Consultation on the future approach to quality regulation

Section 3: A risk-based system of incentives and interventions

Proposal 12: Risk monitoring

We propose to introduce a risk monitoring tool that sets out the factors associated with increased risks to quality.

182. In between cyclical assessments through the TEF, we would continue our risk-based approach to monitoring, as set out in the Regulatory Framework and Regulatory Advice 15: Monitoring and Intervention.^[14] This section sets out how we will use that approach to identify emerging risks to quality in between TEF assessments in a dynamic and timely way. It also sets out how we will make the approach more transparent by publishing a quality risk monitoring tool, and invites views on some of the content of the monitoring tool.
183. Annex I sets out an initial draft of the quality risk monitoring tool. So far, we have identified factors that we consider to be associated with increased risks to quality through the findings of our quality assessment work conducted to date, and analysis of available data. We invite views and evidence about the factors associated with risks to quality that might be included in the tool. Through this call for views, we aim to build a shared understanding with the sector of the main factors associated with risks to quality.
184. Following responses to the consultation we would revise and publish the monitoring tool. We anticipate keeping it updated as the context of the sector and our understanding of risk factors evolves, for example through the completion of each TEF cycle.
185. We would make use of the factors and indicators set out in the monitoring tool to identify and consider increasing risks to quality at providers, as follows:
     1. Monitoring risks in between TEF assessments. Where we identify increasing risks across a range of indictors, we would consider this (alongside the published TEF indicators) to determine whether a provider’s next TEF assessment should be brought forward, or whether further engagement, information gathering, or investigation might be appropriate for a provider.
     2. Considering risks alongside a provider’s TEF ratings. If a provider receives a Requires improvement or Bronze rating, we would consider the risk information alongside the TEF ratings to inform decisions relating to breaches, interventions or further investigation, as set out under Proposal 13.
186. This approach would provide more transparency to providers about the factors that might lead us to consider a provider to be at increased risk or to increase scrutiny of a provider, and would support providers to consider where to focus their improvement activities.

Proposal 13: Incentives and interventions

We propose to introduce a strengthened set of incentives and interventions that vary according to the level of quality and risk, to drive quality improvement across the sector.

187. We propose a strengthened set of incentives and interventions that varies the incentives, the level of scrutiny and regulatory interventions according to different levels of quality and risk to students. Our aim in doing so would be to drive improvement across the sector in a way that is appropriate to different levels of quality offered by providers, and supports our aim for all students to receive a high quality education.
188. At the heart of the system we would assess all providers on a cyclical basis through the modified TEF, with an associated set of incentives and interventions intended to:
     • reward providers that deliver the highest levels of quality and incentivise them to continue to do so
     • strongly incentivise improvement by providers that only deliver the minimum level of quality (rated Bronze), including through increased scrutiny and further regulatory interventions
     • enable us to intervene to ensure improvements are made by providers that do not deliver the minimum level of quality (rated Requires improvement).
189. Under the previous TEF, the only incentive to improve above the level of Bronze, and the only reward for providers with the highest ratings, was the reputational effect of the rating. We want the future system to be more ambitious in driving improvements and securing high quality for all students. We therefore propose additional rewards for providers with the highest ratings, and stronger mechanisms to drive improvement where quality is not rated high.
190. The range of incentives we are considering is outlined in Table 3.

