In November 2012, The Department for Business Innovation and Skills (BIS) published a consultation document on applying student number controls to alternative providers with designated courses. Download HEFCE’s response to the consultation.
HEFCE response to BIS consultation on ‘Applying Student Number Controls to Alternative Providers with Designated Courses’ 1. HEFCE welcomes the proposed improvements to the course designation framework, and in particular the benefits it will have for students and the reputation of alternative providers. More robust and transparent checks will offer greater assurances to students, impact positively on student choice and enhance the high-quality provision of the English higher education sector generally.
2. We also support the rationale for creating a more level playing field of regulation between providers. We believe that the new designation system will go some way towards achieving this and, in the absence of legislation, creating a single regulatory framework. In our view, the new criteria will help to protect student interests more effectively than the current system. Introducing student number controls for alternative providers will offer more assurance that funding (in the form of student loans) is being used appropriately. However, we have concerns about the different regulatory models being proposed and what this will mean for protecting student interests and fair access, as well as practical issues about operability and timing, which are outlined in more detail below.
3. Overall, we support the direction of travel set out in the consultation document but consider that more could be said about how the Government’s original ambitions, as set out in the 2011 White Paper ‘Students at the Heart of the System’, will be achieved.
4. The consultation questions are predominantly aimed at alternative providers; therefore we have decided not to respond to the questions, but to highlight some key points of principle.
Different regulatory models 5. The revised approach being taken means that there will be a different regulatory system for alternative providers compared with that of the existing publicly funded sector. This poses a risk as it will result in different levels of assurance and accountability. Our response outlines a number of differences, and it will be important that these are clearly articulated to ensure that students and the general public are informed of the levels of assurance available and how these differ between providers. We believe that some form of information gateway about the differences should be developed, which would create greater public transparency. The HEFCE web-site could potentially be used for this purpose and we would be keen to work with BIS to try and develop such a gateway.
6. In the longer term, we would very much support a move to a single regulatory framework as originally envisaged in the 2011 White Paper. This would address any anomalies between the two systems, thus helping to level the playing field and offer a more consistent approach to safeguarding student interest and choice. We believe that a consistent approach would also have benefits for alternative providers, enabling them to be seen as equals in a competitive HE sector and part of its high-quality brand.
Student protection 7. While the current proposals appear to provide greater ‘protection’ to students compared with the present system, they do not achieve the levels of protection set out in the 2011 White Paper. For example, while BIS is suggesting alternative providers voluntarily subscribe to the Office of the Independent Adjudicator, there is no formal requirement for them to do so. Nor is there any requirement to publish robust and comparable information for students. There would be benefits in considering whether subscription to the Office of the Independent Adjudicator could in some way be made compulsory, and also whether more information could be made available to prospective students (perhaps through Key Information Sets). This approach would ensure that students at alternative providers have access to the same routes of appeal and public information as students studying at HEFCE-funded providers.
Social mobility 8. We note that students studying on designated courses at alternative providers are unable to access tuition fee loans above £6,000 a year, though they may be charged a higher amount. This is not comparable to the financial support given to students in the publicly funded sector. While, on the face of it, there may be less need for financial control, due to the lower levels of public financial exposure, the cap on loans means that alternative providers are not required to hold access agreements with the Office for Fair Access. As a result there is no formal mechanism for promoting and monitoring fair access to alternative providers. It is important that the social mobility objective set out in the White Paper is monitored and assessed, in particular the equality impact on certain groups including those from less advantaged backgrounds.
Student number controls 9. While we support the move to align the controls with the existing sector, there are differences in the operations of the proposed systems for publicly funded and alternative providers. The proposed methods set out in the consultation document currently lack detail as to how the number control will be implemented in practice. The methods proposed for setting and monitoring student number controls need to be carefully examined for unintended consequences. This is particularly true of Method 2, which is very different from HEFCE’s current approach and therefore has not been tested. BIS needs to ensure that this method does not conflict with the student interest – there is a risk, for example, that it could incentivise institutions to discourage students from claiming student support.
10. There will need to be further consideration given as to how any additional student numbers are allocated between new and existing alternative providers. It is not clear whether any change to student number controls for alternative providers would impact on the publicly supported sector and vice versa. In addition to the allocation of student numbers there will need to be confirmation about whether any processes, such as core and margin or high grades policy (or similar), will be put in place to allow new providers to enter the system. Thought also needs to be given to whether alternative providers would have similar flexibility to that of the public sector around the student number controls. The earlier this can be clarified the easier it will be for providers and HEFCE to implement the new system.
