The Society for Research into Higher Education

Policy and Funding in England (April 2017)

By Rob Cuthbert, Editor, SRHE News

Funding for HE in England 2017-2018
The annual grant letter to HEFCE from Minister Jo Johnson held no surprises, but was notable for how much the emphasis of the letter has over the years shifted HEFCE towards a research role in which the Council is pointed very firmly at Government priorities, with teaching excellence top of the list. And if you think Government was stumped for ideas about how actually to assess teaching excellence, it is nothing compared to their stumpedness on credit transfer, on which all the letter said was:

“As part of the Government’s higher education reforms, we are seeking to promote the transfer of students between courses and institutions. Student transfer offers students more flexibility to choose the type of study most suitable for them and contributes to ensuring that all those who could benefit from higher education are able to do so. The Council will need to keep in mind the importance of student transfer and ways in which it might support its promotion and take-up.”

We think this is civil service code for: “We haven’t had any time to think about this, or even talk to someone who knows about it, but we’ve just remembered we need to include it somehow.”

Budget statement on 8 March 2017
In his budget announcement on 8 March 2017 Chancellor of the Exchequer Philip Hammond mentioned HE at some points. Andrew McGettigan blogged about the Chancellor’s reference to student loans. Part-time maintenance loans for degrees are coming in 2018-2019, and there is to be a review (downwards) of support for part-time distance learning students, which has alarmed the Open University. From 2018-2019 there will be one-off doctoral loans of up to £25000, which will be bundled with taught postgraduate taught loans to create a single allowance.

Financial health of the higher education sector: a variable picture
HEFCE’s report ‘Financial health of the higher education sector: 2015-16’ published on 23 March 2017 shows a financially sound position overall. However, there is significant and increasing variation in the financial performances of individual institutions, with the main financial strength remaining in a small number of them. The report takes into account Financial Reporting Standard (FRS) 102, the new financial reporting framework for higher and further education providers. This introduces some significant changes and thus poses some difficulties in comparing financial results between institutions and against historical trends. Some transitional changes reflected in the restated 2014-15 results also make this an atypical year. FRS102 is interpreted for the sector by the FE and HE Statement of Recommended Practice (SORP). Andrew Connolly (Exeter) and Matt Sisson (Communications Officer, British Universities Finance Directors Group) explained on WonkHE on 24 January 2017.

In 2015-16, the sector reported a surplus of £1,519 million, equivalent to 5.2 per cent of total income (Note 2). However, at an institutional level, results range from a deficit of 7.2 per cent to a surplus of 32.1 per cent, and that gap is getting wider. Early data for 2016-17 indicate a continuing trend of growing institutional variation. The Higher Education Students Early Statistics survey reports a 0.6 per cent decrease in the total number of undergraduate entrants (home, European Union and non-European Union) but this masks considerable disparity across the sector. This means it may be challenging for some institutions to achieve the levels of growth projected in their July 2016 forecasts, so the sector’s income and surplus projections might not be achieved.

Capital investment in 2015-16 totalled £3.8 billion, an increase of 14.5 per cent compared with 2014- 15. This level of investment is driven by a small number of institutions, with 18 contributing 50 per cent of the sector’s capital expenditure. 53 institutions reported a decline in capital expenditure over the period. In July 2015 the sector estimated that it still needed to invest £3.6 billion to upgrade its non-residential estate to a sound ‘baseline’ condition. Inflationary pressures on the cost of construction are likely to push this figure higher.

Winners and losers in HEFCE grant 2017-2018
HEFCE published Board decisions on funding for 2017-2018 on 15 March 2017. Institutional allocations were announced on 12 April 2017 and will be published on 5 May 2017. Overall cash amounts are slightly reduced, there will be losers, and maybe not too many winners.

Value for money in HE
HEFCE made value-for-money reporting obligatory for English HEIs last year, and are now reviewing the first crop of reports to governors. Matthew Davey, Senior Efficiency and Sustainability Adviser at HEFCE, blogged about it on 14 March 2017.

