Transcript of Susan Lapworth’s speech at a Chartered Association of Business Schools event

Good morning, and thank you Robert for your introduction. And for the invitation to be with you all today.

This is the first time I’ve met with the Chartered Association of Business Schools, and I’m pleased to have this opportunity to talk to you because we all have students at the heart of what we do. 

Your organisations educate around 1 in 6 of all UK students and around 1 in 3 of all international students. More students are studying on business and management courses than courses in any other subject.

The UK’s business schools contribute billions to the UK economy each year through teaching, research and their wider impact. And they employ 19,000 academic staff.

The evidence shows that business schools have an essential role to play – not just within the higher education ecosystem, but in the wider economy too.

Your students go on to lead global businesses and small family firms and everything in between, contributing to a dynamic economy. And so, it’s important – critical – that they should have a rewarding education that leaves them well-placed to make those contributions to the economy and society graduation.

And that’s where the OfS, as the sector’s regulator, can work with you to ensure this is the case.

Role of the OfS and importance of regulation 

But why do we regulate? Why is what we do so important?

Like you, we’re focused on the things that matter to students:

• The quality of their course.
• The support they receive while they study.
• And making sure that their qualifications are credible and help them succeed in their careers.

So, we have two main areas of focus in our strategy.

The first is quality and standards.

We think all students should have a high quality academic experience that equips them for future work or further study.

The second is equality of opportunity.

That’s about ensuring that all students – regardless of their background – can benefit from higher education.

Those two things – quality and equality – go hand-in-hand. We’re not doing our job if students from disadvantaged backgrounds are recruited onto poor courses with weak outcomes. That’s why we’re so focused on these two areas.

And having learned lessons from the first period of the OfS’s life, we’re starting to use our regulatory tools in an active, targeted, way to deliver these ambitions for students.

You can see this in our work on quality, which I’m going to talk about now.

Business and management assessments 

We’ve significantly reformed our approach. And we’re now implementing those changes. 

I expect you’ll know that our first group of regulatory cases on quality has focused on business and management courses.

And I expect that you’ll have questions and thoughts about that.

You may be wondering: why business and management?

First, I want to reassure you that we’re not singling out your subject for arbitrary reasons. We need to prioritise our regulatory activities and we think hard about where risk might sit in the sector.

When you look at the data for the sector as a whole, business and management courses have the widest range of performance in those key student outcomes measures – some really excellent performance, some that seems much less so. So the patterns of performance in the sector in this subject area are raising regulatory questions for us.

Business and management courses also tend to have large student populations. And the numbers continue to rise. So, we need to ask:

Isn’t it right that we should want to ensure that those large cohorts of students are getting the right support?

That their courses are up-to-date. And that they’re developing the skills they need for future success?

I think so. I expect most people in the room think so too.

But whatever we all think – these things matter to students. And that’s why it’s right that the regulator focuses on them.

We would be doing a disservice to your students if we didn’t identify and address concerns about quality. And we would be doing a disservice to you too. Reputation matters, and is best protected when everybody can be confident that the regulator will step in where needed.

I’ve talked about why we’re doing this work. But I also want to say a few words about the process. 

We understand the concerns that any kind of external scrutiny can bring.

And I know that those institutions that were the first through the new process will have feedback about how it went and how it felt. We’re committed to reflecting on this as we conclude the first group of cases. My aim is to provide as much information as we can about the approach we take and how a typical case might unfold. And I hope that as we develop and embed the process, it’s going to feel more familiar to us all.

One of the things we’ve been stressing is the importance of independent academic judgement. We’ve recruited a large pool of academic assessors. They’re subject experts drawn from a wide range of institutions. We told them that this was an opportunity for them to shape the development of learning and teaching in their discipline.

And I think you can see them doing that in the reports we’ve published – these are credible and incredibly thoughtful judgements from independent experts. That should give you confidence in the process and the judgements that the assessment teams are reaching.

But I do appreciate that this can feel difficult, particularly as it’s a new way of working for the sector.

My final point on this topic is this: I urge you to read and reflect on the assessment reports we’re publishing.

Why?

