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Dear Vice-Chancellor or Principal

Higher education regulatory reforms 

1. The Minister for Universities and Science has today informed Parliament of the next steps in the Government’s programme of higher education funding and regulatory reform. A copy of his statement is at www.hefce.ac.uk/news/newsarchive/2013/name,82681,en.html.

2. On 2 July the Minister wrote to HEFCE’s chair, Tim Melville-Ross, setting out these steps and HEFCE’s role in taking them forward. The HEFCE Board considered the letter at its 4 July meeting. A copy of the letter is at Annex A. I am writing to draw your attention to it and to the Minister’s statement and to outline HEFCE’s broad approach, including the timetable for consultation and implementation.

3. The letter reaffirms the primary importance of institutional autonomy and academic freedom, principles which are enshrined in the Further and Higher Education Act 1992 and which have served higher education in England well. HEFCE’s statutory independence – its arm’s-length relationship with Government – is another key element, as is our tradition of working in partnership with the sector. We will continue to maintain intelligent, open and constructive relationships with universities, colleges, alternative providers and other partners in taking these changes forward.

4. On behalf of the Regulatory Partnership Group (RPG), HEFCE is publishing a summary of the current and proposed regulatory and funding arrangements, ‘Operating framework for higher education in England’1. A copy is available at www.hefce.ac.uk/about/intro/wip/rpg/of/.

HEFCE oversight and coordination role

5. The Government has asked HEFCE to take on a regulatory oversight and coordination role. We will do this in partnership with the RPG and the wider sector, working to safeguard the interests of students, ensure proper accountability for the use of public funds, and protect and enhance the reputation of higher education in England. We will be even-handed and proportionate, and we will keep the administrative burden on institutions to a minimum.

6. The Government has asked HEFCE and the RPG to implement the reforms within existing legislation, while recognising that a new legislative framework will be required in the longer term. 

Work to date

7. HEFCE has been leading a number of interrelated strands of work to progress the new funding and regulatory arrangements.

  1. We are beginning work on a register of higher education provision. The register will provide a public record of clear, reliable information on each higher education provider that is part of the regulated sector.
  2. We will be consulting in autumn 2013 on proposed revisions to HEFCE’s Financial Memorandum with higher education institutions2. These revisions are limited in scope and significance: the main consultation issue will concern what requirements are necessary to manage the potential risks around financial commitments taken on by higher education institutions in the new financial and banking environments.
  3. We have been given responsibility for operating the new system of specific course designation for alternative providers, and are supporting these providers in the transition to the new system.
  4. We will continue to implement reforms to student number controls, including extending them to alternative providers from 2014-15.

Designation of HEFCE-funded universities and colleges for student support purposes

8. The Government intends to delegate to HEFCE responsibility for the process of approving designation of HEFCE-funded universities and colleges, and for providing assurance that the agreed terms and conditions are met. Eligible courses at these institutions are and will continue to be designated automatically, allowing students on them to access student support. Institutions will not be required to undergo a separate designation process. This means that in practice there will be little change for existing HEFCE-funded institutions, and no additional administrative burden.

9. Under the present system, HEFCE-funded institutions receive automatic designation of their eligible courses on the basis that there is sufficient regulation and oversight through the HEFCE Financial Memorandum and grant arrangements. However, as the balance of funding shifts from grants to tuition fees, the effectiveness of regulation through the HEFCE Financial Memorandum diminishes for those institutions with limited HEFCE funding. As a result, the Government has identified a potential risk to the proper stewardship of student support funding. Placing conditions on automatic designation for student support is seen as an important step towards mitigating this risk, and maintaining safeguards for students.

10. The scope of the Further and Higher Education Act 1992, which gives HEFCE its existing powers, does not extend to the student finance system. The Teaching and Higher Education Act 1998 sets out the legal basis for designated courses and, as a result, the terms and conditions of course designation will need to be set out separately from those in the HEFCE Financial Memorandum3. However, the Government has made clear its expectation that conditions of designation for HEFCE-funded providers will align with those in the current HEFCE Financial Memorandum.