Gazelle numbers dwindle 
The Gazelle group of FE colleges was set up amid much fanfare but now appears to be ‘on its last legs’, as FE Week put it on 6 January 2017. At its peak the group had 23 members, each paying significant sums for membership, but it now appears there are only 5 colleges left. FE Week quotes policy expert Mick Fletcher, who voiced his scepticism about the group in FE Week as early as March 2012. He said Gazelle was “not the first example of unwise investment by FE colleges and probably won’t be the last … Two things stand out: one is the scale of the sums gambled by the founding members, but perhaps even more significant is the sheer credulousness of a few leaders who built a business fantasy on the back of some interesting but unremarkable approaches to curriculum innovation.”

The Higher Education and Research Bill

What’s still wrong with HERB?
After the ‘marshalled list’ of amendments to the HE and Research Bill for the Lords’ consideration, UUK and GuildHE issued a joint statement to the Lords on 2 March 2017 saying they were happy with the amended HE and Research Bill, but Andrew McGettigan still wasn’t happy on his Critical Education blog on 6 March, pointing out some major remaining issues and problems. And Mark Leach of WonkHE was still arguing on 6 March 2017 that the devil would be in the detail.

TEF 1 and TEF 2: who’s in and who’s out
Mark Leach of WonkHE has been on particularly good form recently and his 20 February 2017 blog analysed, as far as possible, the non-participants in TEF 1 and TEF2 – for TEF1 that included two leading for-profit providers, including Regent’s College. The Open University’s openness in announcing its nonparticipation in TEF contrasts starkly with most of the other 33 non-participants in TEF2, who remain anonymous. The DfE also broke the rules set out in the White Paper for TEF1 by admitting three institutions which were not deemed compliant by QAA before the deadline set in the White Paper.

HERB and TEF in the Lords
David Morris of WonkHE blogged on 8 March about the latest Lords discussion of HERB:

‘The noble Lords have inflicted another embarrassing defeat for the government over the Higher Education and Research Bill, this time inserting a new clause preventing a link between the Teaching Excellence Framework and differential levels of fees.

Does this mean that the TEF is dead? Probably not. Does it mean that tuition fees will no longer be increased by the rate of inflation? Probably not either. The cross-party group of opposition Lords behind this amendment made it clear that they were not opposed to increasing fees by inflation, and many also stated that they supported some form of Teaching Excellence Framework as a means to improve quality.

Indeed, the matter highlights the splits within the group of TEF’s opponents. Some, including NUS and UCU, are opposed to any increase in fees whatsoever. However, most of the Lords arguing against TEF (and one suspects many vice chancellors) simply want to take the inflationary fee increase and quietly dispose of the burden of TEF. In the long run, it’s unlikely either group will get what they want: fees will rise, and some variant of the TEF will probably limp on.’

On 8 March 2017 Lords inflicted several more wounding blows. David Morris blogged again for WonkHE on 9 March about defeats for the government on three more amendments: 72, calling for TEF to be an in-depth assessment of teaching quality rather than a simplistic overall rating; 116a, requiring a four-year run-in period for new HE entrants; and 117, altering the basis on which providers might appeal against changes in their degree awarding powers based on decisions by the Office for Students. It remains to be seen how many of these amendments will survive the next stage of scrutiny by the Commons.

