Shortly before parliament dissolved for the General Election the Housse of Lords debated the Report of the Industry and Regulators Committee Must do better: the Office for Students and the looming crisis facing higher education

https://publications.parliament.uk/pa/ld5803/ldselect/ldindreg/246/24602.htm

This is is what I said:

I declare an interest as chair of the council of Queen Mary University of London. I thank the noble Baroness, Lady Taylor, for her comprehensive and very fair introduction to our report. I thank her too for her excellent marshalling of our committee, with the noble Lord, Lord Hollick, and I add my thanks to our clerks and our special adviser during the inquiry.

I will speak in general terms rather than specifically about my own university. In higher education, there have been challenges aplenty to keep vice-chancellors and governing bodies awake at night: coming through the pandemic, industrial relations, cost of living rises for our students, pensions and research funding, to name but a few. But above all there are the ever-eroding unit of resource for domestic students, which was highlighted extremely effectively by the noble Lord, Lord Johnson of Marylebone, on the “Today” programme last week, and the Government’s continual policy interventions, including, above all, their seeming determination to reduce overseas student numbers.

In the face of this, I have to keep reminding myself that in 2021-22 Queen Mary University delivered a total economic benefit to the UK economy of £4.4 billion. For every pound we spent in 2021-22, we generated £7 of economic benefit. Universities are some of our great national assets. They not only are intellectual powerhouses for learning, education and social mobility, making a huge contribution to their local communities, but are inextricably linked to our national prospects for innovation and economic growth.

The committee’s report was very well received outside this House. Commentating in Wonkhe, the higher education blog—I do not know whether there are many readers of it around; I suspect there are—on the government and OfS responses to our report, its deputy editor noted:

“If you were expecting a seasonal mea culpa from either the regulator or the government … on any of these, it is safe to say that you will be disappointed”.

For him, the four standout aspects of our report were:

“the revelations about the place of students in the Office for Students … the criticism of the perceived closeness of the independent regulator to the government of the day … the school playground

level approach to the Designated Quality Body question … and the less splashy but deeply concerning suggestion that OfS didn’t really understand the financial problems the sector was facing”.

As regards the DQB question, which the committee explored in some depth, the current approach being taken by the OfS is extremely opaque. We clearly need a regulatory approach to quality to align with international standards. It is clear that the quickest way to get the English system realigned with international good practice would be to reinstate the QAA—an internationally recognised agency. Most of us cannot understand what seems to be the implacable hostility of the OfS to the QAA.

It is notable that the OfS, perhaps stung by the committee’s report, has now belatedly woken up to the fragility of the sector’s financial model and the fact that the future of the overseas student intake is central to financial underpinning. In its 2023 report on the financial sustainability of HE providers, the OfS confirmed that the

“overreliance on international student recruitment is a material risk for many types of providers where a sudden decline or interruption to international fees could trigger sustainability concerns”

and

“result in some providers having to make significant changes to their operating model or face a material risk of closure”.

Advice that they need to change their funding model and diversify their revenue streams is not particularly helpful, given the options available.

The Migration Advisory Committee’s Rapid Review of the Graduate Route, published last week—which recommends retaining the graduate visa on its current terms and reports that the graduate route is achieving the objectives set for it by the Government, finding

“no evidence of any significant abuse”—

is therefore of crucial importance. There is absolutely no doubt about the importance of the work study visa to the sector and the broader UK economy. In answer to the question from the noble Lord, Lord Parekh, we want it, and I hope that the OfS will play its part in trying to persuade the Government to retain it.

The Wonkhe blog also asks the fundamental question about the Government’s response regarding the regulatory burden on higher education. I hope the Minister can tell us: do the Government think it necessary and acceptable to keep ratcheting up regulation on universities? We are going in the wrong direction. Additional resource is required to monitor and provide returns in a whole variety of areas, such as the new freedom of speech requirements.

With the extraordinary contribution that universities make to society, communities and the economy as a whole, will university regulation benefit from the proposals set out in Smarter Regulation: Delivering a Regulatory Environment for Innovation, Investment and Growth, the Government’s recent White Paper? We will discuss this in a future debate on the response to our subsequent report, Who Watches the Watchdogs? For instance, the White Paper proposes the adoption of

“a culture of world-class service”

in how regulators undertake their day-to-day activities, and the adoption by all government departments of the

“10 principles of smarter regulation”.

It says:

“All government departmental annual reports must also set out the total costs and benefits of each significant regulation introduced that year”,

and says that the Government will

“strengthen the role of the Regulatory Policy Committee and the Better Regulation Framework, improve the assessment and scrutiny of the costs of regulation, and encourage non-regulatory alternatives”.

It says:

“The government will launch a Regulators Council to improve strategic dialogue between regulators and government, alongside monitoring the effectiveness of policy and strategic guidance issued”.

Finally, it says that

“it is up to the government to better assess its regulatory agenda, to try to understand the cost of its regulation on business and society”.

What is not to like, in the context of higher education regulation? Will all this be applied to the work of the OfS?

That all said, I welcome some of the way in which the OfS, if not the Government, has responded to our report. There is an air approaching contrition, in particular regarding engagement with both students and higher education providers. I welcome the OfS reviewing its approach to student engagement, empowering the student panel to raise issues that are important to students and increasing engagement with universities and colleges to improve sector relations

As regards the Government, a dialling down of their rhetoric continually undermining higher education, a pledge to ration ministerial directions given to the OfS, and putting university finances on a more sustainable, long-term footing would be welcome.

It is clear that continued scrutiny and evaluation— I very much liked what the noble Baroness, Lady Taylor, had to say about post-scrutiny reporting—will be essential to ensure that both government and OfS actions after their responses effectively address the underlying issues raised in our report. Sad to say, I do not think that the sector is holding its breath in the meantime.