A first letter of note

Everyone has, of course, been getting very excited about the first real letter from the Secretary of State for Education dealing with higher education matters. In this 4 November missive (which does not appear to have been published as yet) Bridget Phillipson covers a good deal of ground on fee increases, access, economic growth, community engagement and academic standards. But the letter also covers efficiency and reform:

5 Underpinning all of this needs to sit a sustained efficiency and reform programme. I know many higher education institutions are already making difficult decisions to ensure they are financially sustainable – and I welcome the efforts that the sector is already making, through Universities UK, to identify opportunities for system-level change. However, adapting to the changed context of the higher education sector over the next decade will require a more fundamental re-examination of business models and much less wasteful spending. We will need to see far greater collaboration across the sector to drive efficiency. I will also expect the sector to be significantly more transparent on how it is managing its resources and to be held to account for delivering great value for money for students and the taxpayer.

This is only to be expected – the sector needs to do its bit too in order to justify the single modest fee increase it seems. And there will be more detail along in a green paper next summer. I recently wrote about the Behan review of the Office for Students.

One of the points I made was that, apart from resulting in Sir David becoming the new interim chair of the OfS Board, the report itself (which was far from flimsy) does not seem to have had a significant impact. I’ve remained a bit surprised by this to be honest. It’s perhaps all been down to the focus on the financial challenges currently facing the sector and whether alternative funding arrangements can be implemented. But I possibly need to eat at least some of my words as the Secretary of State does refer to his report in her letter in relation to academic standards.

Before efficiency and reform

Whilst the sector will welcome the small increase in home fees and will eagerly be awaiting ideas for efficiency and reform, in the meantime there remains money to be saved from reducing the excesses of unnecessary and costly over-regulation. 

Many commentators have said these kind of savings are not worth worrying about, there are bigger prizes, we should focus more on the big headline efficiencies and reforms like shared services and mergers. Whilst I am sure there are issues to explore these are time-consuming matters and difficult to deliver. Moreover, when every university is looking at ways to make savings, both through spending freezes and redundancies surely it makes sense to look at the cost of avoidable and unnecessary regulation. Money saved on reducing the regulatory burden is cash that can be diverted to supporting the student experience or sustaining research activity.

This recent post on cutting regulation and saving money set out a number of ways that significant resources could be made available in lieu of other income. I know that I’ve regularly talked about this issue but the cost remains huge and the savings have become even more vital. And it’s something to do while waiting for the green paper.

Blueprint for salvation?

Given these concerns I was pleased to see a whole chapter in the recent UUK Blueprint dedicated to better regulation. There is quite a lot in here of interest and near the beginning of Chapter 7 we have this set of observations:

We need a thriving higher education and research sector to enable people to reach their potential, enrich our society and meet the challenges of the future. An effective regulatory framework and regulator are essential to this, if we are to uphold public and political trust and confidence in our universities.

The regulatory framework for England should be designed and operated in such a way that it supports – and where necessary requires – the higher education sector to meet society’s needs and ambitions. At a time of scarce resources, the sector and government must work together to achieve a more coordinated regulatory system in which the benefits of regulation exceed its costs.

The autonomy of universities is central to their success and should be maintained. However, this must be earned through effective governance and strong sector stewardship. The sector must demonstrate the quality of its offer as it adapts to the needs and wants of a changing society. This means being open to the scrutiny of regulation and acting on concerns.

It’s a good opening and there are many things to like in this chapter. For example, I could not have written this better myself:

In an era of constrained finance, it is also essential that the regulatory architecture is robust enough to inspire confidence, but proportionate and implemented in a way that is mindful of burden. Every pound spent on responding to regulatory requirements must be a pound well spent, in the interests of students, graduates and the public.

A positive sentiment for sure. But there are also many opportunities to go much further than this. The front piece of the chapter has three notable data points:

These are telling. In a slightly different vein I liked this comment on the importance of addressing the UK-wide dimension of regulation:

The international reputation of the university system depends, to some extent, on a coherent identity at the UK level. We therefore need regulation that respects the nature of devolved government but also recognises the value of the sector’s global outlook and a coherent, UK-wide sector that supports student choice.

It’s another well-made point. The report also notes the conflicting or duplicative asks by PSRBs. This is an often overlooked aspect of the regulatory architecture. 

You add this in on top of everything else though and it becomes clear – the higher education sector is significantly over-regulated:

UUK identifies a number of challenges for the English sector’s principal regulator, the Office for Students (OfS): its operation of a narrow remit and the perception of it being too susceptible to government interference (such as that statistic about 27 pieces of advice and direction from government in just a few years). All of this helps to explain the loss of trust in the OfS from both the sector and students.