WonkHE’s weekly briefing reported breathlessly on the position on Monday 13 March:

‘As we stand, against the government’s wishes, the amended version of the Bill now allows for the following:

  • Any government ‘rating’ of universities (i.e. TEF) may not be used to set variable rates of tuition fees or to restrict recruitment of students, including international students. …
  • Any such government rating may not be a “single composite ranking” of higher education providers, and instead “must evaluate and report on whether an institution meets expectations or fails to meet expectations on quality measures”. This was an explicit vote of dissatisfaction by peers against the TEF’s three-medal rating system, effectively giving OfS powers for a pass/fail threshold for institutions.
  • The methodology of teaching evaluation must be evaluated by the Office for National Statistics, and approved by a resolution of both Houses of Parliament. Peers argued that the TEF’s current methodology is not sufficiently robust and has not been sufficiently scrutinised.
  • A higher bar has been set for new providers to receive degree-awarding powers. A new clause requires either a track-record of four years operating under a validation agreements with an existing provider or satisfying the needs of the OfS’s Quality Assessment Committee. And, in addition to either of those, OfS must be satisfied that the provider operates “in the public interest and in the interest of students.” Peers argued that a four-year track record is essential to protect the quality and reputation of the sector. With the Quality Assessment Committee constituted of HE practitioners, this is a protectionist move designed to make it more difficult for new entrants to award degrees.
  • Students should be automatically placed on the electoral register, reversing the effects of Individual Electoral Registration introduced in 2014, which saw huge numbers of students drop off the register.
  • Appeals against a variation or revocation of a higher education providers’ authorisation by the OfS to grant degrees have been altered to replace a narrow list of options with, “the grounds that the decision was wrong”. This was a more technical point, aiming to increase providers’ scope for appeal if they find themselves in conflict with the OfS.’

The Lords did not oppose increasing tuition fees annually by inflation; they objected that the link with TEF means not all universities would be entitled to such an increase. The government could still award universities the increase through a statutory instrument, as it has done for 2017 entry. But it might not do so in the future without the quid pro quo of the TEF – when the Bill is finally enacted the fee rises could be shelved altogether, even though the sector has been expecting and planning for the rises.

WonkHE speculated that some amendments could be flashpoints in the Commons: ‘Amendment 145 would prevent retrospective changes to the terms and conditions of student loans. Amendment 146 prevents students in unincorporated higher education providers from fully accessing publicly funded student support. Amendment 150 will stipulate that students not “be treated for public policy purposes as a long-term migrant to the UK”. The amendment also aims to secure employment and immigration rights for foreign nationals working at HE providers. UUK is briefing peers in support of this amendment.’

The Bill had its third reading in the Lords on 4 April and returned to the Commons for consideration of the Lords amendments. You can track its progress on the Parliament website.

MPs meet Sir Michael Barber
The House of Commons Education Select Committee summoned the Office for Students chair designate, Sir Michael Barber, for some gentle questioning in February 2017, before he takes up his role at the Office to be established by the HE and Research Act when it becomes law. Mark Leach of WonkHE has been a reliable observer of the Barber’s chair and his blog on 22 February 2017 was wary: “There is much for the sector to be happy about here, at least on the surface. If yesterday’s hearing is anything to go by there will be no deliverology-led data-driven revolution.”

Why we must protect university autonomy (and the HE and Research Bill)
HEPI’s Nick Hillman delivered a speech at the inaugural meeting of the G20, a global group of independent universities, at the University of Buckingham on 3 April 2017. In the speech, titled ‘Why we must protect university autonomy’, he made ten points which argued a pro-Government position on university reform:

1. institutional autonomy benefits UK universities in terms of their global standing;
2. universities are more autonomous than they are always willing to admit;
3. we should not cry wolf over university autonomy too readily;
4. recent changes in England, including tripling tuition fees and removing student number controls, have increased institutional autonomy;
5. official support for new providers stems less from a desire for fully-blown marketisation and more from a desire to shape the sector indirectly;
6. the House of Lords’s amendment to the Higher Education and Research Bill, defining what a university is, is misguided and MPs should reverse it;
7. pure autonomy involves risks, including uniformity and hierarchy, which the university sector must guard against;
8. external scrutiny of universities is essential, despite their autonomy;
9. Parliament should debate the optimum categorisation of different sorts of higher education providers;
10. more higher education legislation will be necessary in the future.

Before moving to HEPI Nick Hillman was the special adviser to David Willetts when he was Minister of State for Universities and Science from 2010-2014.

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