#HEWhitePaper The University of Castlebeck? Risk management in the new model.

You know what would be a superb model to follow for the regulation of university teaching quality? The regulation of care homes. A model of low intervention, arms length review and risk management has seen the care sector transform from a statist behemoth to an efficient, effective and competitive

OK, you guessed I’m bluffing on that one. I’m not sure for the very obvious evidence-based reason alluded to above that lowering regulatory engagement at the same time as raising costs to students (or consumers *shudder*) and specifically encouraging new entrants to the sector is such a great idea. But, it’s what on offer.

3.19 We propose a genuinely risk-based approach, focusing QAA effort where it will have most impact and giving students power to hold universities to account. All providers must continue to be part of a single assurance framework. But we would explore options in which the frequency – and perhaps need – for a full, scheduled institutional review will depend on an objective assessment of a basket of data, monitored continually but at arms length. For new providers, with an inevitably shorter track record of quality, a more regular and in-depth review is appropriate than has previously been applied. Conversely, for those providers with a sustained, demonstrable track record of high-quality provision, we would expect to see significantly less use of full institutional reviews.

So, assumption-based risk management then. Universities that have been around for ages are clearly very good, so no need to bother assessing them. Let’s just wait until some students complain – because it’s difficult to imagine what else would be in this basket of data. Number of meetings of the Departmental Quality Assurance Group? Some derivative of HESA data on completions?

3.20 We will ask HEFCE to consult on the criteria against which overall risk should be assessed and the frequency of review, with a view to achieving very substantial deregulatory change for institutions that can demonstrate low risk.

So the consultation already has a view, and deregulation it is! – but thought we’d ask you anyway. This government are rubbish at consultations aren’t they?

3.21 In our consultation on a new regulatory framework we will ask whether HEFCE, as part of its changing role in the new system, would need additional legislative powers to introduce or to operate a risk based quality assurance system.

So, the consultation definitely has a view. We will have a risk based quality assurance system, we just need to understand the legislation a bit better and rather than paying for legal advice, or asking HEFCE whether they need extra powers, we figured we’d crowd-source it.

Anyway, the other “risks” they need to keep an eye on are financial risks. If an institution went bust, surely that would be a decrease in the choice offered to students. Because this is all about student choice:

6.8b Currently, HEFCE can take action in the public interest where an institution is at risk of getting into financial difficulties. Providers that perform poorly under the new funding arrangements will primarily be those that fail to recruit enough students. Like its predecessors, the Government does not guarantee to underwrite universities and colleges. They are independent, and it is not Government’s role to protect an unviable institution.

Note the use of “unviable”. By this, BIS mean, unable to function in this insane market that has been created. Not “unviable” as in not providing a service of value to the nation. But hell, HEFCE will be keeping an eye on the data, so we’re unlikely to get to this stage:

6.21 In the short term, we will work with the Higher Education Statistics Agency (HESA) to reduce the size of data collections through the periodical review process.

Ah, OK. We’re not going to bother collecting the data we need to manage risk. Maybe just imagine it. That’s how it’s generally done in the “too big to fail” bits of the private sector I suppose. Except that whereas it is the government’s role to protect a greedy, careless bank it clearly isn’t the government’s role to protect, say, an arts college.

There’s one other interesting point around risk. A while back I wrote about some of the “conditions of grant” obligations that needed to be maintained under the new system. Stuff like paying for HESA and the QAA, those doing all the work that I’ve been talking about above. Well, they put a plaster on that:

6.28 For existing institutions, the main difference (within the new regulatory model) will be that many conditions previously attached to the core grant from HEFCE will, in future, attach to designation for student support. 

So, whereas once, you had to pay for the QAA, HESA and such to get any money at all from HEFCE, now you need to pay for them (I assume, nothing in writing) so your students can get fee loans. Of course, if your students don’t get fee loans, you wouldn’t need to meet these conditions – which means that the institutions liable to need most monitoring (the new, pile-em-high, private entrants) would be getting more services from the QAA, but paying less than an established university who gets their (reduced) HESA data glanced over twice a decade.  Kind of like taxing the rich to pay for the poor – that well known Tory principle.

This light-touch regulation would be bad policy even if a similar model hadn’t gone pear-shaped last month. The fact that the coalition is incapable of learning from a significant market failure does not fill me with confidence.

This post represents my personal opinions, and not those of my employers, projects, or programmes I am or have been responsible for. This post is available under a CC-BY license.

AAB or AARGH? A schoolboy funding error in the #HEWhitePaper

Okay, so much in the White Paper to process, probably the focus of many posts to come, but here's the glaring issue for me.

Paragraph 4.19:
“We propose to allow unrestrained recruitment of high achieving students, scoring the equivalent of AAB or above at A-Level. Core allocations [I assume this means allocated student numbers] for all institutions will be adjusted to remove these students. Institutions will then be free to recruit as many of these students as wish to come. Under the new funding arrangements, institutions may be eligible for HEFCE teaching grant for these students, for example those on high-cost courses, and the students will be able to access loans and grants. This should allow greater competition for places on the more selective courses and create the opportunity for more students to go to their first choice institution if that university wishes to take them. We estimate this will cover around 65,000 students in 2012/13.”

The key point here is if a University decides to recruit 50 extra AAB students to, say, a Pharmacy course this means HEFCE has to provide additional funding (you know, the one that used to be called “core funding”) for those 50 students. Don't believe that “may” nonsense, this is a requirement of the model, based around the assumption that lab and clinical sciences cost more to deliver and are of value to the nation. This grant availability could significantly affect the levels of funding that HEFCE would need to make available.
Imagine 50 extra medical students instead, and the exposure of HEFCE (and the NHS) rises further [EDIT: @amacgettigan and others have pointed me to footnote 49 which covers the limiting of medical student numbers] . Basically the extra AAB students only make sense in terms of government funding exposure for non-core funded subjects, not healthcare or lab stuff.

The “low cost” (under £7,500, so not “low cost” by any accepted meaning of the term) margin in para 4.21 at least has the opportunity for central targeting via “agreed critera” so would be able to avoid this issue. Many of us were expecting these two margins to be linked, thus driving down the prices of more popular courses. Apparently not. We've been over this issue before here and, though we applaud the reuse of policy that has actually been proven to work, sticking cost in here as a criteria only makes the whole thing dumber. 

Really, paragraph 4.19, and the suggestion that this margin could be expanded downwards, contains nothing to prevent the slow emergence of a system offering only lab and clinical sciences courses priced at £9,000 to 'A'-level holders, which in terms of revenue generation would be the clear winner for institutions. I'm not convinced that this is the shape the sector wants to be in.

This post represents my personal opinions, and not those of current or former employers, projects, or programmes I am or have been responsible for. This post is available under a CC-BY license.