Consultation on proposals to change how the Office for Students regulates further education colleges in England

Consultation proposals

Proposal 1: Disapply condition A2 (access and participation statement)

What we are proposing

30. Condition A2 applies to Approved (fee cap) providers charging fees up to the basic amount and to all Approved providers.³⁴ This initial and ongoing condition requires a provider to publish an access and participation statement setting out its commitment to supporting access and participation in higher education by students from disadvantaged backgrounds and underrepresented groups. It also requires it to update and re-publish the statement on an annual basis. This is intended to promote transparency and accountability in how providers support students from underrepresented backgrounds.
31. We propose to disapply condition A2 as set out in table 2.

Why we are proposing this

32. As a prerequisite of receiving public funding, the DfE requires further education colleges to submit and publish annual accountability statements that address how the college will meet the Local Needs Duty and to set objectives accordingly.³⁵ This includes how further education colleges will address barriers to participation, support disadvantaged learners, and improve outcomes for underrepresented groups where this has been identified as a need of their local community and economy.
33. We consider that our requirement to submit and publish a separate access and participation statement to comply with condition A2, may create duplication for further education colleges that are already subject to a similar reporting requirement as part of the DfE requirement for receiving public funding. Disapplying condition A2 for further education colleges is likely to reduce administrative duplication without compromising a college’s commitment to equality of opportunity. As such, our initial view is that this proposal would be unlikely to have any negative impact on students.
34. Unlike the rest of the proposals in this consultation, which apply only to further education colleges without DAPs and that do not apply for DAPs, we propose to disapply condition A2 for all further education colleges, including those with DAPs. This reflects that the DfE’s accountability statement requirement applies universally across the statutory further education sector. It also reflects a proportionate and risk-based approach to regulation, recognising that, in the case of condition A2, the DfE’s existing requirements are sufficient to ensure transparency and accountability in how further education colleges support access and participation.
35. If implemented, this proposal would mean that a further education college would no longer be required to publish an access and participation statement, and update and re-publish this statement on an annual basis. Instead, its existing reporting to the DfE would continue to serve as the primary mechanism for demonstrating its commitment to widening participation.

Proposal 2: Disapply initial condition D (financial viability and sustainability)

What we are proposing

36. Condition D requires a provider to be financially viable and financially sustainable and have the necessary financial resources to provide and fully deliver the higher education courses it has advertised and as it has contracted to deliver. It must also have the necessary financial resources to continue to comply with all conditions of its registration. This condition is designed to protect students and public funds by ensuring that providers can continue to operate effectively.
37. We propose to disapply condition D as set out in table 3.

38. We propose that if a further education college applies for DAPs, ongoing condition D will be imposed. For further education colleges applying for registration and DAPs, initial condition D will be imposed.

Why we are proposing this

39. We are consulting on these changes to reduce regulatory duplication. We already adopt a different regulatory approach to monitoring the financial viability and sustainability of further education colleges. The current position is that further education colleges are not required to submit financial information to the OfS via the annual financial return (AFR) in the same way as other registered providers.³⁶ Instead, they submit their financial information to the DfE, and we can access this information through a data-sharing agreement. It is also standard practice for us to review the DfE’s financial dashboards and receive updates accordingly.
40. The further education bodies insolvency regime provides a statutory framework for managing financial failure in colleges.³⁷ It includes provisions for education administration, where the special objective of the education administration is to avoid or minimise disruption to the studies of the existing students of the further education body as a whole and ensure that it becomes unnecessary for the body to remain in education administration for that purpose. It also includes provisions for normal insolvency procedures.
41. Given this framework, we think that the regulation of financial viability and sustainability could be further simplified for further education colleges without DAPs through disapplying initial and ongoing condition D. In our view, this would result in a more streamlined and coherent regulatory system. We think this would particularly benefit a college that may require support or intervention, as it would engage with a single regulator rather than two.
42. For further education colleges with DAPs, the situation is different. As noted above, these providers award degrees directly and operate with greater autonomy. As such it is appropriate that we maintain greater oversight of their financial viability and sustainability, and retain the ability to intervene directly where appropriate. This is achieved through setting and enforcing our own requirements through initial and ongoing condition D.