Table 3: Potential incentives and interventions

Limiting growth in student numbers

191. Under the previous system, providers rated Bronze had little incentive to improve and could continue to be rated Bronze in successive assessments without being materially affected. We think in future an incentive should apply to all providers rated Bronze that is stronger than the published ratings alone, to be more effective in driving them to deliver consistently high quality.
192. We propose to limit future growth in student numbers at providers rated Bronze as well as Requires improvement. This would not be a reduction in numbers, but a limit on the provider increasing its student numbers, until it demonstrates high quality. Although a Bronze rating would mean a provider meets the minimum quality requirements, our aim is that more students should experience the high quality of education they expect. This proposal would provide a strong incentive for all providers to deliver consistently high quality. It would also reward those already delivering high quality through concentrating growth in those providers. Our view is that the overall effect of this proposal would be to enable more students in future to experience high quality education, through a combination of driving up quality to this level, and making more places available at providers that consistently offer high quality.
193. We propose to revise condition B6 to require all registered providers with students in scope of the TEF to participate, and to include the ability for the OfS to issue directions to providers rated as Requires improvement or Bronze. The directions would limit growth in future recruitment, until such time as the provider reaches the level of high quality. We envisage there would be a small tolerance for increased numbers (for example 5 per cent, which is the tolerance applied under the previous system of number controls). We envisage that the OfS would have discretion to increase this tolerance in some cases, for example where a provider is rated Bronze overall but one of the aspects has a higher rating.
194. As part of the stage two consultation we would consult on the details of the proposed revisions to condition B6.

Eligibility and assessment for DAPs

195. We consider that linking eligibility for new awards of DAPs or extensions to existing DAPs to specific TEF ratings is appropriate, because the DAPs criteria that providers are assessed against represent requirements for quality and standards above the minimum levels set out in the B conditions of registration. If a provider receives a Requires improvement rating, it is not delivering the minimum level we expect to comply with these conditions, and therefore we consider it would not be able to deliver the high level of quality we would expect for a provider to be able to demonstrate it meets the DAPs criteria.
196. If a provider receives a Bronze rating it may be eligible for DAPs, but we would consider carefully whether any increased risk of a future breach of an ongoing condition of registration, or any linked specific conditions that may be applied, may affect its eligibility. This is in line with the approach set out in the regulatory framework.
197. We acknowledge that this approach could not be easily applied to new applicants to DAPs that may apply alongside registration applications, or before they have received a TEF rating. We also need to consider the implications for current DAPs award holders that may receive Requires improvement or Bronze ratings through future TEF assessment. If a provider with DAPs receives a Requires improvement rating it is likely we would subsequently want to retest its ability to meet the DAPs criteria, either through a targeted DAPs assessment or as part of any resulting compliance assessment. If a provider with DAPs receives a Bronze rating, any further action may depend on whether any increased risk of a future breach of an ongoing condition is identified, or a specific condition applied. Depending on the findings of the TEF assessment, while we may not seek to remove a provider’s DAPs, we may want to consider restricting powers in some way, for example restricting powers to validate and subcontract other providers’ provision.
198. We plan to consult on our approach to DAPs in the future, and as part of that we would be likely to propose greater alignment between the TEF and providers’ assessments for DAPs, with clearer links between TEF ratings and eligibility to apply for and hold DAPs. We envisage that we would also streamline the DAPs assessment by relying on elements of the TEF assessment wherever possible, for example on quality of the student experience. Our proposals to link eligibility for DAPs to TEF ratings aim to reduce the burden on providers of going through a DAPs assessment it is likely they would be ill-equipped for and unlikely to be successful in, and would also ensure more efficient use of OfS resources. But it is likely we could go further in this alignment to reduce burden across the sector, which we will consider in any future DAPs reform.

Potential eligibility for funding

199. In terms of the potential to link TEF ratings to eligibility for some kinds of OfS funding in future, we are carrying out a review and reform of strategic priorities grant funding. As part of this review we will consider and consult as appropriate on options for linking higher TEF ratings with eligibility for certain funding streams, for example world-leading specialist provider funding. Any proposals to this effect would also consider the implementation implications of our proposal to complete the first cycle of future TEF assessments over three years from 2027-28 to 2029-30. We expect to consult on reform to strategic priorities grant in winter 2025.

Other benefits linked to TEF ratings

200. In addition to the incentives and interventions we are considering, the DfE determines how TEF ratings may be used to determine a provider’s maximum fee limit. Through Schedule 2 of the HERA, the Secretary of State can determine what a high level quality rating is, for a provider to be eligible for the higher fee limit.
201. The DfE also determines eligibility for access to student loans. It has, for example, set out that TEF ratings of Silver or Gold will allow providers to go through a simpler and quicker approval process to access modular funding under the Lifelong Learning Entitlement from January 2027.
202. The government will soon publish its plan for higher education reform as part of the forthcoming post-16 skills White Paper.

