Part III: Competition between exam boards
7 Market share and price
131. Rod Bristow, President of Pearson UK, told us
that the factors schools take into account when choosing an exam
board are "price, service and support [...] typically service
and support are what they care most aboutthe service and
support they get in teaching and learning".
Later in this chapter we look at the charges paid by schools to
exam boards and the competition between exam boards on price.
In subsequent chapters we consider how exam boards compete on
support, in particular training and textbooks, and finally, certain
aspects of service. By competing in these three areas, exam boards
seek to maximise their market share. In the first part of this
chapter, we therefore examine changes in market share and the
reasons for these.
Changes in market share
132. Figures supplied by Ofqual show that overall
market share for GCSE and A level has remained relatively stable
in recent years.
Glenys Stacey told us that "year on year, you do not see
a lot of movement at the highest level, but what is interesting
is the churn underneath. We suspect that the movement underneath
might be telling us something possibly about standards".
133. Analysis of the inter-board statistics published
by the Joint Council for Qualifications (JCQ) confirms the point
made to us by exam board chief executives and Ofqual that sharp
shifts in market share tend to occur at moments of syllabus revision.
We looked at the figures for a sample of large entry A level and
GCSE subjects between 2000 and 2010. Interestingly, these indicated
that WJEC had increased its market share in GCSE English (from
8% to 22%) and in GCSE Religious Studies short course (from 9%
to 18%) over a period without significant syllabus revision. Across
all GCSE syllabuses, Edexcel and WJEC increased their market share
between 2000 and 2010, broadly at the expense of AQA, which saw
its share decrease from 56% to 47%. At A level the changes were
less marked, although WJEC doubled its overall market share from
4% to 8% and its A level French gained steadily in popularity
from 7% in 2000 to 18% in 2010, with new syllabuses in 2002 and
134. We found it difficult to get beyond anecdotal
explanations of reasons for such changes and to identify whether
the changes do say something about standards. The National Association
of Headteachers (NAHT) suggested to us that schools do not tend
to change syllabuses on a frequent basis, but noted that to the
best of its knowledge "there is not a body of evidence that
seeks to explain how schools arrive at the judgement that a particular
specification is right for a particular cohort of pupils".
The Examination Officers' Association suggested that "teachers
are mostly concerned with what is likely to be the best outcome
for students by using a particular awarding body'my students
will get a better deal if I use X, their marking seems to be much
fairer than Y'".
The NAHT stated that "the tipping point comes when a perception
emerges that the quality issues are compromising the integrity
and quality of assessment".
School leaders and exam board chief executives put it more bluntly,
saying that schools switch when they have "had a rotten summer"
and are dissatisfied with the marking/grades and the response
from the exam board.
AQA's Andrew Hall acknowledged that the quality of service varied
across his organisation and suggested that it was the same for
the other boards.
135. Our limited analysis suggests to us that the
changes in market share at individual qualification level warrant
further regulatory scrutiny, particularly given the absence of
independent published research. Ofqual needs to be able to respond
publicly and convincingly to questions about changes in market
share between exam boards and to confirm whether the changes do
say something about standards. This is particularly the case for
large entry, commercially significant subjects, such as GCSEs
in English, mathematics and the sciences. To do this, Ofqual needs
a sound evidence base on which to draw and to monitor changes
more closely, investigating why they occur. Ofqual has told us
that "a lot of data are provided to us by awarding bodies
on switching, for example. We need to be on top of those data
and interrogate them, and then talk with schools and understand,
in a timely manner, what they are telling us".
We are pleased that Ofqual
has recognised the need for closer monitoring of changes in market
share between exam boards and recommend that it prioritise this
work, in order to establish the reasons for changes at individual
qualification level and whether there is any link to standards.
136. Figures from the DfE show large increases in
spending on exams by schools in recent years. Expenditure on exam
fees increased from £154 million in 2002/3 to over £302
million in 2009/10. This means that spend per maintained secondary
school on exam fees increased from £44k to £85k between
2002/3 and 2008/9 and from £47 per pupil to £89 per
pupil over the same period.
