Higher Education: Stability, Restructuring and Student Protection

In July we saw a number of significant regulatory and government interventions for the English higher education sector.

On 3 July, the Office for Students (OfS) published Regulatory Notice 5 which brought in a new condition of registration for English higher education providers to help secure stability and integrity across the sector following concerns about certain institutional activities. This is registration condition Z3 which is designed to be time-limited, applying from 3 July 2020 - 30 September 2021, or earlier following public consultation. The scope of the condition was narrowed following public consultation. It applies to "Specified Activities...and prohibits a provider from engaging in any form of conduct which, in the reasonable opinion of the OfS, could be expected to have a material negative effect on the Stability and/or Integrity of the English Higher Education sector." The Specified Activities are: a) unconditional offers b) advertising or marketing statements about other providers. The concept of "Stability and/or Integrity" includes: a) financial and economic matters b) matters that may affect or distort decision-making by prospective or current students in their choice of higher education provider or course, and c) matters that may affect public trust and confidence in the English higher education sector. The Regulatory Notice should be read carefully to understand the precise scope and circumstances of the conduct which it seeks to regulate.

On 16 July, the Department for Education published its Higher Education Restructuring Regime (HERR). This followed an earlier package of measures introduced on 4 May, including financial support, aimed at helping to stabilise the sector following the impact of Covid-19. This enables institutions, as a last resort, to seek Government support by way of a repayable loan. However, any institution seeking such support would need to allow an Independent Business Review to be undertaken leading to a recommendation to the Secretary of State by an independently chaired HERR Board. Each institution would be considered on a case-by-case basis and there would need to be a "sound economic basis for government intervention". The Government's policy objectives in providing assistance would need to be met: a) protecting the welfare of current students b) preserving the sector's internationally outstanding science and research base c) supporting the role of higher education in regional and local economies through the provision of high quality courses aligned with economic and societal need. Any loan would come with conditions and any institution seeking support would need to demonstrate its commitment to freedom of speech.

The following day, 17 July, the OfS published a further consultation on a new condition of registration (C4) for Student Protection Directions. This would give OfS a new power to issue "directions" to English higher education providers where it "reasonably considers that there is a material risk the provider will exit the English higher education sector." The directions could require a) a provider to prepare a "Market Exit Plan" (MEP) b) other Student Protection Measures (SPMs) and c) a provider to do anything incidental for a MEP and/or SPMs. The OfS in its consultation document on this new permanent condition of registration states that its current powers do not allow it to act quickly enough. The OfS consultation is open until 11 September 2020.

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