Risk-based investigations

203. As set out under Proposal 12 we would routinely monitor providers against a set of quality risk factors and indicators. Where significant concerns arise, we may investigate them outside a TEF assessment. We would also consider whether an investigation should be carried out following a TEF assessment where concerns are raised about the quality of the student experience.
204. We expect each year to carry out a number of such investigations, prioritised on the basis of risk. These would be targeted to investigate specific concerns in relation to conditions B1, B2, B4 and B5. These investigations would include visits to gain detailed evidence of what students are experiencing in the real world.
205. Where an investigation results in a finding of a breach of a B condition, we would have the full range of enforcement powers available to protect students’ interests and ensure improvements are made. Our view is that in such cases we would also be likely to amend a higher TEF rating for student experience to Requires improvement, and we would consider what an appropriate timeframe would be for a TEF reassessment.
206. Where an investigation results in a finding of an increased risk of a future breach of a B condition, we would consider what intervention might be appropriate to mitigate that risk. We would also consider whether a higher TEF rating for student experience should be amended (for example, to Bronze), and what would be an appropriate timing for the next TEF assessment, to mitigate risks to students.

Regulatory interventions following on from TEF assessments

207. Where the TEF assessors rate an aspect as Requires improvement we would consider this, alongside the risk factors and indicators in the risk monitoring tool, to determine:
     1. If the student experience is rated Requires improvement, whether to carry out a further targeted investigation to determine whether there has been a breach of conditions B1, B2 or B4. We consider that such an investigation is likely to be necessary to establish whether there has been a breach of these conditions.
     2. If student outcomes are rated Requires improvement, whether there has been a breach of condition B3. Once we apply the proposed revisions to condition B3, we would be likely to determine that the provider had breached condition B3 during the period covered by the assessment.
     3. For either aspect, whether there is an increased risk of a future breach of a B condition. We consider that the TEF assessment findings, alongside consideration of the risk factors and indicators, may provide sufficient evidence of this without necessarily requiring further investigation.
208. We recognise that there would be a transition period after the proposed revisions to condition B3 come into effect, during which we would not apply the narrower set of contextual factors. This means that for a transitional period we would continue to consider actions taken or planned by the provider as a potential justification for outcomes being below threshold, when considering whether there has been a breach or an increased risk of a future breach of the condition.
209. Where either aspect has been rated as Bronze, it is possible that we might consider a provider to be at increased risk of a future breach of a quality condition. We would consider the TEF assessment findings, alongside the risk factors and indicators, to determine this. Although a Bronze rating indicates quality was in line with the minimum requirements during the period under assessment, there may nevertheless be concerns raised by the TEF assessment, or other factors or information suggesting there are increased risks to the provider continuing to meet the minimum requirements.
210. Where we determine that a provider has breached or is at increased risk of a future breach of a B condition, we would consider whether intervention is needed to protect students’ interests and ensure improvements are made. Where we consider intervention is necessary we would consider the intervention factors,^[15] and what intervention would be appropriate to protect students’ interests and ensure the relevant improvements are made. In doing so we would consider what actions a provider has already taken or plans to take to make improvements.
211. Under Proposal 11, we propose to vary the length of a TEF award depending on whether the overall rating is Bronze, Silver or Gold. We do not propose a standard length for a provider with a Requires improvement rating, as we would want to consider this alongside determining any breaches and interventions, and what length of time would be appropriate to expect the provider to have made sufficient improvements before being reassessed. We would also consider a targeted reassessment focusing on the specific areas of concern, rather than a full reassessment, where it would be reasonable to expect a provider to make rapid improvements in specific areas.

Notes

[14] See OfS, Regulatory framework for higher education in England and Regulatory advice 15: Monitoring and intervention.

[15] See Annex A of OfS, Regulatory advice 15: Monitoring and intervention.