Hepi takes leaf out of banking ledger for regulatory model

Report calls for overarching body to fill gaps in national ‘framework’

November 7, 2013

A super-regulator similar to the Financial Conduct Authority should replace a “plethora” of watchdogs and quangos that have left higher education susceptible to major problems, a study says.

While several bodies, such as the Higher Education Funding Council for England and the Quality Assurance Agency, police the academy as part of a “regulatory framework”, there are “major gaps” in its coverage, claims the report, published by the Higher Education Policy Institute on 7 November.

Without legislation to address changes to the system that have occurred since the introduction of £9,000 tuition fees, the government has “created a new environment fraught with risks and one that…is in danger of being unregulated or at best badly regulated”, says The Future Regulation of Higher Education in England.

One key issue that must be addressed is how Hefce can control courses funded by student loans, rather than its own direct teaching grants, the report says. Concerns over admissions, institutional failure, standards and the independence of funding agencies and regulators are also raised.

Authored by Roger Brown, professor of higher education policy at Liverpool Hope University, and Bahram Bekhradnia, director of Hepi, the report suggests that an overarching regulatory body – dubbed the “Office for Higher Education” – should be created.

Meanwhile, a new agency would combine the funding responsibilities of Hefce and the Student Loans Company.

That body would report to the government, but the super-regulator would report to Parliament, thereby ensuring its independence and the sector’s confidence in it, the report argues.

The split between funding and regulatory function would mirror recent reforms to banking, in which the Bank of England and the Financial Conduct Authority oversee the sector, said Professor Brown.

“The key thing is to keep the regulator out of the hands of government,” he said.

Ministers often try to bend the curriculum, research outcomes and other sector objectives to suit their political agendas, but higher education should remain out of their control, Professor Brown argued.

“Even the Browne review said there should be more independence and our report’s suggested model provides this,” he added.

The Hepi report follows similar recommendations made by the Higher Education Commission last month, which called for a “Council for Higher Education” – a single body covering the sector’s funding and regulation.

Hepi also suggests that the mooted regulator should compel universities to contribute towards a fund to compensate students whose institutions close down – an increased possibility in today’s competitive environment.

“Given the erosion of collegiality and sense of common purpose within UK higher education, it is very difficult to imagine a Russell Group university being willing to see its funds used to protect students at a neighbouring ex-polytechnic,” it says, suggesting that the scheme would need to be “mandatory, and probably statutory”.


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