Improving the financial data we collect

Over the past year, we have carefully reviewed our approach to monitoring the higher education sector’s financial performance and are making some changes to the financial data and information we collect. We have done this in recognition of the increased financial pressures the sector is facing, as set out in our recent report.

These changes will help us to better monitor the finances of higher education providers in real time so that we can target and tailor appropriate support when it is needed. They will also increase our ability to stress test the sector’s finances, so we can bolster the expert advice we publish and provide to government and other stakeholders on the sustainability of the sector.

To inform this work, we commissioned PwC to undertake an independent review of the financial data we collect each year, seeking advice about whether we are collecting the right data and whether we could be more risk-based in our requirements. We engaged with groups of finance directors from across the sector, to develop our proposed changes. We wanted to ensure that any changes maximised the utility of the data we collect. We also wanted to take seriously the need to minimise additional burden where that was possible.

We are now ready to roll out changes in our annual financial return for 2024 and have written to relevant higher education providers today about this. We have also published the independent report from PwC, which includes suggestions for the type and regularity of data we collect to inform our work.

What’s changing?

Before now, our approach has primarily focused on our annual analysis of the financial information and financial forecasts that are submitted to us by universities, colleges and other higher education providers (excluding further education colleges).

Now, in response to the increasingly uncertain financial outlook for the sector, we need to update our data requirements to include important information that has not previously been available and collect some more real-time data. This will help us to support providers in a more targeted way, identify where risks may emerge for different parts of the sector, and improve the independent advice we provide on the state of the sector’s finances. 

Key changes to the data we are collecting from providers include:

• A new requirement to provide an estimate of the value of infrastructure and facility investment needed to bring or maintain the estate to a ‘good’ standard. This will help us understand the scale of financial investments and risks associated with declining condition of providers’ facilities.
• A new requirement to provide information on the financial flows associated with transnational education provision, to better understand its importance to individual providers and the sector as a whole.
• A new requirement to provide information on the financial flows for ‘lead providers’ relating to ’subcontracted out’ courses delivered through partnership arrangements. This will help us to understand its importance to the ‘lead provider’ and overall sector finances.
• A new requirement to provide information on non-UK students and their countries of origin for key recruitment domiciles (China, India, Nigeria, Pakistan, USA, Bangladesh, ‘other’). This will provide much more real time information to help us better understand changes in recruitment patterns and identify providers that are more financially reliant on students from particular countries.
• We have removed the requirement to submit EU student numbers and fee income forecasts separately from other international students and fee income. Following the UK’s exit from the EU, the great majority of EU students are now on the same fee regime as other international students and we have consolidated EU students and international students into one category (‘non-UK students’).
• We have removed the need to return the majority of the detailed financial information in later years of the forecast period. This detail was useful but it became less reliable over the longer term forecast.

We are also introducing more focused questions about risks and mitigations to improve the usefulness of the financial commentary we have about each providers’ approach to managing financial challenges.

Impact of changes

In making these changes to our data collection we have carefully considered what the OfS needs to monitor effectively in a changing financial climate, and the regulatory burden we place on providers through data collection.

We have taken the opportunity to remove some data requirements. But we recognise that, overall, there is likely to be a modest net increase in data burden for most providers. We think this is appropriate in the context of the risks we see building in the operating environment for the sector. It will strengthen our ability to understand where risks are developing and to intervene where needed.

What next?

Today we have written to universities and colleges with our requirements for data collection for the annual financial return 2024, and have published technical information about this year’s changes. We encourage providers to get in touch with their OfS contact if they have any questions about the updated requirements.

We will continue to keep our approach to data collection under review to ensure it allows us to do our job well and reduces burden where that is possible.

We recognise that higher education providers will be increasingly focused on their financial data in the coming months as they identify the steps they may need to take to mitigate financial risks. Our recent Insight brief explores measures providers could take in addressing these challenges, and we hope it is useful in prompting these difficult but necessary conversations.