Proposal 3: Disapply initial conditions E7 (governing documents and business plans), E8 (fraud and inappropriate use of public funds) and E9 (individuals), and ongoing conditions E1 (public interest governance) and E2 (management and governance)

What we are proposing

43. We propose to disapply conditions E7, E8, E9, E1 and E2 as set out in table 4.

44. We propose that if a further education college applies for DAPs, ongoing conditions E1 and E2 will be imposed. For further education colleges applying for registration and DAPs, initial conditions E7, E8 and E9 will be imposed.
45. Under section 13(b) of HERA, the OfS can set conditions of registration that include a public interest governance condition.³⁸ Section 14 of HERA explains that this means a provider’s governing documents should reflect certain principles.³⁹ These principles are designed to help ensure that providers operate in ways that serve the public interest. You can find these principles in Annex B of our regulatory framework.⁴⁰
46. Some public interest governance principles apply to all registered providers, while others are specific to those with DAPs or those in receipt of funding from the OfS or UK Research and Innovation (UKRI).⁴¹ These principles are built into two key conditions: E1 (public interest governance) and E2 (management and governance).
47. We also test management and governance when a provider applies for OfS registration. This is done through assessing compliance with initial conditions E7, E8 and E9, which require a provider to:
    1. have a set of governing documents which will enable the effective governance of the provider in practice, and a business plan which meets relevant requirements (condition E7).
    2. have in place comprehensive arrangements for the purposes of detecting, preventing and stopping fraud and the inappropriate use of public funds. The provider must also have a satisfactory track record in relation to receiving and/or accessing public funds (condition E8).
    3. have key individuals who have sufficient knowledge and expertise to facilitate the provider to comply with the ongoing conditions of registration applicable to it, deliver, in practice, the provider’s business plan, and deliver, in practice, the provider’s fraud and public money arrangements. The condition also requires relevant individuals to be fit and proper (condition E9). The provider must have relevant individuals who are fit and proper for the purposes of ensuring that:
       • the provider is suitable to access and receive public funds
       • public trust and confidence in the higher education sector is maintained; and
       • the provider is suitable to protect the interests of students.
48. The effect of proposal 3 is that we would not set or enforce our own rules around public interest governance for these providers.

Why we are proposing this

49. We are proposing to disapply these conditions because the DfE already regulates these providers through a robust framework. This includes statutory intervention powers (as set out in paragraphs 14-17), governance requirements under the Further and Higher Education Act 1992, and expectations set out in the Managing public money framework.⁴² Together these mechanisms are designed to ensure that further education colleges act in the public interest. The DfE provides oversight of and support to further education colleges and can step in when serious concerns arise – particularly around management and governance. The Further and Higher Education Act 1992 also sets out clear governance responsibilities, including the requirement for colleges to have a governing body and senior leadership roles defined in the instrument and articles of government.⁴³
50. Given this level of oversight, our initial view is that it is proportionate to disapply our own conditions (initial conditions E7, E8 and E9 and ongoing conditions E1 and E2) for further education colleges without DAPs. We consider that this will generally avoid regulatory duplication. We acknowledge that not all our requirements are duplicated, such as the governance principles on freedom of speech and academic freedom. See Annex C for our assessment of how we had regard to this in formulating the proposals.
51. For further education colleges with DAPs, the situation is different. As noted above, these providers award degrees directly and operate with greater autonomy. Because of this it is important that we retain our own oversight of their governance and management. Applying and enforcing initial conditions E7, E8 and E9 and ongoing E1 and E2 will ensure that we can intervene directly where appropriate.

Alternatives considered

52. In developing these proposals, we considered retaining the current approach to regulating financial viability and sustainability, and management and governance, for further education colleges without DAPs. This would have meant continuing to impose the relevant initial and ongoing conditions of registration under our regulatory framework, alongside the existing oversight provided by the DfE. However, we concluded that this option would not achieve the aim of the proposal to reduce regulatory duplication and burden while protecting the interests of students and taxpayers.
53. We discounted this option on the basis that it would not streamline regulation for further education colleges or support more efficient use of resources - either for providers or for the OfS. Instead, the proposals set out in this consultation aim to reduce duplication by disapplying certain conditions of registration for further education colleges without DAPs, while retaining the ability for us to intervene where necessary through a specific condition of registration for individual providers, based on risk. We consider this approach to be consistent with our general duties, including the need to have regard to the principles of proportionality and efficiency, and to support our commitment to minimising unnecessary regulatory burden while maintaining appropriate safeguards for students and public funding.
54. We also considered reducing regulatory oversight further than the proposals set out in this document, for example disapplying additional conditions of registration. We discounted this option as we consider there is no comparable duplication with the DfE’s regulation beyond the areas in scope of this consultation.

Notes

34. See Regulatory framework for higher education in England, paragraphs 323 to 331.
35. See Section 52B of the Further and Higher Education Act 1992 as amended.
36. See Regulatory advice 14: Guidance for providers for the Annual Financial Return.
37. See Further education bodies: insolvency guidance - GOV.UK.
38. See Higher Education and Research Act 2017 - Section 13.
39. See Higher Education and Research Act 2017 - Section 14.
40. See Annex B: Public interest governance principles.
41. See UKRI – UK Research and Innovation.
42. See Further and Higher Education Act 1992; Managing public money - GOV.UK.
43. Established under the Further and Higher Education Act 1992.