Ofqual suggests several factors may account for this increase:
- an increase in the number of
- students moving to qualifications with higher
- an increase in the number of additional fees
such as late fees,
- an increase in the number of re-sits,
- an increase in the level of fees. 
Ofqual's 2012 annual market report shows that increases
in average GCSE and A level fees over the last six and four years
respectively have been roughly in line with inflation.
137. Entry fees for GCSEs and A levels are broadly
comparable across the exam boards. This seems to be due largely
to the nature of the exams market. Professor Jo-Anne Baird et
al explained that rather than an open market the exam boards "operate
in a regulated oligopoly, which produces different characteristics.
In an oligopoly, firms compete less aggressively on price and
the more so the fewer operators in the marketplace".
138. Ofqual told us that "one of the things
that boards compete on now [...] is price: not only the list price
but the deal".
The exam boards provided information in confidence on a range
of approaches towards discounting. Ofqual told us that "although
fee discounting does take place, such practice is not widespread
in schools and colleges".
139. Teaching unions in particular expressed concern
to us about the large amount of public money spent on exams and
a lack of transparency about how this is spent. The Association
of Teachers and Lecturers (ATL) told us:
the transparency of awarding body operations and
their profits is patchy and a weakness in what must be a publicly
accountable systemwe have found it difficult to find a
very clear picture of the big organisations, their subsidiaries,
parent organisations, which are limited companies and which are
charitable bodies, and the money made across these complex structures.
140. In its written submission Ofqual told us that
"the current data available do not allow us to make a robust
overall judgement on the efficiency of awarding organisations'
costs or cost structures".
It acknowledged, however, that "we need to be able to make
In November 2011 Ofqual announced that it will be investigating
pricing principles and structures and undertaking work to understand
better what is driving costs in the sector and the scope for efficiency
as part of its "healthy markets" work.
Ministers have indicated that they need reassurance that fees
are set at an appropriate level and that the Government would
support moves to reduce school expenditure on exams.
Forthcoming changes to GCSEs (the move from modular to linear
courses) and tighter restrictions on the number of re-sits should
help to reduce costs to schools. Indeed OCR has said that it "is
budgeting for a loss over the next few years".
141. There is an undoubted increasing financial burden
on schools linked to exam costs and certainly the perception (though
not necessarily the evidence) that exam boards are making excessive
profits from GCSEs and A levels. The current system of multiple
exam boards may not have generated the downward pressure on fees
that might be desired. As discussed in chapter three, we heard
repeated concerns that organisational reform of the exam system
could bring the risk of increased fees, with Ofqual warning that
"there is likely to be an increase in pricing" under
a franchised system.
of pricing is complex and Ofqual studies so far in this area have
been limited. This hinders Ofqual from making a robust public
critique of the high costs to schools. We agree with the Government
that reassurance is needed that fees are set at an appropriate
level. Ofqual also needs to demonstrate that overall the charges
made to the public purse by the exam system are fair and appropriate.
We also stress that any changes to the system, in particular a
move to franchising, will need close attention to pricing by Ofqual.
209 Q234 Rod Bristow Back
See Ev 165-6, figures 2 and 3 Back
Ev w48, paragraph x Back
Ev w43, paragraph 1.2.9 Back
Ev w48 paragraph ix Back
See Q58 Martin Collier and Robert Pritchard, Q509 Mark Dawe and
Q514 Andrew Hall Back
Q524 Andrew Hall Back
HC Deb, 10 January 2012, col 83W Back
Ofqual annual market report, Ofqual, 2011 Back
Ofqual annual market report, Ofqual, 2012 Back
Ev 179 Back
Q626 Glenys Stacey Back
Ev 197 Back
Ev w 112 Back
Ev 162 Back
Letter from Glenys Stacey to Nick Gibb, 28 November 2011 Back
Letter from Nick Gibb and John Hayes to Glenys Stacey, 29 November
2011 and HC Deb, 10 January 2012, col 83W Back
Ev 136, paragraph 29 Back
Q590 Glenys Stacey, see also Ev w18 and Ev w112 Back