Our QAA UK Series PART 2: What are the lessons from Australia?

What next for quality assurance in England? The implications of not having an independent Designated Quality Body

Report compiled by Dr Elizabeth Halford, Director Wells Advisory UK and Michael Wells, Managing Director Wells Advisory*

Postscript: Just prior to publishing this article, the Office for Students made an announcement relevant to the subject matter of this paper. See postscript at the end of the article for details.

Executive summary

This paper is the second in a series published by Wells Advisory, which considers the changes currently taking place in the regulatory framework of English higher education. It develops the consideration of the impact of the QAA relinquishing its’ role as the Designated Quality Body (DQB), together with the possible implications of the OfS response to this decision. The paper also explores the approach to regulation and quality assurance in Australia, where it could be argued that a similar trajectory has been pursued. Among the issues discussed are:

• The policy background of English higher education;
• The current size and nature of the English higher education sector;
• The potential role of a future DQB;
• Implications for the independent quality assurance of English higher education;
• An outline of the Australian system; and
• A role for private consultants in the new system.

Introduction

In our previous paper in this series What next for quality assurance in England? Changes to the role of the Quality Assurance Agency (QAA) as the Designated Quality Body (DQB) for England, published in August 2022, we considered the potential impact on UK higher education of the decision by the QAA to withdraw from its role as the Designated Quality Body for England.

 In this second paper we discuss the possible developments regarding the future role of a Designated Quality Body, whether this will be independent from the Office for Students (OfS), and what this might imply for the direction of travel of the regulation of higher education in England. We also explore the Australian system of regulating higher education and look at the lessons learned from this approach, making some comparisons with the evolving situation regarding regulation and quality assurance in England.

Context: English higher education policy background

Before considering where we are now, it is helpful to provide a short outline of the past thirty years of higher education policy in England:

• The Further and Higher Education Act (1992) was a significant piece of legislation which (among other things) created a unified higher education sector, re-designating the polytechnics as universities, and creating a single funding authority – the Higher Education Funding Council for England (HEFCE). The 1992 Act also removed further education colleges from the control of local authorities, creating the Further Education Funding Council for England (FEFC) to exercise a national funding and planning role.
• Some higher education would continue to be delivered by the further education colleges under a mix of franchise arrangements with universities, and accreditation arrangements with other awarding bodies. Regarding the quality assurance of higher education provision, as stated in Paper 1 in this series, the QAA was founded in 1997 by the transfer of functions and staff from the former Higher Education Quality Council and the quality assessment divisions of HEFCE.
• Student numbers in higher education in 1992 were considerably lower than currently. The growth in higher education numbers was not a planned policy initiative, despite policies to promote access to higher education by various governments. Rather, the expansion was a response by universities to student demand, not always funded by increased teaching grants and with student number caps in place.
• The pressures on university funding were addressed to some extent by the introduction of tuition fees for undergraduate students in 1998, accompanied by a system of student loans,  administered by the Student Loans Company (SLC).
• Undergraduate tuition fees were subsequently increased substantially in 2006 and in 2012, when the teaching grant was removed for all but strategically important subjects
• In 2015/16 the cap on the number of undergraduate students that could be recruited was removed.
• In theory, these various developments enabled an expansion of the sector, although the distribution of student number increases varied considerably between providers, with a categorisation of ‘recruiters’ and ‘selectors’ emerging. The ability to access student tuition fee payments from the SLC encouraged a growth in the number of alternative providers (i.e. an alternative corporate form to universities, university colleges or further education colleges).
• The Higher Education and Research Act (2017) was an attempt to encourage more diversity and innovation in the range of provision, by creating ‘a level playing field’ in terms of funding and regulation for higher education providers, through a system of registration (see Paper 1). However, significantly fewer numbers of providers are now registered than initially expected. It should also be noted that many unregistered providers are also in operation.

Where are we now: the size of the higher education sector in England?

The removal of any cap on student recruitment created a demand-led provision, in accordance with a government objective to create a large and diverse sector to cater for the skills needs of the economy, and the Higher Education and Research Act (HERA) was an intended instrument in this policy aspiration.

HERA created the OfS as the new regulatory body for higher education, which became operational in 2018, at which point all existing and new higher education providers in England had to apply for registration. There are now 410 providers on the Register and there is no public record of how many applications for registration are under consideration at any point in time. According to data from the Higher Education Statistics Agency (HESA) the total number of HE students enrolled in England in the academic year 2020/21 was 2.2 million (1.6 m undergraduate and 609,000 postgraduate). The home element of this student population is funded by loans subject to income- contingent repayments (based upon earnings after graduation) and there is government concern that insufficient numbers of graduates are likely to repay their loan in full (estimated at approximately 50%), consequently a large proportion of the funding is picked up from taxation. These concerns, together with government comments about the value of some degree subjects and the incidence of grade inflation resulting in higher numbers of first and 2.1 degrees being awarded, has prompted a view that the OfS (prompted by ministerial views) may be looking to shrink the sector in terms of the number of providers and the number of students. This, together with quality assurance measures based on performative metrics, could be harnessed for such a purpose. With this possible policy objective in mind, the future role of a Designated Quality Body is significant.

