English regulator costing some universities ‘over £500K a year’

The costs of regulation by England’s Office for Students, paid by universities and, ultimately, students, have “increased substantially from original estimates” and are “likely to significantly exceed £500,000” a year for some institutions.

The claims on the costs of the new market-style regulator – whose registration process is estimated to have cost universities a combined £2 million in internal costs – are contained in an unpublished Universities UK report on the transition to the OfS regulatory regime.

Times Higher Education reported early last month on the highly critical report, based on a survey of universities, which said the OfS needed to build “constructive dialogue” with institutions.

Concern about the increasing expense of the OfS – whose higher-than-expected staff costs have led to larger registration fees – is another significant element of the report and may deepen disaffection with the new regulator among universities.

The OfS has been required by the government to create a register of providers, on which universities must be included if they wish their students to access public loans.

The unpublished report says, based on the survey of institutions, that the estimated cost of the initial OfS registration process across all UUK and GuildHE members in England was £2.2 million, “equating to an average of £17,000 per institution”.

And there was an additional £1.3 million sector cost for “ongoing monitoring, equating to an average of £10,000 per institution”.

Meanwhile, in addition, the maximum OfS registration fee, paid by all universities, is currently £186,800 a year, the report notes (the fees vary according to the number of students an institution has). The level of the fee bands has increased, on average, by 56 per cent from the December 2017 impact assessment published as the Higher Education and Research Act went through Parliament and by 18 per cent from the Department for Education’s February 2018 consultation.

Other OfS costs for institutions include “ongoing compulsory subscription to the designated quality and data bodies; any additional quality assessment directed by the OfS; internal costs of complying with OfS registration; and compulsory participation in the teaching excellence and student outcomes framework (TEF)”, says the UUK report.

The report does not detail its workings, but appears to use these costs and the registration fees to produce a total OfS cost figure per institution.

“The costs of regulation by the OfS, ultimately to be paid by students from their tuition fees, have increased substantially from original estimates, with total costs for some institutions likely to significantly exceed £500,000 in one academic year,” the UUK report says.

It notes some of the factors behind the increase in registration fees, including that the OfS’ 2019-20 operating costs were originally forecast to be £26.2 million, “but are now forecasted to increase by £1 million”; and that fewer providers than expected have been registered.

Gordon McKenzie, chief executive of GuildHE, said OfS fees were “high”. “Logically, that price ought to come down. Initial registration was a big task; but once it is done, OfS running costs really ought to begin to fall, and the Department for Education should be ensuring they do,” Mr McKenzie said.

He added that, in addition, “wider regulatory costs and burdens are a real problem and they bear down disproportionately on smaller institutions. Being regulated by the OfS does not, at the moment, feel risk-based and proportionate.

“This may be about a new organisation settling down, finding the right way to do its job. But my worry is that if this isn’t addressed soon, then overly burdensome regulation becomes the norm.”

An OfS spokeswoman said: “We will always seek to limit unnecessary burden on the sector, but this must be balanced with the need to protect students’ interests.” The OfS was aiming to reduce regulatory burden “over time” and “this work from UUK could certainly be a helpful contribution to that development if we could see the methodology behind it”, she added.

john.morgan@timeshighereducation.com