CMA publishes policy paper on Regulation in Higher Education

Since the publication of the findings of the OFT’s Call for Education on the Higher Education Undergraduate Sector in England last March, the Competition and Markets Authority (CMA) has been carrying out a project to assess how the HE regulatory framework could be revised to ensure that choice and competition is maximised.

The CMA recognises that the current framework is fragmented and inadequate, and considers that the focus of regulatory activity needs to shift to the quality of the learning experience.  It therefore recommends:


  • There should be a “gateway” for operating in the HE sector, through which all providers need to pass, irrespective of whether or not they are publicly-funded, and irrespective of whether they offer degree-level or sub-degree level provision. Passing through the gateway will involve meeting a baseline level of quality.
  • This baseline level needs to be set as low as is commensurate with providing assurance to students that the provider meets certain standards in respect of its governance, transparency, student redress and consumer protection. 
  • Additional regulation above the baseline must not signal different quality or create an inequitable playing field. The CMA suggests that this might best be achieved by avoiding rules relating to other policy objectives, such as managing public funds or immigration requirements, which can feed the perception that more regulation means better quality.
  • Regulatory review should be risk-based in terms of frequency and intensity and be informed by student complaints and other student-centred factors such as high non-completion or dropout rates. 
  • Sanctions should be the same across all provider types, including, for example, extending the power to remove DAPs (technically a power to refuse to renew DAPs for alternative providers) to all providers. 
  • Regulation must not, however, stifle innovation or inadvertently adversely affect outcomes for learners, by for example, providers passing on the increased cost of regulation to students through fee increases.

There are some interesting details in the report.  The first is a repeated emphasis that questions about the quality of the learning experience should be kept separate from assurances sought to justify passing public funds to the provider. The implication is that the current system confuses the two, and the example is given of whether “providers achieve certain job outcomes” (a rather confused and confusing phrase, which might mean graduate employment outcomes, or something else entirely).

The second is an identified reduction in the appetite of institutions to validate provision delivered by others, which the CMA identifies as a potential barrier to entry to and expansion in the HE market. The reason cited for the reduction is in part the fact that greater scrutiny of validated provision exposes institutions to a greater risk of negative judgments about their quality, and in part that validated partners are often in effect competitors which institutions have no incentive to create or support. The introduction of a “baseline quality” threshold for all providers is expected to help to address the former and the CMA makes no recommendation in respect of the latter, except that the impact on competition needs to be monitored.

Thirdly, the CMA considers that current funding and student support arrangements are militating against innovation in the pace and intensity of course delivery.  For example, the fees for two-year courses are capped at £18,000 which can result in a loss to the institution delivering them. The CMA recommends that these rules should be made more flexible.

The CMA rather ducks the vexed question of provider exit from the market, but instead recommends that BIS and HEFCE design an “orderly exit” regime.

Smita Jamdar
Partner and Head of Education
For and on behalf of SGH Martineau LLP
DD: 0800 763 1332
M: 07909 925946
F: 0800 763 1732
International DD: +44 870 763 1332

From → General Interest

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