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Education Briefing - Regulatory Framework for Higher Education in England published

  • United Kingdom
  • Education - Briefings

28-02-2018

Introduction

The Office for Students (OfS) has today published the new regulatory framework for HE in England under the Higher Education and Research Act 2017 (HERA). This new framework – “Securing student success: regulatory framework for higher education in England” – is the result of the consultation launched by the Department for Education on 19 October 2017 and will now be laid before Parliament by the Secretary of State for Education.

The importance of the regulatory framework is that it sets out how the OfS intends to perform its various functions and provides guidance for registered higher education providers on the ongoing conditions with which they will need to comply. It is composed of five parts:

• the OfS’s risk-based approach

• sector-level regulation

• regulation of individual providers

• validation, degree awarding powers and university title

• guidance on the general ongoing conditions of registration

The OfS will also publish a number of Regulatory Notices to provide additional information about its regulatory requirements as well as regulatory advice to support providers in understanding and meeting these requirements, and a number of these have been published today.

The published framework contains a number of important changes to the original proposals. The categories of registration are reduced from 3 to 2 - the “Registered (basic)” category is dropped, leaving just Approved and Approved (fee cap) status. The Registered (basic) category was to be for providers that simply wished to be registered as a higher education provider. Providers in this category would not have been entitled to receive grant/research funding or student support; apply for Degree Awarding Powers/University Title; or retain/obtain a Tier 4 licence. In its "Analysis of responses to consultation" document, also published today, the OfS has stated that, having considered the responses to the consultation exercise, it has concluded that this category carried more risk to students than benefits.  

In its December 2017 impact assessment on the introduction of registration fees, the OfS estimated that in the year 2019/20 there would be 120 providers in the Registered (basic) category (made up of 87 alternative providers and 33 further education corporations). Those who were contemplating registering in this category will now have to decide whether to apply for registration as an Approved provider, with the greater requirements that entails, as well as a higher annual registration fee.

The proposed ongoing condition on senior staff pay transparency is also dropped from the final framework. Instead, in a move described by the OfS as more targeted and robust, the publication of information about senior pay and a commitment to the CUC HE remuneration code will be relevant in considering compliance with the initial and ongoing registration condition of management and governance (see below for more information).

The OfS has also slightly amended its four primary regulatory objectives which are now that all students, from all backgrounds with the ability and desire to undertake higher education:

• are supported to access, succeed in, and progress from, higher education;

• receive a high quality academic experience, and their interests are protected while they study or in the event of provider, campus or course closure;

• are able to progress into employment and further study, and their qualifications hold their value over time;

• receive value for money.

The framework states that the four primary regulatory objectives are designed to protect the interests of students and that the OfS will use its regulatory tools at sector and provider-level to ensure that the system works in practice for students from all backgrounds before, during and after their studies.

The OfS says it will engage with students to ensure that their voice is heard. It will do this through the student representative on the main board, the OfS’s Student Panel (which will operate with a clear link to the formal governance structure of the OfS) and by seeking the input of individual students and their representative bodies, including student unions.

Sector-level regulation

In relation to sector-level regulation the OfS states that it will allow the higher education sector to flourish and create the space for innovation. It will promote diversity, incentivise innovation and manage the risk to the interests of student and taxpayers by:

• removing unnecessary barriers to entry and minimising the regulatory burden for all providers – it is expressly stated that providers which do not pose specific increased risks will be subject to light touch monitoring, should have less regulatory burden once the regulatory framework is established, and will be free to innovate, provided that they continue to deliver positive outcomes for their students;

• ensuring a minimum baseline of quality for all and promoting excellence and innovation beyond that baseline - the conditions of registration for quality and standards that apply to individual providers are designed to ensure a minimum baseline of protection for all students and the taxpayer;

• championing issues and sharing evidence and examples of effective and innovative practice – the OfS says this will be done by it scanning the local, national and global horizon, and using intelligence obtained from its monitoring of individual providers, to identify specific themes or issues that it wishes to explore at the sector level;

• promoting student choice through diversity of providers and the provision of information – including promoting the ability of students to transfer to another course or provider and supporting accelerated courses; and

• the strategic use of public grant funding for teaching and related activities – this is relevant for those registered in the Approved (fee cap) category

The register

Under the new framework a higher education provider in England will be required to register with the OfS if it wishes to access public grant funding, and/or student support funding; and/or to apply to the Home Office for a Tier 4 licence, or to maintain an existing licence and/or to apply for degree awarding powers and/or university title.

As mentioned the register will be split into two categories - Approved and Approved (fee cap). Only providers in the Approved (fee cap) category will be eligible for direct grant funding provided by UKRI through Research England under section 97 of HERA; be eligible for OfS teaching grant funding or any other OfS payments under sections 39 or 40 of HERA or be eligible for access to student support up to the higher amount.