The future role of the DQB?

We know that the QAA will no longer operate as the DQB for England with effect from 1 April 2023. To date, there has been no public invitation to tender (from the OfS) for a replacement to take on this role, which given the timescale of allowing time for submissions to be submitted and considered, followed by time for the selected candidate to establish operations, raises the possibility that the OfS intends to take this role in house?

This assumption is reinforced by the recent direction of travel of the OfS in relation to its involvement in quality matters, namely:

1. Assuming ownership of investigations into concerns about grade inflation at three un-named providers. The OfS is not using QAA staff for these investigations, instead it now has a panel of advisors drawn from the sector.

2. With effect from October 2022, a new system of metric-based monitoring will include the imposition of sanctions, including fines and deregistration, if the tests for quality courses are not met by institutions. The metric tests in subject areas at an institution are in respect of – graduate outcomes (60% of graduates must go into graduate employment, progress to further study, or set up their own business), drop-out rates (80% must continue the course) and success rates (75% of undergraduate completers must gain a degree).

3. The above approach of metric-based monitoring and intervention is reliant upon accurate and robust data collection from higher education providers (HEPs). This is currently a condition of registration, and HEPs must submit returns and pay subscriptions to HESA as the Designated Data Body (DDB). With effect from 4 October 2022 the role of DDB has been transferred from HESA to Jisc, following the merger of the two organisations. Both Jisc and HESA are UK bodies, and HEPs in Scotland, Wales and Northern Ireland submit data to HESA, although the DDB role is only applicable to England – another complication of devolved responsibility for HE in the UK.

4. A further indication that the OfS will be undertaking a quality role is its implementation of the revised Teaching Excellence Framework (TEF).  Registered providers will be required to make a TEF submission in January 2023.

Implications for the independent quality assurance of English higher education

The requirements of HERA 2017 stipulate that a DQB, meeting the required conditions of the Act, must be appointed by the OfS. HERA is now due for review, but is probably not currently a government priority, and whilst independence is clearly a desirable feature of a national quality assurance framework for higher education, there do not appear to be any conditions which prohibit the OfS from taking the DQB function in house (see Paper 1).

 However, the perceived lack of independent scrutiny of providers does raise potential problems for the reputation of academic standards and the quality of the student experience in English higher education, especially as an independent quality body (QAA) will continue to operate in the other UK nations. This is likely to be of significant interest to international students and the relevant authorities in overseas jurisdictions where English universities operate campuses.

The changes to the regulatory landscape in England, outlined above, have not yet attracted much media coverage or sector public comment. However, they represent a significant shift in the approach to regulation and quality assurance. This can be regarded as a move from institutional autonomy, based upon a particular context and mission, to an imposition of regulatory standards using regulatory tools, such as standard performance metrics, with applied sanctions for failure to meet required standards. This approach does not explicitly include any review or enhancement activity, however may, as is seen in the Australian experience described below, create a demand for an external and independent review process.

When considering the implications for independent scrutiny, of the OfS taking the DQB role in house, it should also be borne in mind that HERA specifies the functions of a DQB in respect of both:

• assessing the quality of, and the standards applied to, higher education (Section 23)
• advice to the OfS on the granting, variation, or revocation of degree awarding powers (Section 46)

These are separate, distinct, and specialised functions, not traditionally undertaken by an English regulator, raising the question of whether the OfS would have the necessary experience and expertise in house, and if this is acquired – how sufficient independence could be maintained within the corporate accountability and governance structure.

Some lessons from the Australian experience: outline of the Tertiary Education Quality & Standards Agency (TEQSA) and its approach to regulation

There are some parallels with, and perhaps useful insights, that can be gained from the Australian experiment of the last decade.

Transition from quality enhancement to regulation

From the late 1990’s, Australia had a national quality agency, funded and located within the Department of Education, but regarded as ‘of the sector’. The Australian Universities Quality Agency (AUQA) was formally disestablished in 2011 and its staff and functions transferred to TEQSA.  TEQSA also absorbed the functions of State and Territory “government accrediting agencies’, which had handled – some for decades – the entry and accreditation of providers without university title.

