left to my own devices – occasional thoughts on higher education

It’s not every day that the deputy chair of a senior parliamentary committee says that English regulators have ‘left the door wide open’ for ‘organised fraudsters’ to access public funds.  That the deputy chair of the Public Accounts Committee (PAC) said this about student loan funding, directing his comments at DfE, the Student Loans Company and OfS on the basis of a deep dive into student loans at franchised providers, doesn’t exactly help break the cycle of bad news hitting the sector at the moment.

It’s been evident for a while that though much valuable and valid work goes on through franchising, there have been issues with some instances of franchising and gaps in the regulatory architecture covering this activity.  In June 2023 the issue even featured in the New York Times, and over the last year WonkHE has done a good job of highlighting and digging into these issues.

the transparency fallacy

While it’s important not to get the issue out of proportion, it’s clear that action needs to be taken to plug the regulatory loopholes relating to franchising.  And the PAC report makes a number of recommendations.  Whether they’re up to the job is another question (not least when compared to the regulation in place in the FE sector for the comparable practice of subcontracting).

A significant element of PAC’s recommendations focus on information transparency – students being made aware: that they are studying at a franchised provider; of the cut of their fee that goes to the body awarding their degree; and about outcomes data for the franchised organisation at which they are studying.  David Kernohan’s verdict nails all of this:

This is a very “class of 2017” recommendation in that it puts the onus on a fully aware student making otherwise unconstrained choices in an information-rich marketplace … Simply publishing outcomes data or, gods forbid, contractual information – long past the point where the students affected could have been helped – achieves nothing.

Of course we don’t know yet how the relevant bodies including OfS will respond to PAC’s report.  OfS may implement in full; or in part; or indeed go further than PAC recommends.

Whatever OfS’s response, though, it’s interesting to wonder whether in making ‘class of 2017’ recommendations PAC has overlooked an evolution in the way that OfS is regulating the sector.

principles- and rules-based approaches

At its launch OfS placed a lot of emphasis on being a principles-based regulator, characterising this approach as:

concerned with qualitative standards of behaviour: the skill, diligence and reasonableness with which organisations conduct their business and the fairness with which they treat their customers

OfS highlighted that principles-based regulation ‘lends itself sell to a focus on outcomes’, which of course was a key feature of OfS’s regulatory approach.

A principles-based approach was contrasted with rules-based approaches, that rely

on enforcing compliance through clearly defined, specific prescriptions. It may be more concerned with processes and outputs, and generally allows more limited scope for judgement or discretion on the part of the regulator.

OfS recognised that this wasn’t binary, that all regulatory systems combine elements of principles- and rules-based approaches. However, the OfS Insight Brief made it clear that OfS would lean towards a principles-based approach while sometimes adopting a rules-based approaches.  It’s notable that the two examples of rules-based approaches OfS highlighted in this Insight Brief were both related to specific issues and concerns (a short-term, Covid-related issue; and a provider-specific condition related to identified higher risk), rather than more general ongoing regulation.

Things seem, however, to have evolved, and it feels as though OfS’s current practice is noticeably different to its initial aspirations. As decisions have been made on specific regulatory areas and issues, it’s possible to see a greater emphasis on rules-based, directive approaches.

Evolving the regulatory approach over time is natural and necessary. But separate decisions have a cumulative impact. One things leads to another, and it’s very easy to end up somewhere different to where you planned. At that point there’s a need to stop; take a step back; look at where things now are; and decide whether the current position is the right one, and whether it will remain the right one for the future.

So where and how has OfS regulation evolved?

inflationary pressures

Take for example the approach to academic quality and standards.

The original Regulatory Framework OfS managed to set out the B1 to B5 Ongoing Registration Conditions in 135 words.  The updated conditions published in May 2022 are c.3,500 words.  The accompanying guidance in 2018 was c.1,800 words; now it’s c.7,500.

To be fair the 2018 version also incorporated the UK Quality Code.  Even with adding in the UKQC, though, the 2018 regulatory requirements for academic quality and standards come in at c.3,400 words; now it’s c.11,000 words.  That’s a fairly hefty increase in the regulatory landscape for this area.

Of course a trebling of the word count doesn’t necessarily mean a move away from principles-based regulation.  But it is quite an increase.  And a more intrusive rules-based approach can be seen in the new B Conditions – e.g. the specific requirements on English language introduced at this point; the approach to retention of assessed work.

There are also other recent developments that indicate a shift of emphasis between principles- and rules-based approaches.

the right tool for the job

We’re finally about to get the outcome of OfS’s consultation on regulating harassment and sexual misconduct, and OfS has told us that the final version will look much like the one on which they consulted (an OfS consultation leading to little change to the original proposals; surely not?).

The draft new registration condition on this issue weighed in at c.2,000 words, with c.5,000 words of guidance.  As well as being pretty hefty, it’s fairly directive too – e.g. the expectations in terms of training for staff and students on these issues.

This is clearly an area of activity in higher education where action is needed.  And my own view is that in some ways the new requirements won’t go far enough – e.g. OfS should have gone with a prohibition of staff-student relationships, rather than a register of such relationships, as several universities already have. So action is needed, action that includes a significant element of rules-based direction.

And while I don’t have an issue with what is being recommended in this area, it’s definitely the case that the direction of travel leans more towards rules- than principles-based approaches to regulation.

jumping the regulatory shark

This lean can also be seen, much less justifiably, in the recently published draft Regulatory Advice on freedom of speech.

Of course the draft Regulatory Advice is still out for consultation and so may change (try not to laugh at the back). If, however, it stays largely as currently written it very much feels like a rules-driven, prescriptive and highly bureaucratic, approach.  To pick just one example, the governance section includes the following statement:

Providers, constituent institutions and relevant students’ unions should record all decisions that could directly or indirectly (and positively or negatively) affect free speech within the law. These records should demonstrate how the organisation has had particular regard for the importance of free speech within the law.

‘All decisions’?  ‘Directly or indirectly (and positively or negatively) affect free speech’?  We’re a long way from the principles-based end of the regulatory spectrum.

where now?

OfS has always been clear all regulatory systems are in effect a hybrid, with elements of principles- and rules-based approaches. The Regulatory Framework has always contained both.

And I’m not arguing that there are no aspects of higher education that require rules-based approaches. I’ve already mentioned my view that such approaches are needed on the harassment and misconduct issue.  And to go back to where this blog started, a few more rules wouldn’t hurt on franchising either: e.g. setting a limit, in the way the FE sector does for subcontracting (it’s 20% in FE), on the ‘cut’ of student fees an awarding body can take.

But it does feel that the principles/rules mix in OfS’s regulatory approach has shifted over time, and there’s a need for an explicit, holistic discussion in the sector about this, alongside the linked but slightly different issue of regulatory burden that the sector has been identifying for quite some time now.

There’s about to be the perfect opportunity to take a step back and talk about where the balance is, and where it should be, between principles- and rules-based approaches as OfS is about to start consulting on the development of its new strategy.  Hopefully it’s an opportunity OfS explicitly embraces as a dimension of this consultation, so that a clear and consciously adopted position is taken rather than just allowing a position on this to emerge as one thing leads to another.