6. GOVERNMENT’S AIMS
• Create an open, dynamic and affordable HE system with
more competition and innovation, and a level playing
field for new providers
• Maintain the highest quality of HE, safeguarding the
strong international reputation of English universities
• Reduce the regulatory and administrative burden,
adopting a risk-based approach while improving
accountability to students
• Regulatory framework should protect interests of
students and public investment
8. Students at the Heart of the System
and BIS Technical Consultation
• “to deliver a better student experience; to
promote social mobility and widen participation;
to create a more responsive HE sector in which
funding follows the decisions of learners and
where successful institutions are freed to thrive”
• An operating framework which ensures
accountability for public funding, protects the
collective student interest and gives priority to
quality improvement
10. HEFCE’s Financial Memorandum
PRINCIPLES UNDERPINNING THE RELATIONSHIP
• Institutional autonomy
• Low risk sector
• Regulation proportionate to risk
• Support and engagement strategy
• Openness - Risk letter
11. HEFCE’s Financial Memorandum
FORMAL REQUIREMENTS: REFRESHING YOUR MEMORY
Part 1 sets out:
– Our responsibilities to institutions
– Institutions’ responsibilities to HEFCE
– Financial management and
sustainability
– Other requirements on institutions
– Accountability and risk assessment
– supporting annexes give details of the mandatory
requirements of the financial memorandum; the
Audit Code of Practice; institutional support
strategy; and consent for financial commitments
12. HEFCE’s Financial Memorandum
FORMAL REQUIREMENTS: REFRESHING YOUR MEMORY
Part 2 (issued each year as the ‘grant
letter’) gives
- conditions specific to each institution
- a schedule of funds available in the
academic year
- he educational provision the
institution has agreed to make in
return for those funds.
13. Financial Memorandum-Formal
Requirements
• Risk management, internal control, corporate governance
• Monitor performance
• Sustainability and financial viability
• Inform HEFCE of adverse changes
• Regularity
• Value for money
• Audit processes
14. Technical Consultation Proposals
• The introduction of an independent lead
regulator
• A single regulatory framework for
provider designation for student support
and HEFCE teaching grant
• The adoption of a single gateway for
entry to the higher education sector
• Reforms to Degree Awarding Powers
(DAPs) and University Title (UT) criteria
• Simplifying the process for changing
corporate status
15. Government’s response to
consultation
13 June 2011 ministerial letter to HEFCE and SLC
• expresses its intention to move its reform agenda
forward primarily through administrative, rather
than legislative means.
• sets out the next steps for HEFCE and the SLC,
working with the other national agencies through
the Regulatory Partnership Group (RPG) in taking
forward the vision in the White Paper.
16. New regulatory framework for HE
Funding and legislation Funding and regulation
Student loans
Universities
and colleges Standards and quality
HE statistics
Student complaints Fair access
18. RPG Projects overview
RPG meetings Operating Financial Data Corporate
Framework Memorandum Governance Forms
December Draft Consultation Challenging Report
2012 proposition project!
March 2013 Consultation Challenging Further work
project!
June 2013 Final Final? Challenging Further work
proposition project!
Leads Paul Greaves Ian Lewis Tim Wilson Anthony
HEFCE HEFCE Andy Youell MacClaren
Steve Egan Steve Egan HESA QAA
HEFCE HEFCE Mark Allanson
David Wallace David Wallace HEFCE
SLC SLC
19. Regulation of alternative
providers – lots of questions!
• Student number • FOI?
controls? • Financial sustainability
• Tuition fee caps? checks & monitoring?
• Loan caps? • Public sector equality
• Off quota recruitment? duty?
• WP and FA? • Ability to charge
• Information? differential fees?
• Student complaints • QA?
(OIA)?
20. Response the HE White Paper
11 June 2012
• Review the existing student support course designation
system for alternative providers to include SNCs and more
robust and transparent requirements on:
– QA
– financial sustainability
– management and governance
• Consult later this year on the process of applying SNCs to
alternative providers who have courses designated for
student support purposes
21. Regulatory Partnership Group
PROGRAMME OF WORK
• Developing an operating framework – description of the
funding and regulatory arrangements for English HE and the
contracts/memoranda of understanding that facilitate it
• Designing a successor to HEFCE’s financial memorandum – a
document to set out the expectations of those in receipt of
public investment, whether through HEFCE grant or SLC-
arranged loan
• Redesigning the data and information landscape – taking the
opportunity to look at data collection and streamlining its
collection in the interests of efficiency and reducing burden
• Investigating constitutions and corporate forms adopted by
organisations that provide HE in England.
22. Looking forward
SECURING EFFECTIVE ACCOUNTABILITY
• HEFCE and SLC – to develop a coherent
operating framework (OF) for reformed HE
that provides:
– Accountability for public funds
– Protects the collective student interest
– Gives priority to quality improvement
• FM replacement forms part of the new OF
23. Looking forward
SECURING EFFECTIVE ACCOUNTABILITY
• A two stage process
– Consult on principles – early 2013
– Consult on detail – around May 2013
– Operationalise from autumn 2013
• Key issues
– What are public funds?