Universities were ‘self-accrediting’ and defending university autonomy was one of the most hard – fought aspects of the TEQSA proposal. In the end, this was not realised. However, the compromise was agreed that existing universities would transition to TEQSA’s jurisdiction and have self-accrediting ‘authority’ (as distinct from ‘status’) which authority TEQSA could potentially restrict or remove if justified. TEQSA has the ultimate regulatory decision about which institutions should have university title, after consulting with relevant Ministers.

TEQSA is also the designated agency (under delegation from the Minister) for registering higher education institutions to enrol international students on a visa. In effect, TEQSA registers providers, lists courses, and sets number controls for international students under separate legislation (Education Services for Overseas Students or ESOS Act).

TEQSA operates a Commission model, and its commissioners are the statutory regulatory body independent of the Minister. Yet TEQSA, the administrative agency, provides staff led by a CEO to support the Commission. The Commission may also delegate some, but not its major decisions, (e.g. registration, university title, self-accrediting authority).  To keep lines clear, TEQSA typically does not delegate its regulatory decision-making powers to the CEO, but rather to experienced regulatory staff within the Agency.

In the early days, TEQSA inherited AUQA’s unfinished institutional audit cycle, but it quickly became apparent that the regulatory role had to take precedence. TEQSA then explored the use of sector-wide thematic quality audits, but for reasons of potential over-reach with its first such audit (into partnership arrangements) and of finding its feet with a new model, TEQSA was subjected to a Ministerial review within 18 months of its commencement. Along with budget cuts, this posed a significant risk to its existence. Yet after more than a decade now, TEQSA has established bipartisan support across the political spectrum and evolved its operating approach to be firmly embedded as an assurance approach, accepted nationally and internationally.

Importantly, TEQSA has a constitutional basis for its authority. Its legislation over-rides university enabling Acts and its powers go well beyond conditions which may be attached to grant funding.

It is also relevant that the Threshold Standards against which most of TEQSA’s work revolves, are made as a legislative instrument laid before Parliament by the Minister after being developed by the Minister’s Higher Education Standards Panel. The current standards were developed following extensive work and consultation across 2013-2015 and these have been important in settling TEQSA’s approach.

The Australian experience over the last decade provides some insights for any system introducing higher education regulation, namely under the TEQSA framework:

• the role of a regulator was established under legislation to make regulatory decisions, according to the law (i.e. a legal threshold).
• decisions had to be defensible, evidence-based and made after affording full procedural fairness.
• almost all of TEQSA’s regulatory decisions are reviewable in the Commonwealth Administrative Appeals Tribunal, a jurisdiction that re-hears the case on its merits, at the date of the hearing.
• Thus, providers have significant appeal rights.
• This has forced TEQSA to develop particular approaches, including the use of external expertise, in arriving at its decisions.
• In addition, its commissioners are drawn from senior higher education sector ranks.

Use of external expertise as part of assurance

TEQSA’s decision-making processes draw upon considerable expertise and experience, including:

• established external experts from the sector (based on an application and vetting process) from which it draws to seek additional expert reports on specific matters particularly academic or disciplinary issues. Such reports are but one input to a TEQSA decision. These reports are not determinative, although often have significant probative value. The reports are highly structured and require the reviewer to consider substantial amounts of evidence in reaching their view. The reviews are almost entirely desk- based, with an evidence brief accessed online, although some interaction with the higher education provider occurs if considered necessary.
• TEQSA Threshold Standards require cyclic independent review of corporate governance and of academic governance. Technically at least once every seven years, but more importantly, now expected to be done in the lead up to re-registration. These reviews, appointed and funded by the institution itself, are critical evidence for TEQSA, as are the institution’s responses to the review recommendations. TEQSA has published guidance on ‘independence’ and this has required careful vetting of reviewers by institutions.
• TEQSA accredits courses for non-self-accrediting institutions (in England the equivalent is those without degree-awarding powers). This is a most interesting point of departure from England, where the alternative has been franchising (referred to as collaborative arrangements by the OfS). Such institutions are registered with courses accredited by TEQSA – indeed registration only proceeds if at least one course is accredited. In TEQSA’s process, it usually calls for two discipline experts to review the course proposal, including down to the full curriculum material for a defined study period.  TEQSA has made it clear that its own consideration will be assisted if an institution itself, prior to submission to TEQSA, engages its own independent cognate reviewers to report on the course to its Academic Board. Responses to such review are then carefully considered.
• It is now quite common in areas of critical issue between the regulator and a provider that both sides may engage experts to assist them. Indeed, in anticipation of concerns by TEQSA, an institution may often engage assistance to provide it with critical review. Such review may, of course, be embedded within its own internal audit processes and reported and considered by the Audit & Risk Committee. Managing high-stakes regulatory risk is a natural consequence of the regulatory approach.  This approach has often seen a strengthening relationship built between the Academic Board (dealing with academic risk) and the Audit & Risk Committee, advising Council / Governors on corporate risk.