Only providers that are (or intend to become) English higher education providers, as defined in section 83 of HERA, can register with the OfS, provided they meet the registration conditions. There are three factors to consider when determining whether a provider is an English higher education provider:

• provision of higher education - defined as delivering a course of any description set out in Schedule 6 of the Education Reform Act 1988;

• being an English provider - over 50% of the provider's higher education activities are carried out in England; and

• being an institution providing higher education.

A provider can meet the requirement of being an English higher education provider without being a legal entity incorporated in England or the United Kingdom, as long as it carries on the majority of its higher education activities in England.

English providers with overseas activities will be regulated by the OfS, in respect of such activities, where they are the awarding body, wherever and however the students study. The framework gives the examples of a provider which operates an overseas campus at which it awards its own English degrees or one which delivers distance learning provision to students based outside of England.

Initial registration conditions

Providers applying to join the register will need to meet a number of initial conditions – described as ‘baseline requirements’. These are designed to mitigate the risk that the OfS is not able to deliver its four primary regulatory objectives. There are 12 such initial conditions and these replicate those in the consultation documents, although two of these - A1 and A2 are alternatives. (Note that some of these have been renumbered - for example condition B5 - that the provider must deliver courses that match the academic standards as set out in the Framework for Higher Education Qualifications (FHEQ) - was condition C2 in the consultation.)

10 of the initial conditions apply to both Approved and Approved (fee cap) providers including:

• delivering well-designed courses that provide a high quality academic experience for all students and enable a student’s achievement to be reliably assessed;

• ensuring that qualifications awarded to students hold their value at the point of qualification and over time, in line with sector recognised standards;

• demonstrating that in developing and implementing its policies, procedures and terms and conditions, the provider has given due regard to relevant guidance about how to comply with consumer protection law;

• having in force and publishing a student protection plan which has been approved by the OfS as appropriate for its assessment of the regulatory risk presented by the provider and for the risk to continuation of study of its students; and

• that the provider's governing documents must uphold the public interest governance principles applicable to the provider – these principles are listed at Annex B and include respecting academic freedom, taking such steps as are reasonably practicable to ensure that freedom of speech within the law is secured and ensuring that there are adequate and effective arrangements in place to provide transparency about value for money for all students and taxpayers.

The only area where there is a difference in the initial registration conditions between the two categories is in relation to access and participation. Condition A2 states that an Approved or Approved (fee cap) provider charging fees up to the basic amount for qualifying courses must publish an access and participation statement and update and re-publish this statement on an annual basis. However, condition A1 applies to Approved (fee cap) providers only, and states that those who wish to be registered in this category and to charge fees above the basic amount for qualifying courses must satisfy the higher standard of having an access and participation plan approved by the OfS and to take all reasonable steps to comply with the provisions of the plan.

The OfS says it will assess a provider’s application and relevant evidence to determine whether the provider satisfies the initial conditions of registration and that it may seek clarification and further information.

If the OfS intends to refuse an application for registration it must first notify the governing body of the provider of that intention and the reasons for this. The governing body will then have at least 28 days to make representations, which the OfS must consider before making its decision. If the decision is to refuse registration, the OfS must set out the grounds for refusal.

Ongoing registration conditions

After registration, each initial condition will become a general ongoing condition of registration. Twelve addition conditions of registration will also apply. Although the framework points out that HERA allows the OfS to decide that one or more of the general ongoing conditions of registration may be dis-applied for an individual provider when the provider is first registered or thereafter, the expectation is that ongoing conditions will seldom be dis-applied, as they are all closely aligned with protecting students.

All of the 12 additional ongoing conditions apply to both Approved and Approved (fee cap) providers except condition G1, which is that a provider in the Approved (fee cap) category must charge qualifying persons on qualifying courses fees that do not exceed the relevant fee limit determined by the provider’s quality rating and its access and participation plan.

An interesting change from the consultation is the removal of what was condition E3 – this related to transparency of senior staff pay and proposed that Approved and Approved (fee cap) providers should publish the number of their staff earning a basic salary of over £100,000 per annum as well as specified information on staff paid more than £150,000 per annum and an explanation of how their remuneration packages were decided and justified.

However, it is important to note that senior staff pay remains relevant to both initial and continuing registration. The framework states that when assessing compliance with the initial and ongoing condition E2 - which requires providers to have in place adequate and effective management and governance arrangements to deliver the public interest governance principles that are applicable to it - the OfS may consider:

• inclusion in the provider’s audited financial statements of information about the pay of senior staff in accordance with the OfS’s accounts direction, and publication of this information (see below for more details); and

• whether the governing body publishes its written commitment to comply with the higher education remuneration code published by the CUC, and the visibility and strength of that commitment, or any explanation provided by the governing body about why it has not published its written commitment to comply with that remuneration code. The recently published CUC code is based on three key elements - a fair, appropriate and justifiable level of remuneration; procedural fairness; and transparency and accountability (see our briefing here). It includes a requirement to provide institutional level justification of the remuneration of “senior post holders” (as defined by the institution) and a requirement for the remuneration of the Head of Institution to be separately justified, published and related to the remuneration of all staff within the organisation by the publication of pay ratios. Consultation on the draft code closes on 12 March 2018 with the intention that the final version will be published in May 2018.

