Office for Students must face looming financial crisis

A new House of Lords report warns that the Office for Students (OfS) and Government are failing to act on the looming financial crisis facing the higher education sector.

After hearing from students, university leaders, current and former ministers, concerns have been raised about the impact of increased costs, undergraduate tuition fee freezes for home students, and reduced EU research funding, leading to an unhealthy dependency on international and postgraduate fees to compensate.    

The Committee’s report criticises the role and performance of the OfS, concluding that it is failing to meet the needs of students and is not trusted by many of the providers it regulates. It also raises concerns that the OfS lacks independence from the Government and that its actions often appear driven by short-term political priorities and media headlines.

Whilst the committee welcomes the OfS’ focus on value for money for students, it questions the OfS’ approach to regulation and whether it provides value for money itself to providers, particularly when higher registration fees partly reflect the regulator’s desire to expand its own remit.

The report calls on the OfS to hold discussions with providers more regularly about their financial situation and ensure it is aware of the systemic challenges facing the sector and to hold providers to account if they do not ensure prospective students receive clear, digestible information on their course, including its long-term costs and approximate contact hours.

The report also calls for the OfS to urgently align its framework for quality with international standards, including reinstating an independent Designated Quality Body (DQB); and make clear how it has taken the institutional autonomy of providers into account when it regulates. It also wants to ensure that there are at least two student representatives on the OfS' Board and open up more of its work to student involvement;

The report also calls on the Government to review how higher education is funded, setting long-term, sustainable funding and delivery models for the sector; and consider making it a requirement that serving politicians resign any party political whip they hold before becoming Chairs of independent regulators.

Lord Hollick, Chair of the Industry and Regulators Committee said: “At a time when the higher education sector faces a looming crisis caused by financial instability, increased costs, industrial action, and reduced EU research funding, it is vital that the sector’s regulator is fit for purpose.

"However, it was evident throughout our inquiry that the OfS is failing to deliver and does not command the trust or respect of either providers, or students, the very people whose interests it is supposed to defend. We were surprised by the regulator’s view that the sector’s finances are in good shape, which is not an assessment that we or most of our witnesses share.”