Source · Select Committees · Public Accounts Committee
Recommendation 6
6
The Department failed to adequately assess the current and future financial impacts on providers of...
Conclusion
The Department failed to adequately assess the current and future financial impacts on providers of disruption to A-level assessments. The use of locally assessed grades in place of A-level exams during the COVID-19 pandemic led to substantial grade inflation in 2020 and 2021. This meant that more students were able to take up places at high-tariff providers, but left many medium- and low-tariff and specialist providers undersubscribed, who have therefore lost expected fee income. The Department had anticipated the likely impact of locally assessed grades on providers that would be oversubscribed and that could require additional funding for high-cost courses. But it had not considered the impact on those providers that would become undersubscribed. Being undersubscribed causes financial pressure on providers for an extended period, as most courses last at least three years. At the same time, oversubscribed providers risk not being able to maintain the quality of provision they have promised their students as they may not have sufficient teaching facilities or student accommodation. Recommendation: Learning from the disruption to the higher education market during the COVID-19 pandemic, the Department and the OfS should model and review the financial impacts on providers of changes to the number and profile of domestic students over the short, medium and longer terms. 8 Financial sustainability of the higher education sector in England 1 Oversight of financial sustainability in the higher education sector
Government Response
Not Addressed
HM Government
Not Addressed
6.1 The government agrees with the Committee’s recommendation. Target implementation date: September 2022 6.2 The department has undertaken careful monitoring of applications and providers’ offer-making in the 2022 admissions cycle. Ahead of the 2022 cycle, the department engaged extensively with key higher education stakeholders, including undertaking scenario planning around the interaction between A-level grades and higher education capacity. Planning early in the cycle and building resilience into offer-making strategies is a vital part of contingency planning for higher education providers. The department has encouraged providers to be thoughtful when setting offer requirements and to consider any additional measures which would allow them to plan as effectively as possible, communicating openly with students in the process. 6.3 The impact of changes in student recruitment on the finances of higher education providers is a key feature of the OfS’s regular monitoring of provider financial sustainability. It closely monitors the data from the University and Colleges Admissions Service (UCAS), along with other information, through the recruitment cycle. It models the potential implications on income to guide its understanding of the capacity of providers to manage such change in the short term. 6.4 The OfS, the department and other interested government departments meet regularly to discuss risk factors and trends related to the medium- and long-term financial sustainability of the higher education sector. Additional data sharing, analysis and scenario planning is undertaken as appropriate.