Briefing: Department for Education announces support package for higher education

With education predicted to be one of the worst-hit sectors as a result of the pandemic, the sector has eagerly awaited the government’s announcement on support measures. The package was launched on 4 May. Many in the sector will be disappointed at the lack of new money pledged – however, the government has proposed some concrete measures to try and assist. The Office for Students (“OfS”) is also going to consult on introducing a stringent new temporary condition of registration.  This comes against a darkening backdrop for institutions, with the University of Edinburgh today announcing that it is cutting back heavily on its spending, including furloughing all staff who cannot work from home.

The full package is available here, and the press release is available here.

The Department for Education’s package of support for higher education

The package includes a suite of task forces and working groups focusing on research sustainability and international recruitment. However, this is not a bailout as no new money is being provided. This speaks to wariness in the Treasury as to any excess spending in a time when every part of the economy is looking for assistance.

The package relies on an assumption that the September academic year will begin as normal
The package envisages that the academic year due to begin in September will start as normal (or close to it). However, it is at this stage too early to assess whether this is realistic, given some predictions that social distancing will have to continue into 2021. If this is the case, traditional lecture and class-based learning will not be viable and institutions need to plan ahead. Online learning is likely to be more effective in some disciplines than others, with subjects reliant on lab work facing the biggest challenges. If institutions cannot offer the experience that students expect, many – particularly overseas students - may seek to defer their places. This presents further issues, both in terms of cash flow and as institutions will not have the capacity to accept mass deferrals as this ties their hands for the following year. Whilst there has been a temporary loosening on student numbers (see below), this will have unpredictable and uneven results across different institutions. On the other hand, students considering deferring will have to consider a poor job market and limited capacity to travel overseas.

If online leaning is to and is substantially different from that which students expected when they received their offer, institutions must consider to what extent their legal obligations are being met – be they contractual or arising from consumer rights legislation . Institutions will need for example to consider if these alterations will amount to a change in course content as compared to what was advertised and take appropriate early steps to mitigate against any associated risks. For more information on these legal obligations see our legal alert of 8 April, available here.

The OfS is to consult on a new temporary condition of registration

The OfS is consulting on the integrity and stability of the English higher education sector. The consultation seeks responses on issues that have arisen, and have potential to arise, because of specific circumstances relating to Covid-19. The consultation paper is live and is available here.

The proposal which perhaps raises the most questions is the possibility of a new, time-limited ongoing condition of registration which would prohibit registered providers from engaging in any form of conduct which, in the opinion of OfS, could reasonably have a material negative impact on the stability and/or integrity of the English higher education sector. This proposal aims to restrict various types of competitive behaviour between providers at a time of uncertainty within the sector. This covers a very broad range of actions, including making too many unconditional or very low offers, offering gifts or discounts to attract students away from original choices, and making false or misleading statements. It would mean the OfS can intervene if providers take actions “that are harmful to the sector and students”, and potentially impose penalties that would “cancel out any financial benefit to providers of acting inappropriately.” This is stated to extend even to actions said to take advantage of OfS relaxing particular regulatory requirements (i.e. as a result of the pandemic), or even “bypassing, or seeking to bypass, the admissions processes of the University and Colleges Admissions Service (UCAS) where the provider would normally use UCAS processes.” The requirement that institutions must behave in a way that protects the interests of the sector as well as students represents a widening of the OfS’s remit, which is fundamentally to protect students. Commentators have noted that, while this enforcement power is being accrued to the OfS, its role is somewhat weaker during this crisis than some might expect – with many of the headline decisions, such as allocating additional student numbers and imposing financial penalties on providers that break controls, to be exercised by the Secretary of State.

Responses to the consultation need to be submitted by noon on 26 May 2020, with the OfS intending to make a decision on whether to implement the new condition in early June. Institutions may want to respond in order to try and obtain greater clarity as to what circumstances are likely to be considered as “harmful to the sector and students”. Institutions can respond via the following link: https://www.officeforstudents.org.uk/publications/consultation-on-the-integrity-and-stability-of-the-english-higher-education-sector/

The other headline proposals from the package include:

• A temporary loosening of number controls on domestic and EU students, with providers permitted to recruit full-time domestic and EU students at up to a temporary set level plus an additional 5% above their forecasts for the 2020/21 academic year. This extra capacity will help to Universities accommodate students deferring their places at the last minute. It is anticipated that this measure will have an even greater effect in relation to numbers of domestic students, as EU students are less likely to enrol this year, given ongoing uncertainty. Whether this will encourage students to divert their places to different institutions and how the OfS will expect them to respond to that remains to be seen. This control is likely to benefit stronger providers while potentially weakening the sector as a whole, especially as less prestigious institutions are likely to have smaller endowments and be in a less robust financial position more generally.
• The Student Loans Company is to bring forward £2.6bn of tuition fee payments in the 2020-21 academic year to providers. However, this is presumably only to be paid by students who have registered. A recent study by London Economics (available here) suggests that the sector is to take a £2.472bn hit in lost fees alone, based on an assumption that enrolment will fall by 24% next year, so the question will arise as to whether this will be enough (or if enrolment will fall even further). Whilst this measure will assist with cash flow in the immediate term, it will not solve a long term funding gap between the fees universities will have planned for, and what they are likely to receive.
• The government is to bring forward £100m of quality related (QR) research funding for providers in England into this academic year. However, this type of tied results funding, while helpful, is likely to be far more useful to Russell Group universities than across the board.
• Clearing will be enhanced by UCAS including Clearing Plus, a new tool matching students to institutions based on their achievements and course interests. However, given A Level results are being assigned by teachers this year, there are fears that students from disadvantaged backgrounds who receive poor A Levels will be discouraged from even applying through the clearing process. Further, students in this position are likely to be in need of support when they do start, and more likely to be discouraged by a remote learning option. There is a fear that these students will be lost to higher education altogether.  Universities will therefore need to factor that in when planning on-line teaching provision for September..
• The package clarifies that providers can use existing funding to boost their hardship funds for students in financial difficulty although no new money has been announced for supporting students.
• However, the package is clear that no new money is envisaged. The announcement emphasises that “The Government expects [that] access to the business support schemes, reprofiling of public funding and student number controls should be sufficient to help stabilise most providers’ finances, and that should certainly be the first port of calls for providers.” This is likely to be of some concern to institutions and students, and contrasts with the approach in Wales which makes clear that a future funding settlement will be needed.
• There is also mention of a higher education “restructuring regime” but it is not detailed in the package. It is yet clear what this may entail, but it is likely that it will mean the government attaching more obligations if the time comes to prop up or bail out individual institutions. This may also indicate that the government is planning against any kind of sector-wide bailout, and will focus on dealing with any issues provider by provider.

Other news: OfS has published briefing notes on student support

• The OfS is also publishing a set of briefing notes covering support for students. So far these have focused on student accommodation and student mental health. Institutions must continue to provide appropriate support to students. The OfS briefing note on student accommodation is available here, and the note on mental health is available here.