11. The terms and conditions of this designation will also apply to further education colleges offering higher education. The Skills Funding Agency will continue to be the lead accountable organisation with oversight of the further education sector. HEFCE will ensure that the requirements for further education colleges align with their Funding Agreements with the Agency.

12. The principles of this designation, and its delegation to HEFCE, will be determined by Ministers. However, we intend to consult the sector on its detailed terms and conditions. We will do this in spring 2014, when the relevant changes to the student support regulations have been made and responsibility for designation has been formally delegated to HEFCE by the Secretary of State. We will take full account of the views of the sector, including responses to the Financial Memorandum consultation.

13. We will implement the terms and conditions of designation consistently and fairly, as we do with the Financial Memorandum. This means that we will be able to demonstrate to Parliament, the public and students that when, exceptionally, something goes wrong, there is a clear mechanism to put it right. In line with the Minister’s letter, we will be considering options for developing the Designation Resolution Process. In doing this, we will respect the autonomy of institutions, seeking only to intervene where necessary and ensuring that our involvement is proportionate to the risks.

14. These changes only affect HEFCE-funded institutions. Higher education providers that are not funded by HEFCE will still need to go through the specific course designation process. Details of this process can be found at www.hefce.ac.uk/whatwedo/reg/desig/.

Timetable

15. The table below sets out the current timetable for introducing the new arrangements.

Event/Change

Date

New system for specific course designation (alternative providers) starts

10 June 2013

Minister for Universities and Science writes to HEFCE and the Student Loans Company setting out the Government’s plans for the next phase of regulatory reform

2 July 2013

HEFCE Board considers Minister’s letter of 2 July 2013

4 July 2013

Ministerial statement on Government’s intention to introduce conditions for designation for HEFCE-funded universities and colleges
HEFCE circular letter to sector
Operating framework published

11 July 2013

HEFCE consults on new Financial Memorandum

September-December 2013

Student support regulations amended

By end January 2014

Secretary of State delegates process of designation of HEFCE-funded universities and colleges to HEFCE

Early February 2014

HEFCE Board consider responses to Financial Memorandum consultation

March 2014

HEFCE consults on terms and conditions for designation of HEFCE-funded universities and colleges

March-May 2014

HEFCE Board considers responses to designation consultation

July 2014

Operating framework document updated

By 1 August 2014

New Financial Memorandum and terms and conditions of designation for HEFCE-funded universities and colleges introduced

1 August 2014

HEFCE register of higher education provision published

By August 2014

16. HEFCE will continue to develop the regulatory framework through consultation and discussion with the sector and other partners. Our approach will uphold the principles of institutional autonomy and academic freedom, protect the student and public interest, encourage transparency, and promote innovation and dynamism.

Yours sincerely

Sir Alan Langlands

Chief Executive



Notes

1. The Regulatory Partnership Group was established in September 2011 by HEFCE and the Student Loans Company. Its purpose is to advise Government, HEFCE and other national agencies on policy, strategic and operational issues arising from the development of the new funding and regulatory arrangements for higher education. The Group is made up of the Chairs, Chief Executives and Deputy Chief Executives of HEFCE and the Student Loans Company, and the Chief Executives of the sector agencies that have a role in the regulatory framework: the Higher Education Statistics Agency, the Quality Assurance Agency for Higher Education, the Office of the Independent Adjudicator and the Office for Fair Access. The National Union of Students, Universities UK, GuildHE, UCAS and the Department of Business, Innovation and Skills sit as observers.

2. The consultation will reflect comments already made by Universities UK, GuildHE, the Committee of University Chairs, the National Union of Students, the Association of Heads of University Administrators, the British Universities Finance Directors’ Group, and other sector bodies and stakeholders with whom we have been discussing early ideas.

3. The Act is supplemented by the Education (Student Support) Regulations, which are updated each year as necessary.

Downloads

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Annex A: Letter to HEFCE from the Department of Business, Innovation and Skills

Download the Annex A: Letter to HEFCE from the Department of Business, Innovation and Skills as PDF (297 KB)

Date: 11 July 2013

Ref: Circular letter 20/2013

To: Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions
Heads of other higher education providers in England

Of interest to those
responsible for:

Governance, Finance and planning

Enquiries should be directed to:

HEFCE contacts for institutions