Whilst TEQSA employs a metrics-based approach for reviewing and rating each provider’s risk profile (annually), this process is deliberately designed to establish a basis for escalating or de-escalating regulatory attention and pointing to areas of focus. It is not designed to substitute for regulatory analysis. This is because under appeal, regulatory decisions made purely upon metrics would be highly unlikely to be sustained in such a nuanced area as higher education. Metrics do, however, give TEQSA a basis of rating risk and, on that basis, of deciding to go hard after a high – risk provider when primary evidence points to failure to meet standards.

What is interesting for quality assurance advocates is that the reviews and expertise mentioned above are not that very different to enhancement reviews. However, a key yardstick is whether threshold compliance has been met. Whilst regulation will mean this is in accordance with the minimum legal standard, the threshold standards used by TEQSA are by no means ‘low’ and embed quality assurance processes as a threshold in of itself. Many specific standards, and certainly all standards taken together, are a very challenging set of requirements that regulate corporate and academic governance, course quality and institutional wide policy, practice and operations. Universities undergoing re-registration today, after a decade of TEQSA regulation, continue to find the process of meeting the current thresholds most challenging and an evolving pressure on the institution to both improve, and evidence the impact of this.  This is of course a quality assurance tenet – i.e. how do we know, what is the evidence base? TEQSA’s process has involved less emphasis on interviews, site visits, and qualitative portfolio statements. Rather it is based on the institution identifying specific evidence to show how it meets the standards primarily through minutes of governing bodies, policies, and internal reports. In this sense, the pressure is on the institution to demonstrate threshold compliance. The judgement of this evidence is ultimately one for the decision-maker (often the TEQSA Commission) but after taking advice and input from the internal TEQSA case team, and with the benefit as required from sector experts. A difference is certainly that the sector experts do not determine the outcome. They inform it. This is regulation, not quality assurance. Yet should the regulator’s decision come to be challenged, which it may well be, evidence of sector benchmarks, of quality assurance processes, and ultimately proper governance, will usually stand the provider in a strong position vis-à-vis the regulatory decision. These approaches are not all or nothing. The Australian experience points to ways in which they can work together, and certainly in which quality enhancement has a place in the new regulatory world.

Conclusion: a role for private consultants in the new system?

Should the DQB role be moved in-house at OfS, it is likely that (as in the case of the Australian system) there will be significant need for sector expertise to help assist the regulator, and to support institutions in meeting the regulator’s expectations, at all stages of the process. In this process, there is a significant difference in style and approach to quality assurance forums, and therefore those assisting institutions and indeed OfS need to shift gears. It becomes less about site visits and qualitative process reviews, and more about developing a system which produces the evidence required for a particular context. This reaches far into governance as much as management. Indeed, where quality enhancement sat almost exclusively with academic leadership and the academic governance system, regulation (not least the license to operate) means that governance inevitably will be more drawn into this space. Who stands up and gives assurance to governance that the institution definitively meets the regulatory requirements? This is a significant shift in the self-perceived role of academic governance committees. The role of external reviewers then finds a significant place in this framework, for both the institution and its regulator.

This system of a principles – based approach to regulation, based upon indicators of predictive risk, requires higher education providers to have robust, accurate and timely data management systems, together with appropriate mechanisms of report, review and responsibility within the management and governance structure. This will enable institutions to identify and manage their own particular risks and take mitigating action as appropriate, to ensure the confidence of all stakeholders in their academic standards and student experience. Such an approach could benefit from expert consultancy, as in the Australian system, to provide targeted support and objective external advice in support of submissions to the regulator. This type of independent review, provided by a team of experts with extensive knowledge and experience of the sector, rather than a solitary advisor, could also be beneficial to institutions operating in overseas jurisdictions, where some form of independent quality assurance is frequently required by governments or professional bodies.

* The authors: Liz Halford is a Director of Wells Advisory UK and was formerly Head of Research and Intelligence at QAA, having had an academic career. Michael Wells is Founder and Managing Director of Wells Advisory, a founding Commissioner of Australia’s Tertiary Education Quality & Standards Agency, and formerly head of university planning, quality assurance and budgets at The University of Melbourne.

Post script

As we were in the process of publishing this paper, it has been confirmed by the OfS, on the 14th October, that:

‘From 1 April 2023, the OfS will undertake the following assessment activities that are currently delivered by the designated quality body:

• Quality and standards reviews for providers seeking registration (available for providers that applied for registration before 1 May 2022)
• Standards assessments for the purpose of assessing initial condition B8 for providers that applied for registration after 1 May 2022
• Assessments for degree awarding powers
• External quality assurance of end-point assessments for integrated higher and degree apprenticeships.’