Concerns raised over OfS ‘pause’ in processing higher education provider applications

A recent House of Lords Grand Committee debate has put the OfS’ proposed 2025-2030 strategy and its decision to pause certain applications under scrutiny. Several concerns were raised during the debate, including whether the OfS has the legal authority to depart from its regulatory obligations for registering new providers, the possible worsening of the backlog of registrations, the negative impact on some education providers’ financial situations, and the potential hindrance on investment in the higher education sector in England.

Despite the concerns raised, the response from the government speaker showed support for the OfS’ decision and its ongoing work on managing the “critical” risk of financial sustainability in the sector and protecting the interests of students. However, she also emphasised that the regulation of the higher education sector has to “be proportionate and not stifle growth”.

The OfS’ decision to temporarily suspend work on applications for registering new institutions, granting degree-awarding powers and awarding university title was announced in December 2024. According to the OfS, this pause aims to enable it to refocus its existing resources to “work more closely with institutions under significant financial pressure in order to protect the interests of students”. OfS financial analysis in November indicated a rise in the number of higher education providers at increasing financial risk. It said the number of providers facing significant challenges in the next two or three years is increasing. The pause is expected to last until August 2025, with regular reviews every three months to assess the situation.

This decision followed a House of Lords report by Sir David Behan on the OfS, in which he recommended that the regulator should focus on the key priorities of quality, financial sustainability, acting in the student interest and protecting public money. These recommendations have laid the groundwork for OfS’s proposed new strategy for the next five years, which is open for consultation until 20 February. The proposed strategy sets out three main priorities for the OfS, which are quality, wider student interest and sector resilience.

During the latest debate, several questions were raised about the impact the pause on applications may cause for certain institutions and how the OfS would react in these situations. One example may be when a university or higher education provider which is in financial difficulty seeks a rescue package that includes the reallocation of degree-awarding powers, or a requirement for a new entity to be registered, for example as a result of a merger. 

In response, the government speaker asked for the Lords to come forward with examples if the OfS was not processing well advanced applications as it had agreed to do, and reassured the committee that the OfS will  continue to work with partners as the pause is ongoing and review the situation every three months until the pause is lifted in August, or earlier if possible.

Higher education expert Gayle Ditchburn of Pinsent Masons said: “The debate in the Lords echoed the frustrations with the OfS from within the sector, but it is evident that the government remains entirely supportive of the regulator and how it is managing its regulatory functions. While well advanced applications are expected to be processed, this does not recognise that many of those applications had not been well advanced prior to the implementation of the pause due to the OfS’s own delays.”

She explained that preparing for these applications takes considerable time and cost, using resources that applicants in the sector don’t have much of in the current financial climate. The impact of this ‘pause’ is significant to applicants and those who were in the process of preparing applications.

“The benefits to higher education providers of being on the OfS register mean that they can recruit international students, access grant funding and student loan funding. The benefits of having degree awarding powers mean that providers don’t have to enter into validation agreements with other higher education providers that do have the powers to validate their programmes – which also comes at a cost in paying validation fees. Applicants and prospective applicants will have built these financial benefits into business plans and forecasts, which they are now having to revise,” she said.

The debate also touched another important plan by the OfS, which seeks to strengthen its oversight of subcontracted delivery of higher education, also known as franchising. The regulator proposes that franchise delivery partners with 300 or more students must be registered with the OfS for courses they deliver to be designated for student finance by the Student Loans Company. Its consultation on these proposals closes on 4 April.

This proposal has caused concerns among the Lords about the additional burden of managing applications for registration by the OfS, potentially worsening the backlog once applications are reopened. The government speaker responded by saying that the largest 10 unregistered providers account for 58% of all franchised students at unregistered providers, therefore, the new registration requirements should work “quickly and effectively with the largest suppliers”. In addition, she clarified that further education colleagues are exempt from the new proposed requirements for franchising.

Higher education expert Rebecca McCall of Pinsent Masons said: “The ending of the pause will inevitably lead to delays in processing applications as the OfS manages the backlog and new applications that providers will be making ready to submit as soon as the pause is lifted. Added to this will be the introduction of the potential for a considerable number of franchised providers having to register with the OfS.”

According to McCall, appointing a new designated quality body (DQB) may be a possible solution to resolve the expected delay and the shortage of resources at the OfS to manage the backlog of applications while delivering its new strategy.

“It is unlikely that the sector will be anywhere near ‘fixing’ the financial sustainability problem before August this year when the ‘pause’ is due to be lifted, which calls into question how the OfS will be able to manage its own resources to deliver its obligations as a regulator into the future, whilst at the same time implementing its new strategy. Is it time to reopen the question of appointing a new DQB, following the controversial ending of the QAA’s tenure, to resource and manage the quality assessment processes for applicants on behalf of the OfS?” she added.

The Quality Assurance Agency for Higher Education (QAA) was the previous DQB appointed by the Secretary of State to provide statutory assurance functions like assessments of degree awarding powers for higher education institutions in England on behalf of the Office for Students (OfS). Its appointment ended on 31 March 2023.