It is undoubtedly the case that the OfS has in recent times sought to engage more frequently, constructively and directly with the sector than previously. Its remoteness as a regulator from those it was regulating was a notable criticism from the House of Lords enquiry and certainly stimulated greater efforts from agency personnel. These steps are taken sincerely and the effort has to be welcomed in my view. I’m not certain though that the new engagement strategy is viewed as wholly credible by all universities and there remains a degree of scepticism about the scale and depth of the activity. It is perhaps too early to judge.

It’s all about quality and standards

The report notes that quality and standards remain the responsibility of institutions, that there are well-established structures and approaches to their assurance to which universities adhere but that there remain nevertheless legitimate public concerns about the standard of academic awards and the quality of experience enjoyed by students (again referred to in the Secretary of State’s letter).

Quality and standards are fundamentally the responsibility of universities, and there are established structures and processes to which the UK’s university sector adheres. The external dimension to the assurance of quality is essential but there are searching questions raised in the Blueprint about the OfS approach which echo concerns raised by Behan. The regulation through compliance with OfS conditions of registration is burdensome and coarse-grained and the targeted approach to addressing quality concerns does seem to be somewhat opaque and slow-moving. Although the Blueprint is positive about the general approach to targeting poor provision it is more critical of the disconnect between the approach to the access and participation agenda and assessing quality and standards.

There is also, rightly, concern that aspects of the regulatory regime are disproportionate and the requirement for the retention of assessed work for five years post-graduation is a clear example of this (see this earlier commentary on the problems with this costly and unnecessary condition of registration).

The lack of full alignment with the European Quality Assurance Register (EQAR) is another significant concern highlighted in the Blueprint which notes that this risks undermining the international reputation the country has enjoyed for the quality of its provision and damaging both international student recruitment and English universities’ TNE activity.

The diagram above shows the complexity of the regulatory landscape. Complexity brings duplication and cost and the Blueprint rightly observes that there is no single body taking a “strategic, system-wide view of the overall health of the sector in England” and a lack of co-ordination across this plethora of regulatory requirements.

Excessive regulation really costs

The report quotes findings from a 2023 investigation conducted for UUK by Morehouse consultants:

This heavy regulatory burden restricts universities’ ability to innovate and put a strain on scarce resources. Research commissioned by UUK in 2023 found that:

• on average, a university has a full-time equivalent (FTE) of 17.6 staff dedicated to regulatory compliance
• across all 116 UUK members in England, the total could be as much as 128 FTE at executive level, 638 FTE at manager/director and 1,288 FTE at officer/coordinator level
• 45% of universities say that regulation takes up a significant or major proportion of their governing bodies’ time.

The costs of compliance are significant therefore. Indeed, my estimate of the spend on these roles (see this earlier piece) put this at up to £150-200m per annum across English universities, representing a major impact on university operations, not to mention the opportunity cost.

Solution-focused

The Blueprint proposes a number of solutions to the current challenges. First it argues that the remit of the OfS needs to be streamlined in line with the Behan recommendations. But it goes further in suggesting, among other things, that the OfS should have regard to promoting the financial health and sustainability of the sector and ensuring the proportionality of regulation.

Secondly, and looking more broadly, the Blueprint proposes evolution of legislation:

Changes made within current legislation could see a more principles-based, risk-led and outcomes-focused OfS. The scope of current legislation would also permit greater collaboration between the regulator and the sector and reinforcement [of] the OfS’s independence.

Very much food for green paper thought there.

Thirdly It is argued that regulation has to be clearly for public benefit and the cost justified. This would also mean a shift away from prescriptive rules to placing greater emphasis on institutions’ own assurance mechanisms.

Next it is recommended that the OfS’s engagement with institutions should be based on the establishment of a transparent risk-monitoring and assessment process. Other recommendations include realignment with international standards and greater engagement with students, and with the sector. 

The Blueprint offers recommendations to government on co-ordinating regulatory activity across departments and to universities on ensuring their governance develops and follows good practice. It’s all pretty reasonable stuff.

Moving faster

Chapter 7 of the UUK Blueprint does provide a fair critique of the current excessively burdensome regulatory regime and sets out some sensible proposals. This is part of a broader prospectus though and there are many other areas for action across the Blueprint which have attracted a greater degree of interest than this chapter. Given the limited traction in relation to these recommendations to date I would argue that there is a real need to press harder to ensure that some of these changes are implemented rapidly.

As I’ve noted before, the work on reducing the burden, which would free up at least some resource across the sector, can begin immediately. It just requires some concerted action in the areas listed above combined with other potential savings. This will save money which is so desperately needed by many institutions right now and help to re-establish the confidence of all in the quality of the UK’s higher education. 

And in the absence of progress on other parts of the Blueprint, at least until we get a green paper, it is likely to be one of the few opportunities available for institutions to find meaningful resources.

 This article represents the personal views of the author