And that is just in England – the picture is even more complex if you raise your eyes to cover the other parts of the UK too.

And it wasn’t just a one off. Earlier this week, both the Office for Students and Universities UK put out statements about judging the quality and standards of higher education – in essence, how to judge if a course is low value or not, which we know the Government also wants to do. The well-respected specialist body the Quality Assurance Agency is designated as the official quality body by the Office for Students and the Government so also has a major role to play. Who is in the driving seat on the future of quality and standards? As with admissions, it is not entirely clear.

In other words, after five years of profound change, elements of the higher education landscape are less well defined rather than more clear. It is not just in Number 10 Downing Street where there is a tussle for power. An optimist might say this leaves lots of room for sector-wide collaborative partnerships but others might ponder whether it is more likely to prove a recipe for confusion.

2. Supply side

Another intriguing area is the supply side of higher education. The core goal of shifting from the old Higher Education Funding Council for England (Hefce) to a new market regulator like the Office for Students was, of course, to promote supply-side reform – or ‘a level playing field for all providers of higher education’ in the lingo of the time.

Jo Johnson, during his first stint as Minister for Universities, compared validation arrangements as ‘to Byron Burger having to ask permission of McDonald’s to open up a new restaurant.’ In future, Byron’s equivalents in higher education were to have a smoother and faster path to degree-awarding powers and university title.

But the supply-side measures are not working in at least three ways. First, it is not really any easier to get a new institution off the ground than it was. Almost five years ago, in HEPI’s response to the 2015 higher education green paper, Roxanne Stockwell of Pearson College warned that the Government’s reforms did not go far enough. And so it has proved. Just look at the challenges and delays faced by exciting new initiatives like the New Model Institute for Technology and Engineering in Hereford or the proposed University of Peterborough.

Secondly, it is also no less challenging than it was to run what used to be called ‘alternative providers’ – those institutions that were not regulated by Hefce but which are now often regulated by the Office for Students, though often in the ‘approved’ rather than the ‘approved (fee cap)’ category. Approved providers are subject to nearly all the same regulatory requirements as Approved (fee cap) providers, even though their students can borrow much less money from the Student Loans Company to cover their tuition fees and even though the original intention had been to let a thousand flowers bloom.

I sometimes see this first hand as a member of the Council at one of my local institutions, the University of Buckingham. It is clearer still in recent changes of status elsewhere: as I recently noted in a speech to St Mary’s University, the American University in Richmond has entered a strategic partnership with China Education Group Holdings Limited and the previously not-for-profit Regent’s University is joining Galileo Global Education, which spans over 13 different countries.

Originally, the Office for Students was meant to have a ‘basic’ category for institutions that wanted a relationship with the regulator but which were not ready for full regulation. It was dangerous nonsense because it would have allowed an institution to pay £1,000 and then to claim it had a close relationship with the regulator. But, in my view, the answer should not have been to abolish the basic category before it was even created but to make it more meaningful as a clear step on the way to becoming fully regulated in due course.

Thirdly, as a consequence of the challenges to both new providers and existing providers trying to do things differently, we have far fewer regulated higher education institutions in total than we were meant to have by this point. The Government predicted there would be 531 institutions on the Office for Students Register in 2020/21, but there are currently just 413 – around three-quarters of the number expected. Moreover, by my count, just 67 of the 413 are in the ‘Approved’ category, which is under half of the expected 144 total, while the other 346 are in the ‘Approved (fee cap)’ category, which is around 90% of the expected total. So it is clear that the promotion of diversity via the ‘Approved’ category has not worked out as planned.

To those Jeremiahs who say we have too many higher education institutions, I would point out that we actually have a lot fewer than we were meant to have by this point.

3. Funding and demography

It is now less than a week until the much-anticipated and long-awaited spending review. Overall, it is likely to be a damp squib compared to original expectations. A full multi-year spending review was meant to happen in 2019 but was delayed to 2020 because of Brexit and then it was, more recently, downgraded to a one-year review.

It would be wrong, however, for the higher education sector to think the spending review will now be meaningless. There are two reasons for this. First, when such totemic pledges like the 0.7% commitment to international development spending are in doubt and when big spending increases are to be made to other areas like the defence budget, it could be unwise for the sector mentally to bank the £22 billion a year of public spending on research and development announced by the Chancellor back in March 2020. Remember, the commitment to move towards the OECD average of spending 2.4% of GDP on R&D is worth less in cash terms if the economy contracts as a result of COVID.

Secondly, we are due a trilogy of major documents that could conceivably emerge around the time of the spending review: a further education white paper; a response to last year’s Augar report; and the review of the Teaching Excellence Framework by Dame Shirley Pearce, commissioned as part of the Higher Education and Research Act, which received Royal Assent getting on for four years ago. So there is at least a chance that the spending review will turn out to be more important to education than to other major areas of public spending.

I worry about what this might mean for funding. There are plenty of people who think the unit of resource for educating each student should go down. Aside from its well-publicised recommendation to cut the full-time undergraduate tuition fee cap from £9,250 to £7,500, the Augar report also recommended an 11% cut in the unit of resource – it looked to what it euphemistically labelled ‘further efficiencies’ delivered by a year-on-year freeze in the average per-student resource until 2022/23.

Sir Philip may now have himself rejected the fee cut, but some would like to go even further than he originally proposed, perhaps moving closer to Augar’s £7,500 fee cap but without the Treasury making up the shortfall even in cash terms let alone in real terms. This would certainly put us closer to the territory painted by the Institute for Fiscal Studies, in which a dozen or so universities go bust – or fall into the Government’s new restructuring regime.

One reason why the Government might wish to save money on higher education is the new reclassification of student loans in the national accounts, which makes the current system look much more costly than it did. That could raise the sceptre of caps on the number of places. I thought it was a mistake for the sector to call for number caps earlier in the current crisis, not least because the removal of number caps was hard fought for but also because it seems crazy to put limits on surging demand for higher education when we could be on the cusp of a recession and when aspiration levels are running so high.

As we showed in one of our most recent HEPI reports, authored by my colleague Rachel Hewitt, we are likely to need around 360,000 full-time places just in England over the next 15 years.

So let me end where I started, with admissions. One of the notable features of the last week’s discussions on admissions to higher education is the way in which the focus has been on the mechanics of the different systems. Yet, in reality, the way any admissions system operates depends in part on how many places are available. As well as watching the spending review for financial cuts, we also need to watch it closely for front-door or back-door reductions in the future supply of higher education places.

If there is one thing that 2020 has shown, it is that you never know quite what is around the corner. But we can prepare better for such uncertainties if we provide as many people as possible with the transferable skills that UK higher education at its best excels at.


  1. Julian Gravatt says:

    In the years between the publication of the HE green paper in 2015 and the actual start of OFS regulation in 2019, there were 62 college mergers. I’m not sure that DFE officials on the HE of the wall took college activity into account when forecasting OFS register numbers

  2. Albert Wright says:

    A great deal has happened since 2018 and several forecasts in that review have not been achieved, possibly because objectives have changed and achievement is no longer appropriate / desired.

    This article has encouraged me to find out more about ‘approved’ rather than the ‘approved (fee cap)’ categories and what the financial implications are.

    It also describes the increased complexity in the sector despite the original objective of greater clarity.

    However, it does not change my view that Higher Education is still in a bit of a mess and costs too much compare to the benefits it provides.

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