University Alliance has responded to the Department for Education’s consultation on the future funding model for the Office for Students (OfS). While supporting the principle of an independent and appropriately resourced regulator, we argue that the overall cost and burden of regulation on higher education providers is already too high and should not increase further at a time when universities are making significant cost reductions and facing acute financial pressures.
Our response stresses that any reforms to the OfS fee charging model should focus on distributing costs more fairly across the sector, rather than increasing the total level of fee income raised from providers.
- Regulation should be proportionate and risk-based
We believe that the current annual registration fee model relies too heavily on provider size as a proxy for regulatory burden.
Instead, we calls for a fee model that better reflects factors such as regulatory risk, organisational complexity, compliance history and the level of regulatory intervention required.
Providers with strong records of governance, compliance and student outcomes should not bear a disproportionate share of the costs associated with regulatory activity elsewhere in the sector, the response argues.
- Concerns over rising regulatory costs
Our response highlights concerns about the growth in regulatory costs at a time when institutions across the country are making difficult financial decisions. Rising fees must be accompanied by clear evidence that they reflect genuine regulatory costs and deliver value for money for students and providers.
- Support for transparency and safeguards
University Alliance supports efforts to improve transparency in how regulatory activities are funded and accepts the principle that applicants should contribute towards certain costs, including applications to join the OfS Register.
However, significant activity-based charges could create barriers to innovation, new market entrants and institutional development if they are not carefully designed.
The response recommends that any move towards cost recovery should include:
- clear and transparent methodologies;
- safeguards against excessive annual increases;
- consultation on future charging changes;
- clearly defined limits on chargeable activities; and
- regular reviews of the impact on innovation and competition.
- Protecting collaboration and sector transformation
Our submission also highlights concerns that some proposed fees could inadvertently discourage mergers, restructuring and collaboration between institutions.
We argue that providers pursuing structural change in support of financial sustainability or government priorities should not face significant additional regulatory charges.
We recommend exemptions or reduced fees for mergers and other forms of strategic consolidation that strengthen the resilience of the higher education sector.
- Delivering value for students
Confidence in the OfS funding model will depend not simply on how costs are distributed, but on whether those costs are justified, controlled and clearly linked to positive outcomes for students.
The Department for Education should consider whether the overall cost of regulation remains proportionate and to ensure that future reforms strike the right balance between fairness, efficiency and support for a thriving higher education sector.
Commenting on the submission, Susanna Kalitowski, Director of Policy at University Alliance, said:
“Universities recognise the importance of effective regulation and the need for the Office for Students to be appropriately funded. However, at a time when institutions are making difficult decisions to remain financially sustainable, it is essential that regulatory costs are proportionate, transparent and aligned with risk.
“The focus of this review should be on creating a fairer charging model and ensuring that providers and students receive clear value from the resources being invested in regulation. Future reforms must support innovation, collaboration and growth, rather than creating new barriers at a time when the sector is under significant pressure.”
