Financial support for students at alternative higher education providers - Public Accounts Contents

Conclusions and Recommendations

1.  The Department pressed ahead with the expansion of the alternative provider sector without a robust legislative framework to protect public money. Since the Government announced higher education reforms in 2010, there have been multiple warnings about the risks associated with a rapid expansion of the private higher education sector. In particular, this Committee, the Higher Education Funding Council for England (HEFCE) and the University and College Union raised concerns about proceeding without a robust regulatory framework. Although it became clear in 2012 that the legislation required to establish a new regulatory framework would not be passed within the current Parliament, the Department continued with implementation but failed to think through how it would manage the risks in the absence of the expected legislative powers. In particular the Department has no rights of access to alternative providers. In these circumstances, the Accounting Officer at the Department could have sought a Ministerial Direction to proceed, but did not, so must bear responsibility.

Recommendation: Accounting Officers should not proceed with implementing schemes without being assured that risks can be appropriately managed. If risks to public money cannot be sufficiently controlled, whether through legislative or other means, they should seek a Ministerial Direction.

2.  The Department failed to identify and act quickly on known risks associated with the rapid introduction of schemes to widen access to learning. The Department did not learn from previous Government experience, in particular the introduction of Individual Learning Accounts where rapid expansion led to serious problems. Furthermore, the Department has been slow to react to warning signs. The rapid expansion in numbers was concentrated in five colleges that accounted for 50% of the expansion. 20% of students receiving funding were not registered for a qualification and drop-out rates were very high in some institutions. There was also evidence from whistleblowers that proficiency in English language was not tested, that some institutions were recruiting students on the streets, and that students claiming funding were not attending colleges. Rather than respond to the warning signs by conducting a broader investigation, the Department chose to focus on specific issues and specific providers, and even then has failed to apply adequate sanctions in some cases.

Recommendation: The Department must systematically assess and control the specific risks identified by the National Audit Office and at our evidence session, and provide us with a clear explanation of how it will manage these risks in future.

3.  The Department does not know how much public money may have been wasted. The Department has not attempted any calculation of the total financial impact of its weak oversight. The Department was able to tell us that it had paid out £3.84m to EU students who were not eligible for student loans. The Department's record in collecting monies from EU students is already poor. Furthermore, it did not know how much public money may have been wasted where larger than expected numbers of students have failed to complete their qualifications, or how much funding has gone towards paying for additional EU students rather than for the intended purpose of widening access to higher education for students in England. The Department also does not know why there is a 20% difference between the number of students enrolled with alternative providers and the number registered with the qualification awarding body and whether this represented a misuse of public funds. It has not established whether there has been any waste of public money as a consequence.

Recommendation: The Department should report back to us urgently with an assessment of how much public money is at risk of being wasted.

4.  The Department has failed to protect the interests of legitimate students, the taxpayer and the reputation of those alternative providers who may be performing well. The Higher Education Statistics Agency provides published data to enable students and others to assess and compare the performance of higher education institutions. No data is provided to assess the performance of private providers. In particular, whistleblowers told us that some institutions admitted students with unacceptably low fluency in English who were therefore not equipped to pursue qualifications for which they had enrolled. These students will have a poor experience, may fail or drop out, and will have taken on significant loans they may be unable to repay. With no reliable data, the reputation of all private higher education colleges is tarnished by the unacceptable standards in a few of the colleges.

Recommendation: The Department needs to ensure that it has a much firmer grip on the quality of teaching and the standard the students can expect in private sector higher education colleges. It needs to identify poor performers and take appropriate action to protect students and the sector as a whole.

5.  The Department does not monitor what it is achieving from expansion of the alternative provider sector. One of the objectives of the Government's higher education reforms was to improve student choice by supporting a more diverse sector. More opportunities for part-time study, sandwich courses or distance learning were intended to widen access for groups who were previously less likely to enter higher education, for example older students or those on low incomes. However, the Department did not define any measures that would allow it to judge whether implementation of the policy has been successful. Furthermore, the Department has not collected sufficient data on the alternative provider sector, such as the number of students from lower socio-economic groups who have gained a higher education qualification. Such information would help the Department assess whether the policy is working.

Recommendation: The Department needs to set specific, measurable objectives for this policy, and collect and analyse the right data in order to evaluate the full impact, taking account of any unanticipated impacts, such as the recruitment of EU students.

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Prepared 24 February 2015