The Competition and Markets Authority (CMA) on 23 March 2015 issued a policy paper entitled An effective regulatory framework for higher education.  Click here to access the paper.

The paper was prepared by the CMA in accordance with a recommendation from the Office of Fair Trading that the CMA should help to develop proposals to improve the regulatory framework for higher education, the current framework being “increasingly at odds with [an HE] system that is now largely based on competition and student choice via tuition fees rather than direct government funding through the higher education funding Council for England (HEFCE)”.

Problems arising from the existing regulatory framework

CMA identified several problems which it says have arisen largely because the current regulatory framework has evolved around the protection of public money rather than reducing risks to the quality of students’ learning experience.  CMA identifies the problems as: 

  • Gaps in regulatory oversight and discrepancies in the application of regulatory sanctions, resulting in different types of HE providers being quality assured in different ways (or not at all in the case of providers not in receipt of public funding, lacking degree awarding powers, university title etc and providing HE courses at sub-degree level).
  • The current regulatory framework may be restricting entry to the HE market and expansion, if the tightening of oversight arrangements makes it increasingly risky for HE providers with degree awarding powers to validate new entrants’ courses.  
  • Some aspects of the way that courses are provided are restricted by the rules around student loans, potentially holding back innovation such as development of accelerated degree programmes.  
  • There is no comprehensive sector – wide “exit regime”, which might mean students are not protected if a course closes or a provider fails.
  • Information provided to students is improving but could be even better.

CMA recommendations

CMA recommends that the regulatory framework is reformed, based on the following principles: 

  • regulate for a baseline level of quality – so all students are assured about the quality of the HE provider.  
  • apply a strict cost – benefit assessment to ensure the baseline level of quality is kept to a minimum to promote competition – while allowing scope for providers to compete to provide a higher quality learning experience above the baseline.
  • additional regulation above the baseline should not signal different levels of quality or create an un-level playing field – to avoid giving signals to students that providers bound by additional rules offer better quality.  The system should be “competitively neutral” so that different types of providers (such as private and publicly funded institutions) have the opportunity to be bound by the same rules.  
  • maintain a risk-based approach to the frequency and intensity of regulatory review.  
  • relate sanctions to risks facing students rather than institutional type.


HEFCE has over the past 18 months gone to considerable lengths to extend the scope of its regulation of HE to take account of the rebalancing of HE funding of most teaching from central grants to institutions to tuition fees. However, the limitations of developing regulation by administrative means rather than by legislation have been exposed, for example by recent problems with the financial stability and quality of provision of certain alternative providers.  HEFCE is understood to favour the introduction of an HE Bill after the general election: this was of course the original intention of the government's 2011 White Paper Students at the heart of the system.  Proceeding by legislation would provide the opportunity for a wide ranging debate and would follow the approach taken in Wales (where a Higher Education (Wales) Act has recently been passed) and in Scotland (where changes to HE governance by legislation are currently under consideration).

Input to such a debate from an organisation, such as the CMA, sitting outside the HE sector and with specialist knowledge of regulation and its likely effects may well be valuable, provided the government takes fully into account the distinctive features of UK HE which continue to make it highly regarded around the world.  The paper ties in closely with work being undertaken by HEFCE to review current arrangements for the assessment and assurance of quality of provision.


Whatever the outcome of the general election it is likely that the government will wish to take forward improvements to the regulation of HE.  The CMA paper is an important starting point in such considerations.  Both public and privately funded HE institutions, and colleges providing HE, should be preparing themselves for the possibility of significant change to regulation in the years to come.