– Putting self in position of students
– Where do they get assurance from
• Quality?
• Complaints procedures?
• Financial sustainability?
24. Looking forward
SECURING EFFECTIVE ACCOUNTABILITY: POTENTIAL WAYS FORWARD
• Legislation
• Co-regulation/self-regulation
– “….we comply with the requirements of the
new FM and you can take comfort…..”
Aim: Be clear for students what they can take
comfort from and what they cannot – influence
where they go
25. A new financial memorandum
Some key questions:
• What are public funds? What can be included?
• Who and what organisations are included?
– The replacement FM needs to cover the public and
collective student interests; and to be able to apply to all
providers?
• How will it be described?
– “Providers of HE: statement of accountability
requirements”?
– “Accountability of providers of HE to students and the
public”?
• What sanctions are available for non-compliance?
– Removal of designation?
– Others?
26. What does it all mean for you?
REGULATION AND THE HE COMMUNITY
• Consultation on SNCs for alternative providers with
designated courses (November 2012)
• Consultation on the new operating framework
(Spring 2013)
• Admission of the second cohort of students paying
fees of £6,000 - £9,000 (September/October 2013)
• Introduction of a successor to HEFCE’s financial
memorandum, covering all public investment from
whatever source (Autumn 2013)
These objectives in tensionDecisions take timeMultiple external uncertaintiesApparent inconsistencyLead and lag unpredictable (Access, NSP)320bn quantitative easing ↑pension deficitUKBA immigration policy – verseas YFinancial control vs. student choiceW Participation (Ycost) vs Market disciplineNo legislationImpact of tuition fees on CPI then government finances
First principle is institutional autonomy. Introduction to the FM says “Under the Further and Higher Education Act 1992, which established HEFCE, the Secretary of State is not entitled to frame his conditions of grant to us by reference to specific institutions, or to particular courses of study or programmes of research, or to the criteria for the selection and appointment of academic staff or for the admission of students. This is designed to safeguard both institutional and academic autonomy, which are widely regarded as key factors in the success of English higher education. We strongly endorse these principles”However HEFCE has a clear regulatory duty to ensure that universities in receipt of public funds provide value for money and are responsible in their use of these funds. We also ensure that the funding we distribute accurately reflects what is delivered. In addition, we now act as the principal regulator for those universities and colleges that are exempt charities, advising the Charity Commission where appropriate. We aim to reduce the accountability burden on institutions by enabling other public bodies, wherever possible, to rely on our systems of oversight and assurance.HEFCE is also legally responsible for making sure that the quality of learning and teaching is assessed in each university and college across England. We also assess the quality of research, enabling us to fund research selectively by supporting excellence wherever it is found
The Model Financial Memorandum sets out the formal relationship between HEFCE and the governing bodies and accountable officers of the higher education institutions (HEIs) it funds. It reflects our responsibility to provide annual assurance to Parliament that: Our funds are being used for the purposes for which they were givenRisk management, control and governance in the sector is effective Value for money is being achieved.
.
We have been asked to develop the new operating framework and replacement for the financial memorandum within the existing legislative framework, but HEFCE’s powers are limited to attaching conditions to the grants it provides; it is legally prevented from attaching conditions to funding derived from other sourcesHEFCE sanctions will continue to carry weight for the next two years and possibly three years. When funding for old regime students is phased out a large number of HEIs will still continue to receive substantial HEFCE funding either through teaching funding or through research, but 30 of them will receive less than £5 million per year which is less than the maximum penalty HEFCE can impose under existing legislation (all explained in paragraph 23 of Ian’s paper). Since we also have a statutory duty to ensure quality and one of the sanctions is withdrawal of funding, we won’t have that sanction (see paragraph 21).
We have been asked to develop the new operating framework and replacement for the financial memorandum within the existing legislative framework, but HEFCE’s powers are limited to attaching conditions to the grants it provides; it is legally prevented from attaching conditions to funding derived from other sourcesHEFCE sanctions will continue to carry weight for the next two years and possibly three years. When funding for old regime students is phased out a large number of HEIs will still continue to receive substantial HEFCE funding either through teaching funding or through research, but 30 of them will receive less than £5 million per year which is less than the maximum penalty HEFCE can impose under existing legislation (all explained in paragraph 23 of Ian’s paper). Since we also have a statutory duty to ensure quality and one of the sanctions is withdrawal of funding, we won’t have that sanction (see paragraph 21).
Legislation – whatever you feel able to say about thatVoluntary agreement - This will require all parties to be willing to sign up to and abide by such a voluntary agreement. This would be tested if one or more institutions decided to leave, so casting doubt on whether effective accountability can be achieved through such a voluntary agreement. It may be that such a voluntary agreement could operate for a limited time, but not in the long-term. The threat of legislative action, though, may be sufficient to ensure a voluntary agreement is effective (paragraph 32)