In its "Analysis of responses to consultation" document, the OfS has stated that it has decided to adopt a different approach to senior staff pay, which it believes has the same effect as the consultation proposal but is more targeted and robust. It says it has done this by adding an additional public interest governance principle requiring transparency around value for money and bolstering the accountability condition of registration to require providers to comply with the OfS accounts direction. It says that the first accounts direction will require disclosures that include:

  • the number of staff with a basic salary of over £100,000 per annum, broken down into pay bands of £5,000;
  • full details of the total remuneration package and job titles for each member of staff with a basic salary of over £150,000 per annum, including bonuses, pension contributions, and other taxable benefits;
  • a justification for the total remuneration package for the head of provider and the provider's most senior staff; and
  • the relationship between the head of providers remuneration and that of all other employees, expressed as a pay multiple  

Therefore it is clear that senior staff remuneration arrangements will remain an area of scrutiny for the OfS.

Other additional ongoing registration conditions include cooperating with the requirements of the student complaints scheme run by the Office of the Independent Adjudicator for Higher Education; providing to the OfS, and publishing, information about the arrangements for a student to transfer; and (for providers with more than 500 students on HE courses) participation in the Teaching Excellence and Student Outcomes Framework (TEF).

Part 5 of the new framework provides guidance on the initial and ongoing conditions of registration and a summary table is at Annex A.

Degree awarding powers

A provider currently authorised to grant taught awards, or research awards, or both, does not need to apply to the OfS to retain this authorisation.

However, for those providers who are not currently authorised to grant degrees, section 42 of HERA gives the OfS power to authorise a registered higher education provider to grant taught awards, or research awards, or both. OfS authorisation will be in the form of an order setting out the extent of the provider’s authorisation, whether there are any restrictions, the date on which the authorisation takes effect and, if it is time limited, the period during which it has effect

Under the new regulatory regime there are two different routes to authorisation, which remain broadly as set out in the consultation.

A provider that has been delivering higher education for three or more years may apply for full authorisation, with a time limit of three years. These are Full Degree Awarding Powers (“Full DAPs”). If the OfS is satisfied that the provider meets the eligibility requirements and appears to be suitable for Full DAPs it will ask the Designated Quality Body (QAA) to undertake an initial assessment. Following that, if appropriate, the OfS will grant Full DAPs for the three year probationary period. At the end of this the provider will be subject to a review which, if passed, will allow authorisation with no time limit (Indefinite DAPs).

A provider that has been delivering higher education for less than three years cannot apply for Full DAPs authorisation but may instead apply for “New DAPs”. These can only be awarded for taught awards. Again, If the OfS is satisfied that the provider meets the eligibility requirements and appears to be suitable for New DAPs it will ask the QAA to undertake an initial assessment, following which the provider may be granted authorisation for a three year period. Before the end of the probationary period, the QAA will undertake an assessment of the provider’s arrangements against the Full DAPs criteria. This could lead to the provider being given Full DAPs authorisation for a three year period and potentially, at the end of that, Indefinite DAPs.

University college or university title

Under the new framework, a higher education provider is eligible to apply for university college title when it is registered with the OfS; satisfies all of its ongoing conditions of registration; and has obtained indefinite authorisation to grant taught awards (other than foundation degree only DAPs) or research awards.

A higher education provider is eligible to apply for university title when it meets the criteria for university college title and when, in addition, the number of its full time equivalent higher education students exceeds 55% of the total number of full time equivalent students, of which at least 50% must be on courses at level 6 or above on the Framework for Higher Education Qualifications.

A provider that is part of the further education sector is not eligible to apply unless it moves out of that sector.

In deciding whether to award university college or university title the OfS will consider its existing risk assessment for the provider. It will also determine whether the provider’s chosen title may be, or may have the potential to be, confusing or misleading.

OfS intervention

The OfS says it will intervene when there is, or has been, a breach of an ongoing condition of registration, or when it perceives that the risk of a breach is increased. It states that its response will be proportionate and relevant to the risk it is seeking to mitigate. The impact of an intervention on students is one of the factors the OfS will consider when deciding whether to intervene and the form of any intervention.

The OfS has a significant range of intervention powers and sanctions available namely:

• enhanced monitoring and/or investigation;

• powers of entry and search;

• imposing specific ongoing conditions of registration;

• monetary penalties;

• refusal to approve an access and participation plan;

• variation or revocation of degree awarding powers;

• revocation of university title;

• suspension of registration; and

• de-registration.

Should a provider be de-registered, the OfS may put in place transitional “teach out” arrangements to protect the interests of students.

Future briefings will explore some the above issues in more detail.

For more information contact

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