13 November 2012

Alison Johns Head of Leadership, Governance and Management

Policy Drivers 1

Policy Drivers 2

EconomicGrowth White Paper Vision

CoalitionPolitics

Fiscal Deficit

Government Departmental Objectives

• Parliament approves £9K fee limit (December 2010)

• HE White Paper (June 2011)

• BIS Technical Consultation (August 2011)

• Innovation & Research Strategy (December 2011)

• BIS response to consultations (June 2012)

• Joint HEFCE/OFFA letter (May 2012)

• Joint HEFCE/SLC letter (June 2012)

HE policy context (1)

Students at the heart of the system

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

• Student number controls

• Future regulatory environment

• Government investment

• Student behaviour

• Institutional responses

• Unintended consequences

……uncertainty

• “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

Students at the Heart of the System and BIS Technical Consultation

the FM and how it might change

HEFCE’s Financial Memorandum

• Institutional autonomy

• Low risk sector

• Regulation proportionate to risk

• Support and engagement strategy

• Openness - Risk letter

PRINCIPLES UNDERPINNING THE RELATIONSHIP

HEFCE’s Financial Memorandum

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

FORMAL REQUIREMENTS: REFRESHING YOUR MEMORY

HEFCE’s Financial Memorandum

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.

FORMAL REQUIREMENTS: REFRESHING YOUR MEMORY

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

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

Government’s response to consultation

• 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.

13 June 2011 ministerial letter to HEFCE and SLC

New regulatory framework for HE

Funding and regulation

HE statistics Standards and quality

Student complaints

Student loans

Fair access

Funding and legislation

Universities and colleges

Regulatory Partnership Group

• Operating framework• Data Governance• Corporate forms• New Financial Memorandum

RPG Projects overviewRPG meetings Operating

FrameworkFinancial Memorandum

Data Governance

Corporate Forms

December 2012

Draft proposition

Consultation Challenging project!

Report

March 2013 Consultation Challenging project!

Further work

June 2013 Final proposition

Final? Challenging project!

Further work

Leads Paul Greaves HEFCESteve Egan HEFCEDavid Wallace SLC

Ian Lewis HEFCESteve Egan HEFCEDavid Wallace SLC

Tim WilsonAndy Youell HESA

Anthony MacClaren QAAMark Allanson HEFCE

Regulation of alternative providers – lots of questions!

• Student number controls?

• Tuition fee caps?• Loan caps?• Off quota recruitment?• WP and FA?• Information?• Student complaints

(OIA)?

• FOI?• Financial sustainability

checks & monitoring?• Public sector equality

duty?• Ability to charge

differential fees?• QA?

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

Regulatory Partnership Group

• 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.

PROGRAMME OF WORK

Looking forward

• 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

SECURING EFFECTIVE ACCOUNTABILITY

Looking forward

• 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?

SECURING EFFECTIVE ACCOUNTABILITY

Looking 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

SECURING EFFECTIVE ACCOUNTABILITY: POTENTIAL WAYS FORWARD

A new financial memorandumSome 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?

What does it all mean for you?

• 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)

REGULATION AND THE HE COMMUNITY

Discussion

Thank you

a.johns@hefce.ac.uk