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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