From: John Simms Departmental Assembly Liaison Officer Department for the Economy Date: 13 October 2016 To: Peter Hall Committee Clerk Assembly Committee for the Economy Briefing Paper for the Assembly Committee for the Economy - The Higher Education and Research Bill Introduction 1. The Higher Education and Research Bill was introduced into Westminster on 19 May 2016 and received its second reading on 19 July 2016. It is now at the Committee Stage, with the Report Stage expected after 13 October 2016. 2. The Bill will underpin a number of changes to the operation of the higher education (HE) system in England, which are summarised in the body of this paper. The Bill, as it was introduced in May, has no direct impact upon the HE system in Northern Ireland. However, there are three areas of the Bill where amendments introduced during the Committee Stage will have an impact and will consequently require a Legislative Consent Motion (LCM) to be passed by the Northern Ireland Assembly. They are in relation to: joint working; the facilitation of applications by eligible NI institutions to assessment under the Teaching Excellence Framework (TEF); and powers to fund research in the arts and humanities. 3. In summary, the joint working arrangements are required to replicate those already in place between the HE funding councils for England, Scotland and Wales, as two new bodies are being established in England to take on the powers of the current HE Funding Council for England (HEFCE). The Bill will also make provision for the current powers which HEFCE has to pass to the new English bodies in respect of providing advice to the Department for the Economy (DfE) and the Department of Agriculture, the Environment and Rural Affairs (DAERA) in relation to their higher education functions, and to introduce a joint working arrangement with Northern Ireland at the same time that replicates the arrangements with Scottish and Welsh funding councils. This effectively clarifies in law how the system currently operates, and the Department does not believe this is contentious. 4. The second set of clauses relate to the Teaching Excellence Framework (TEF) and reflect the desire of HE institutions across the UK to take part in the assessment exercise under the TEF in order to protect their reputations, in the event that TEF results will feature in relation to media league tables or as information for prospective students. These clauses are enabling, and provide a safeguard in that an institution will only be able to take part with the express approval of the Minister for the Economy. 5. The final amendment is an entirely technical change to extend the clarification of powers to make a grant or loan for research in the arts and humanities to Northern Ireland. 6. Government amendments that introduce these powers have now been introduced during the Committee Stage of the Bill, which began on 6 September 2016. Development of the Bill took place largely over the summer months and this is the first opportunity that the Department has had to provide briefing to the Committee. 7. This paper sets out a summary of the Bill as a whole, and notes any potential impact on Northern Ireland, before discussing the clauses that will require an LCM to be passed by the Assembly. A copy of the Bill as introduced and the proposed amendments are attached to this briefing. Summary of the Bill 8. The policy intentions underpinned by the HE and Research Bill fall under three broad headings: reforms to the operation of the HE market in England; promotion of transparency and choice, including the introduction of the TEF; and structural reforms to the organisation of how the sector is regulated. 9. The White Paper, Success as a Knowledge Economy, sets out the policy rationale, which is summarised below. Reforms to the English HE Market 10. The stated aim of this part of the White Paper is to establish a single entry point and single regulatory system for all providers in the English HE system, whether they are traditional universities, further education colleges, for-profit providers or any other providers of HE. 11. The single entry point would be overseen by a new Office for Students (OfS) (essentially a merger of non-research HEFCE functions and the Office for Fair Access – see below), and would for the first time bring together all recognised HE providers by means of a register, with three distinct kinds of status: a. Registered providers will be part of the English HE system, and will need to subscribe to the Office of the Independent Adjudicator (OIA), as well as ensure that their courses meet the academic standards set out in the Framework for HE Qualifications. Registered providers will not have access to student finance, public funding, or be able to apply for degree awarding powers or to use the ‘university’ title. b. Approved providers will have access to up to £6,000 student finance per student and will be able to set their fees at any level. Approved status requires a successful quality assessment, demonstration of financial sustainability, management and governance, meeting Consumer and Market Authority requirements on students’ rights and adherence to the OIA good practice framework. c. Approved (fee cap) providers will be subject to fee caps of £6,000 (basic level) and £9,000 (with an access and participation agreement in place), but their students will be able to access loans covering the full tuition fee, and the institutions would also be eligible to receive public funding if they agree to its associated terms and conditions. Approved (fee cap) providers will also be subject to more stringent financial sustainability checks over and above those required by other approved providers. 12. Many traditional providers will experience little change with this classification and will fit comfortably into the ‘Approved (fee cap)’ category with fees capped at £9,000. The notable change is that other, alternative providers will for the first time have access not just to student finance, but also to grant funding from public sources. 13. Running through this is a risk-based approach that will tailor regulation according to assessed risk; for example with newer institutions student number controls may be tighter, and monitoring for compliance with financial sustainability guidelines may be more frequent. 14. In terms of degree awarding power (DAP) applications and applications to use the ‘university’ title, the power to make decisions on these matters will in future be transferred from the Privy Council to the OfS. The most notable change here is that any approved provider that meets the financial sustainability, management and governance requirements will be able to receive DAPs on a probationary basis immediately, rather than needing to demonstrate a track record of delivering HE under a validation arrangement with another provider as is the case now. A three-year probation will establish the track record currently required, and that track record will be reduced from four to three years, which will also include the scrutiny process, meaning that full DAPs would be conferred immediately after the initial three years of approved status. The six-year review period for alternative providers with DAPs will be removed; instead, all new organisations that have received DAPs will be reviewed after an initial three-year period, and will hold DAPs indefinitely thereafter. 15. The minimum student numbers requirement for university title applications will be removed completely, having already been reduced in England to 1,000 FTE students in 2012 (it is currently 4,000 FTEs elsewhere in the UK). The requirement for at least 55% of all FTEs to be on HE courses will remain. In practice, this means that many small providers may apply for university title, which may significantly increase the number of universities over the next few years. 16. The White Paper acknowledges the reforms to the quality assessment system introduced by HEFCE, but notes that the current procurement-based approach introduces uncertainty, and instead proposes to empower the OfS to monitor quality across the whole sector, using a risk-based approach that integrates all aspects of registration, including financial and governance aspects as well as quality. OfS will have a duty to ensure that both quality and standards are appropriately assessed as part of this, and will consult the sector on whether there is a body that would design and operate a quality assessment system, which would itself be designated by the Secretary of State and monitored by the OfS. Northern Ireland Implications 17. The reforms to the conferment of DAPs and university title have no direct impact on Northern Ireland institutions. The broad approach to amending requirements to enter the market, deliver HE and award degrees is not one that is attractive for our environment, given that the size of the higher education and student market here is unlikely to support a market based on choice and specialisation in the way intended in England. Most student choices are made on the basis of course availability and institutional reputation, and the system which we have already offers clear enough choices on that basis. 18. The one area that does have an impact in Northern Ireland is quality assessment. Northern Ireland is closely tied to England for this function, with the current HEFCE system also applying here, and being delivered in part by HEFCE under its service level agreement with DfE. The proposed reform should be straightforward to manage, particularly under the proposed joint working powers. Quality and Choice: Introduction of the Teaching Excellence Framework 19. The second area of reform aims to improve the information available to students, to support better decision-making when choosing courses of study.