The U.K.’s student watchdog has been accused of being asleep at the wheel in the face of the looming higher education financial crisis.
The Office for Students, along with Government, has not paid enough attention to the challenge of a squeeze on income at a time of rising costs for universities, according to a parliamentary committee.
And the OfS is also accused of failing to meet the needs of students and earn the trust of universities.
But the watchdog insists it is aware of the “significant risks” facing the sector and maintains that it would work to protect students if an institution fell into financial difficulties.
The cap on tuition fees for domestic students – universities’ main source of income – plus the loss of EU research funding, has left many universities with “an unhealthy dependence” on fees from international students and postgraduates, according to a report from the House of Lords Industry and Regulators Committee, published today.
But an increasingly competitive global environment means student numbers could suddenly fluctuate, threatening to shatter the “worrying complacency” that international fee income can be relied on in the long-term, the committee warns.
“At a time when the higher education sector faces a looming crisis caused by financial instability, increased costs, industrial action, and reduced EU research funding, it is vital that the sector’s regulator is fit for purpose,” said Lord Hollick, chair of the committee.
“However, it was evident throughout our inquiry that the OfS is failing to deliver and does not command the trust or respect of either providers, or students, the very people whose interests it is supposed to defend.”
He said it was worrying that the OfS – the independent regulator of higher education in England – seemed to be oblivious to the danger.
“We were surprised by the regulator’s view that the sector’s finances are in good shape, which is not an assessment that we or most of our witnesses share,” he said.
Lord Wharton, chair of the OfS, said the watchdog was aware of the level of financial uncertainty facing the sector, but stood by its claim that many universities were financially stable.
“Our detailed analysis of the data universities provide to us suggests that many are in good financial shape,” he said.
“We are also alive to significant risks, including the impact of a fixed undergraduate tuition fee, cost pressures and an overreliance by some on international students.”
The OfS would continue to identify risks and protect the interests of students, he added.
The Department for Education did not respond to a request for comment.
The committee also criticized the watchdog’s approach to value for money as too narrowly focused on employment outcomes, ignoring the broader value of higher education.
It also questioned whether the OfS itself provided value for money. The OfS increased its registration fee by up to 12%, at the same time as adding to the burdens it places on universities.
And the committee reported a suspicion that the watchdog’s use of “the student interest” to justify intervention is used as a smokescreen for a political agenda.
The OfS appointed its first director of free speech earlier this year, following Government attacks on so-called ‘cancel culture’ in higher education.
The OfS – which has just one student on its board – also created the impression that it wanted to micro-manage universities, including imposing spelling and grammar requirements, the committee said.
“There have been too many examples of the OfS acting like an instrument of the Government’s policy agenda rather than an independent regulator,” the report concluded.
Among the committee’s recommendations are that the watchdog should hold more regular discussions with universities about their financial health, pay more attention to university autonomy and adopt a less combative approach to universities.
The OfS should also ensure it has at least two student representatives on its board and encourage more student involvement, the committee said.
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