11. While we are committed to working with Government to implement the new system of course designation and student number control, we have concerns about the feasibility of fully introducing the new system in 2013-14. For the HEFCE-funded sector we have already announced the student number controls for 2013-14 as institutions will now be making offers to students who intend to begin their studies in September, bearing in mind that the UCAS deadline, of 15 January, has already passed. It would not be possible to give alternative providers this certainty for 2013-14, as the new system will not be in place in time. If it is necessary to introduce student number controls in time for 2013-14, we recommend that a simple method of student number controls is implemented in 2013-14, which can be implemented as quickly as possible, in order to provide some clarity for alternative providers and their students. This could be developed further, if appropriate, in 2014-15.
12. The consultation is clear that student number controls will not apply to non-designated courses, which gives alternative providers the continued freedom to increase privately funded (‘off quota’) student numbers. This freedom is not available to institutions from the existing sector, and may come under challenge at some point. This approach might also work against the objectives of fair access and social mobility.
13. While the consultation is focused on alternative providers, one consequence might be that existing HEFCE-funded institutions look to set up new entities that could follow the alternative provider route to course designation. In the short-term we do not feel this is a significant issue but as the quantum of HEFCE funding for teaching reduces, the incentives for different corporate forms and structures will increase. This might be desirable in some instances but it means that levels of protection for students could reduce.
Transitional issues 14. The transitional arrangements for the existing alternative providers with designated courses will need further development. Considerable thought needs to be given to the impact of an existing alternative provider not meeting the new criteria for course designation, and to the consequences for its students who already access the student finance system. There are some significant implications of, for example, withdrawing course designation yet enabling students to complete their courses of study. The interests of existing students must be paramount in this, and it is not yet clear how such issues will be addressed. We note that BIS is due to publish detailed guidance on the overall designation process, and we would be happy to provide further advice.
15. Currently a number of non-HEFCE funded providers who receive funding from other government departments or agencies receive automatic designation of eligible courses. This includes some further education colleges and some initial teacher training providers. We understand that some consideration has been given to how these providers will be treated in the new system, but that the issue is unresolved. This needs to be finalised quickly, and the relevant providers informed accordingly.
Monitoring 16. BIS will need to decide how the system will be monitored, including its impact on protected groups and on the student interest in general. (Non-completion rates may be particularly relevant, as this may affect not only students but the rate of debt write-off.) It will be important that sufficient information is collected to allow this monitoring to take place. In our view this will require Higher Education Statistics Agency (HESA) data returns from most or all providers whose students have access to student support. The type and volume of information that HESA would need to collect would not necessarily replicate that submitted by HEFCE-funded providers. We appreciate that this would incur a cost (currently unspecified) for providers, but this has to be balanced with the wider public interest in the effective stewardship of the whole higher education sector. Some providers already submit information to HESA or the Further Education Data Service, which may mitigate any transitional costs.
17. The consultation includes a short section on sanctions, appearing to suggest that providers should make a voluntary contribution to any cost to Government resulting from over-recruitment. While this will be an appropriate sanction linked to the student number control, it will also be important for BIS to consider actions it may take in response to other shortcomings linked to course designation (such as academic quality or financial sustainability) and whether or not these need to be consistent with those applied to HEFCE-funded providers. We would be happy to provide advice on this.
18. In addition, the complexities of alternative providers in the devolved administrations operating in England have yet to be addressed. The new process will apply to any providers who want their courses designated to allow any English-domiciled students access to the student finance system. This means that non-English-based providers may apply to have courses designated. Some of these providers may already have been assessed by other devolved administrations or government departments. It will be important to ensure that there is clarity over responsibilities and consistency in decision-making.
19. There is an expressed desire for the arrangements to be ‘proportionate’ for small providers. Exactly how this will be achieved while also fulfilling the requirement to control finances and support the student and public interest is not clear enough in the consultation document. We would be happy to work with BIS colleagues and smaller alternative providers to develop these arrangements.
Implications for HEFCE 20. The process being considered differs from HEFCE’s role with the existing funded sector, and therefore the assurances we can give in our advice on alternative providers may be more limited. We are committed to working with these providers to improve our understanding of their operations and to support them in delivering high-quality education to students. However the regulatory and accountability framework will be different under the proposed arrangements, and BIS needs to be aware of the limits to our role and what we can deliver. It will be critical for HEFCE that we work within our current legal powers at all times and establish open and effective relationships with alternative providers.
21. There are resource implications for HEFCE in supporting the new system. We are being asked to lead on the main operation of the new course designation process, which will create a significant amount of new and additional work for the organisation. Currently we fund and monitor 128 higher education institutions and fund 187 further education colleges, with over 100 alternative providers currently with designated courses, and many more providers applying. This gives an indication of the scale of the challenge we are considering. To discharge our new responsibilities in a professional way we are likely to require further resource.
Download HEFCE’s response to the consultation.