https://competitionandmarkets.blog.gov.uk/2016/12/06/competition-in-higher-education-is-in-the-interests-of-students/

Competition in higher education is in the interests of students

Andrea Coscelli

Students have always invested plenty of effort into getting the best they can out of their higher education, now they have to supplement that with money. A lot of money.

When deciding what to study and where, prospective students now also have to consider the likelihood that once their university years are complete, they will leave many thousands of pounds in debt. Therefore it is important that students are provided with the very best information to help them choose, that universities respond to the needs of students, and the sector is regulated in the interests of students.

What is the Higher Education and Research Bill?

The Higher Education and Research Bill (HERB), which receives its Second Reading in the House of Lords on 6 December,  seeks to make improvements in all 3 of these areas and the Competition and Markets Authority (CMA) believes that the measures in the Bill, many of which we recommended in our 2015 policy report, may help to bring about greater competition and choice and, therefore, improve the quality of higher education  in the interests of students.

One of the main elements of the HERB is the creation of a regulatory structure intended to provide a single set of regulatory requirements and sanctions which will be common to universities. Under the current system some institutions are subject to greater regulation and more stringent sanctions than others just because of who they are or how long they have been around. The HERB will mean that oversight is based on risks facing students, not institutional type. This is one of several recommendations that we made in 2015.

Regulation applied to all providers and enforced on the basis of risk should ensure that all students are adequately protected. It should also mean that burdensome conditions are not unfairly applied to only some (usually newer) providers, which may hinder competition and ultimately harm students’ interests.  And it should allow institutions to compete above a regulatory baseline, finding creative ways to attract students onto their courses.

Furthermore, setting this regulation no higher than is necessary (another of our 2015 recommendations) - to avoid imposing unnecessary barriers and therefore speed up entry into the market for new institutions - may also encourage new providers into the market which can provide courses in different disciplines and in different ways, reflecting the changing preferences of students and demands of the labour market.

The recent announcement that the Dyson Institute of Technology has entered into a partnership with Warwick University to offer engineering degree apprenticeships is a welcome example of this principle in action.

I attended 2 higher education institutions, Bocconi University in Italy and Stanford University in the United States. Both were once very much the poor relations of older, more august universities. But they looked for new ways of working and attracted high-quality staff who, in turn, attracted more students. Now both are highly respected and prestigious while some of their rivals, hampered by a lack of innovation for decades, languish at the bottom of league tables.

If providers are unable to provide courses that students want in a financially sustainable way it is in the long-term interests of students and the taxpayer that they close down. This is of course compatible with government subsidies of certain courses, such as STEM (science, technology, engineering and mathematics), that are deemed necessary for economic growth. The proposals to introduce a student protection requirement on institutions mean that universities must have plans in place to ensure students can complete their studies if they are forced to close. We recommended this in 2015 as it will protect students from circumstances outside of their control.  And if government knows that students’ interests are protected, it will not be tempted to prop up failing institutions.

Our work in the UK higher education sector

In addition to policy recommendations, the CMA has undertaken significant work in the UK higher education undergraduate sector to raise awareness of and improve compliance with consumer protection law.  In March 2015, we published compliance advice for providers as well as materials for students to raise awareness of their rights and help drive compliance. Our work covers the need to provide up-front, accurate and comprehensive information to students, for terms and conditions that apply to students to be fair, and for complaint handling processes to be accessible and fair to students.

A review of the sector published in July this year found significantly increased awareness of and compliance with consumer law, as well as some examples of potential non-compliance which was dealt with through enforcement action.

As the UK’s competition authority, we have the power to recommend changes to any legislation government brings before Parliament where it affects competition in markets.  We have exercised that power in the case of the Higher Education and Research Bill (see my letter to Jo Johnson) and it’s a good example of our being a critical friend.  We support the aims of the Bill, and have highlighted only some issues that we think the government needs to keep in mind.  We think it’s important that students can access, assess, and act on clear, accurate information about providers and products, that the signals the government sends about the quality of institutions and courses through the Teaching Excellence Framework are accurate, and that barriers to providers innovating, for example by providing courses over a shorter time period than has been traditional, are removed.

When competition works well in markets, consumers benefit. The government’s reforms should encourage competition in the interests of students, ensuring that they get good value for money whatever their chosen field of study.

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