Because we want them to be a catalyst for reflection and change. They should help you think about the quality of your courses and what you’re offering to students. Think about academic and student support. Think about whether the particular students you recruit are getting what they need to succeed. If necessary, make changes.

This desire to prompt learning for the sector as a whole is one the reasons we’re taking a thematic approach to these assessments – we’ll have a rich resource of judgements about business and management courses and we’re really keen that you’re able to make good use of that.

As you do, we’ll really welcome your feedback.

House of Lords 

Speaking of feedback, a lot of our current thinking is focused on understanding the issues raised by the House of Lords Industry and Regulators Committee. We’ll respond formally to its report later this month.

As a regulator with significant powers over the higher education sector, the OfS is rightly subject to scrutiny and accountability.

That’s the price of being the Office for Students and we’re happy to pay it.

So we’re embracing the report as a learning tool for the next phase of our development as a regulator.

And while we don’t agree with everything in the report, we do understand that students, institutions, and sector representatives, are looking for a different relationship with us. That’s one of the most prominent themes in the report.

And that’s why, even before the committee launched its inquiry, we started to make changes to how we engage with you. We wanted to develop those relationship and deepen our understanding of the sector’s diversity and complexity.

The report gives further impetus to that work resetting relationships.

Along with senior colleagues, I’ve been visiting institutions. Talking to vice-chancellors and their teams, visiting academic departments, and perhaps most importantly, talking to students. That’s all been hugely valuable.

We’re committed to doing more of this – creating opportunities for colleagues across the sector to tell us about their priorities, their challenges. And for us to explain more about our role and approach to regulation.

We’re seeking a richer two-way dialogue – because that’s an important part of making sure our regulation is effective in practice.

Financial sustainability 

The final thing I want to talk about today is an area where that two-way dialogue is particularly important: financial sustainability.

We’re pleased that the sector has generally managed to weather the financial storms over recent years, but we know that crossing fingers that the next storm will pass is not a sustainable business model.

Yes, most institutions do remain in good financial health. Our most recent report on financial sustainability reflects the sector’s own forecast that, in aggregate, income will continue to grow. 

But we understand that institutions continue to face significant financial challenges. Indeed, you may have seen recent analysis from mission groups that estimates that the average deficit for each home undergraduate student will increase to £5,000 each year by the end of the decade.

Clearly, that is challenging.

And, like you, we can see other risks:

• Rising costs as a result of inflation – including higher pay and pension costs and increased energy bills.
• Challenges in maintaining and improving facilities and buildings.
• Competitive pressures for UK students – especially where selective providers have increased recruitment and that’s squeezing less selective providers.
• Reliance on income from international students – and this is especially true for many of your institutions, with well over 200,000 international students studying on business and management courses across the UK.

So we know that the challenge of increasing operating and capital costs, and growing income in an increasingly competitive market to meet those rising costs, is real.

We see it. We understand what a difficult job it is to run a university at the moment.

Looking at all those risks, for a small number of institutions the financial picture is particularly worrying. We’ll continue to focus our attention on those cases – working constructively with any institution facing financial difficulties.

But in these turbulent financial times, we’re also looking to institutions to make sure that their financial management is effective. Are leadership teams and governing bodies looking ahead, identifying risk, and responding proactively? Are they stress testing, scenario planning and challenging optimism bias?

I suspect that the academic expertise in the room today means that you’d be able to give me countless examples of businesses that have been caught out by poor financial strategy and management when the operating environment gets difficult.

We can see some of that in our sector. And it can be difficult to find the sector-wide conversations about the changes that might be needed in that context – what are the radical options for transformation, are there new business models and different ways of doing things?

There don’t seem to be easy solutions to the sector’s financial challenges on the horizon. And, of course, the OfS can’t solve these problems. But we can work with you to ensure that institutions are clear-eyed about the challenges and are taking the necessary steps to navigate them.

That’s an important part of our role. Because sustainable universities and colleges are necessary to protect the interests of students and ensure that, whatever their background, they have a fulfilling experience of higher education that enriches their lives and careers.

That’s perhaps a good place to stop. I’m conscious we have a little time for questions and I’m keen to hear from you all.