English regulator consults on tying funding to quality metrics

England’s higher education regulator is seeking sector views on how it should use the approximately £1.5 billion of public funding it distributes to institutions each year, ahead of the next spending review, with questions including whether funding should be aligned with controversial metrics on course quality.

The Office for Students has launched a call for evidence on funding it allocates through the Strategic Priorities Grant – which covers fields including high-cost subjects and additional costs in teaching students from disadvantaged backgrounds – as well as its capital funding.

The Strategic Priorities Grant is of close interest to ministers, whose guidance letters to the OfS often seek to direct the regulator on its use.

In its call for evidence, the OfS says its approach to allocating this funding has been “largely unchanged” since 2012 and in a “changed context for the sector”, it is “considering how we should use funding made available to us by government to benefit students, taxpayers and the higher education sector”.

The regulator adds that it is undertaking “early policy thinking” and wants to be “in the best position to provide evidence and policy advice to ministers” for the government’s next comprehensive spending review, which must be in place before the end of the 2024-25 financial year – and which will likely take place against a bleak outlook for the public finances.

The call for evidence “seeks views about how the OfS could develop its funding approach in three broad areas: the activities we fund; how we determine funding allocations; and the factors we prioritise in our decision-making”.

John Blake, director for fair access and participation at the OfS, said in a briefing: “It is a call for evidence – there’s no OfS recommendations of directions of travel; it’s just a range of open questions seeking views on the process and impact.”

He added: “We’re being very open and want to be very clear that we recognise government’s legitimate interest in our funding power. Most of the letters that we receive from the secretary of state are about our funding power. I don’t think there’s anything inherently wrong with that. But we are keen to understand what the sector thinks the proper limits of that should be.”

Mr Blake continued that “nothing’s going to happen at the end of it [the call for evidence] automatically”. There may be “technical changes” – which would require consultation – and “if we want to do anything broader, then we will conduct a discussion at that point”.

In its regulatory work, the OfS judges universities’ courses against numerical baselines on student completion and continuation, and on the proportion of their graduates entering “managerial or professional” employment – metrics whose introduction met with strong opposition from universities concerned about potential disincentives to recruit disadvantaged students.

The call for evidence asks on quality: “Should measurements of the quality of a provider’s higher education courses affect the eligibility of those courses to be counted towards the provider’s OfS funding allocation? Would it be possible and desirable to incentivise quality improvements through different funding methods?”

Mr Blake said the question being posed was that “given we are a regulator with a funding power, should we be seeking to use those things to reinforce one another?…I could probably lay quite a lot of money on where the weight of some of the responses to that are going to be. But I think it’s useful to ask the question: if people think we shouldn’t do that, why shouldn’t we do that? And that helps us understand more of what the funding is doing or it isn’t doing.”

There are, he continued, “parts of government that would quite happily apply much stronger quality tests to the distribution of funding. Aside from what we, the OfS, think about it, we should be able to say, ‘This is what the sector is likely to think about it and this is how we might do it.’ So it’s important to air these questions, whether we think it’s likely those things will go forward or not.”

On the call for evidence in general, Mr Blake said: “We are not going to make any sudden movements. This is about gathering the sense from the sector.”

He added of taking an approach that is more open and flexible than a formal consultation: “You all watched the events of late last year and the discussions about our [the OfS’] relationship with the sector. This is one of the ways in which we’ve taken seriously the feedback.”

“This doesn’t have to be adversarial,” Mr Blake went on. “We are seeking to understand what this money does in the system.”

There were, he said “enormous amounts of public money…at stake. I don’t think it’s credible not to have really meaningful accountability measures for that.”

The call for evidence will close on 23 May.

john.morgan@timeshighereducation.com