The administration of examinations for 15-19 year olds in England - Education Committee Contents

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 about—the service and support they get in teaching and learning".[209] 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.[210] 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".[211]

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 2010.

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".[212] 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'".[213] The NAHT stated that "the tipping point comes when a perception emerges that the quality issues are compromising the integrity and quality of assessment".[214] 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.[215] 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.[216]

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".[217] 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.

Examination fees

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.[218] Ofqual suggests several factors may account for this increase:

  • an increase in the number of qualifications taken,
  • students moving to qualifications with higher fees,
  • 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. [219]

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.[220]

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".[221]

138. Ofqual told us that "one of the things that boards compete on now [...] is price: not only the list price but the deal".[222] 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".[223]

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 system—we 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.[224]

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".[225] It acknowledged, however, that "we need to be able to make this judgement".[226] 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.[227] 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.[228] 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".[229]

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.[230] The area 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

210   See Ev 165-6, figures 2 and 3 Back

211   Q284 Back

212   Ev w48, paragraph x  Back

213   Ev w43, paragraph 1.2.9 Back

214   Ev w48 paragraph ix Back

215   See Q58 Martin Collier and Robert Pritchard, Q509 Mark Dawe and Q514 Andrew Hall  Back

216   Q524 Andrew Hall  Back

217   Q632 Back

218   HC Deb, 10 January 2012, col 83W Back

219   Ofqual annual market report, Ofqual, 2011  Back

220   Ofqual annual market report, Ofqual, 2012 Back

221   Ev 179 Back

222   Q626 Glenys Stacey Back

223   Ev 197 Back

224   Ev w 112 Back

225   Ev 162  Back

226   Ibid. Back

227   Letter from Glenys Stacey to Nick Gibb, 28 November 2011  Back

228   Letter from Nick Gibb and John Hayes to Glenys Stacey, 29 November 2011 and HC Deb, 10 January 2012, col 83W Back

229   Ev 136, paragraph 29  Back

230   Q590 Glenys Stacey, see also Ev w18 and Ev w112  Back

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Prepared 3 July 2012