Whatever happened to all those ‘alternative providers’ of higher education? By Nick Hillman

While Margaret Thatcher was the Secretary of State for Education and Science in the 1970s, she instructed people working in independent educational institutions to:

‘never apologise for independence. It is worth stimulating and nurturing for its own sake. You do not have to justify it. It is those who wish to finish it who have to justify their case.’

If this is a tenet of the Conservative approach to education, then one might assume the lengthy period of Conservative-led governments since 2010 would have ushered in a more diverse higher education sector by stimulating more independent provision.

Yet when I entered the Department for Business, Innovation and Skills as the Special Adviser to the Minister for Universities and Science in May 2010, we found so-called ‘alternative higher education providers’ – those that did not receive funding from the old Higher Education Funding Council for England – were off the departmental radar.

Civil servants did not even know how many of these providers there were and, initially, seemed to have minimal interest in finding out on the grounds that they were not responsible for them.

• Eventually, three years after the Coalition entered office, the Department published a survey showing there were ‘674 named privately funded HE providers operating in the UK.’
• A further three years on, a second report commissioned by the Department found even more: ‘some 732 alternative providers of higher education which between them served somewhere between 245,000 and 295,000 students.’

We had to fight hard to get more equal funding rules to support these legitimate providers. For example, when we were tripling the maximum fee and loan cap for full-time undergraduates at Hefce-funded providers to £9,000, the firm advice from the civil service machine was that we should have a much lower loan limit for students at alternative providers. The politicians in charge overruled this and went for a loan cap of £6,000 instead in an effort to develop a more diverse sector.

This was the right decision, even if it briefly encouraged some cowboys leading to the need for more careful regulation. A permanent solution was outlined in the higher education white Paper of 2011, Students at the Heart of the System. This promised to:

‘remove the regulatory barriers that are preventing a level playing field for higher education providers of all types, including further education colleges and other alternative providers.’

But the tricky parliamentary votes on higher fees at the back end of 2010 and the embarrassments faced by the Liberal Democrats deterred the Coalition from finding the parliamentary time for such new legislation and the White Paper remained largely unimplemented.

That is why, on arriving at HEPI a decade ago, my first report – produced 10 years ago this month – compared the state of regulation back then to ‘an unkempt meadow’ and made the case for change, including floating the idea of ‘an equitable, rather than equal, [regulatory] system with risk-based differences.’

We had to wait another few years, until 2017, for the Higher Education and Research Act (known as ‘HERA’) to get on the statute book and then to take effect for a different world to be ushered in. Perhaps the single biggest driving force behind this new legislation was to deliver supply-side reform, both as a good in itself but also as a competitive pressure on the traditional sector.

It should not have come as a surprise because the responsible Minster, Jo Johnson, had previously warned the sector:

‘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. It stifles competition, innovation and student choice’.

Yet once the Office for Students started work, this agenda fell off the table once more. There are today far fewer providers on the Office for Students’ Register than there were meant to be. When the Higher Education and Research Act was being enacted, the Government predicted there would be 606 higher education providers on the Office for Students’ Register in 2023/24. Yet today there are only 422 registered providers.

In December 2022, it was officially admitted by the Department for Education that:

‘While the government may have envisaged that more new providers would have registered with the OfS than have done so in practice, it is not currently government policy to actively seek to increase the numbers of HE providers.’ [My emphasis]

Moreover, those institutions that are on the Register have tended to find life harder than it was meant to be. As we showed in HEPI report last year by the experienced consultant Edward Venning, there are clear problems with how the regulatory regime works for any institution that is not a large multi-faculty one.

This paper quoted from a report commissioned by the Office for Students on how they communicate with the sector, which found:

‘Providers wanted more recognition of the different circumstances in which they were working: from small and further education providers, with individuals or teams struggling to cope with the volume, speed, and nature of OfS requirements.’

Among Edward Venning’s recommendations was the idea that the OfS should change its regulatory approach to ensure regulation does not reinforce advantage for larger and more general providers.’ Specifically, the HEPI paper recommended ‘an additional measure (under Key Performance Measure 11) on the proportional impact of the regulatory burden by size of institution on small and medium size providers.’

But for now and after a dozen years in power, the Conservatives seem to have given up on supply-side reform of higher education just as the number of young people is surging and the appetite for traditional higher education seems to be flatlining. Instead of the long-promised proportionate and risk-based regulatory regime, we have a rather inflexible and unresponsive one. The price is less innovation.

Alex Proudfoot, chief executive of Independent HE, recently complained that the Office for Students’ process for new providers ‘takes far too long’. When asked about the growth in franchised provision by Times Higher Education, he said:

‘If there was a streamlined, efficient, proportionate process that new providers could access and be confident about accessing it in a time frame their investors are comfortable with, then most of them would do it.’

There is one glimmer of hope. Ministers have asked the Office for Students to develop ‘a third category of registration’ specifically ‘for smaller providers typically offering level 4 and 5 qualifications.’ This third category is an opportunity finally to make risk-based regulation meaningful by introducing a new registration category for providers posing less systemic risk.

It matters because, if you talk to people who are trying to do things differently when it comes to the delivery of higher education, they will very often tell you they regret starting down the path to begin with. Despite the immense challenges faced by such institutions, there are currently some excellent initiatives underway, like the Dyson Institute, the London Interdisciplinary School and NMITE, but all remain small and there are too few of them.

Moreover, it is just possible that, if a regular university falls over financially any time soon, the Government and the Office for Students may come to regret not stoking a bigger alternative sector. Private finance from an institution already active in the higher education sector can be a cheaper way to rescue a struggling traditional university, at least from the perspective of taxpayers, than for the Exchequer to pick up the tab.