Recommendation 2

To remain financially viable, some providers may be incentivised to increase student numbers through franchising, which creates risks for students and taxpayers. In 2022, the Committee highlighted the risk of providers being financially vulnerable. OfS analysis, published in May 2023, suggests some rely on increases in student numbers to remain viable. Some providers have used franchising to increase their student numbers, depending on this income. A small number of franchised providers have expanded very rapidly. The C&AG’s report explained that lead providers could be taking between 12.5% and 30% of tuition fees paid in respect of students at their franchised providers. OfS cannot access these contracts, but expressed shock at the figures, and voiced concerns about the impact this might have on teaching quality. Some providers use recruitment agents to increase student numbers. Because these recruitment practices are unregulated, agents may not make it clear what students get for their money, and there are incentives to recruit student numbers rather than ensuring students enrol on the most suitable courses. Universities UK has developed a quality framework, that it has now committed to review and update as needed. Recommendation 2a) Within the next 12 months, OfS should publish a more systematic overview for the higher education sector sharing its insights on where providers have adapted their delivery models, and the emerging risks providers then need to manage. b) OfS should also set out what proportion of tuition fees lead providers could be seen as reasonably retaining in relation to the student services they remain responsible for, and consider these financial arrangements in the scope of any investigations it carries out into the quality of franchised provision.