Key performance measure 7

‘We are vigilant about safeguarding public money and student fees. We will strengthen our focus on governance, recognising the critical role of effective leadership.’ (The OfS strategy 2025 to 2030)

The OfS receives financial returns from all institutions on the OfS Register, excluding further education colleges, which are monitored by the Department for Education. In recent years, we have seen optimistic forecasting, driven largely by international recruitment forecasts that do not materialise.

Institutions that have assumed levels of income that do not materialise may be exposed to financial risk. They may also delay or avoid taking the difficult but necessary decisions required to secure their financial sustainability, increasing the risk that financial challenges become more serious over time.

In response to these challenges, the OfS has worked with institutions to strengthen their financial governance capability.

This KPM measures how accurately the sector forecasts its annual income from course fees. We focus on course fee income as it is the single largest source of income for higher education institutions and less volatile than some other measures of financial forecasting.

Tracking the accuracy of sector forecasts will help us to understand the impact of our work to strengthen financial governance.

This measure shows the extent to which institutions’ forecasts differ from actual income from course fees.

A value of 0 per cent would indicate that on average, institutions’ forecasts were accurate. Positive values indicate that income from course fees was higher than forecast (pessimistic forecasting), while negative values indicate that income from course fees was lower than forecast (optimistic forecasting).

The data shows that on average, forecasting has become less accurate over time. In the 2022-23 financial year, course fee income was 2.1 per cent higher than forecast, suggesting forecasts were pessimistic. Since then, forecasts have been optimistic, with course fee income 3.4 per cent lower than forecast in the 2023-24 financial year and 7.3 per cent lower than forecast in the 2024-25 financial year.

For each institution, we calculate the difference between actual and forecast income from course fees for a given year, expressed as a percentage of the forecast.

We then calculate a weighted average of these differences across all institutions, using the size of each institution’s relevant financial activity (based on fee income) to determine its weight.

The resulting figure shows the average variation from accurate forecasting (0 per cent) in percentage points, with values above or below zero indicating actual income was higher or lower than forecast.

This measure uses medium term forecasts submitted in the previous financial year.

Download the data for KPM 7