"The Funding Council has performed well during a benign
environment for higher education. However, the sector is now facing
a period of transition to a very different financial environment,
increasing financial and management pressures on our higher
education institutions. In light of this, the Department for
Business, Innovation and Skills needs to be ready to re-think fully
the Funding Council's regulatory framework in the
future."
Amyas Morse, head of the National Audit Office, 4 March
2011
The Higher Education Funding Council for England, the funder and
regulator of the higher education sector, has overseen the
financial sustainability of the sector through a period of growth
in income and student numbers, according to a report published
today by the National Audit Office. The Funding Council has taken a
cost-efficient approach and has delivered value for money in the
context in which it has operated to date. However, the sector is
facing a period of transition to a very different financial
environment.
The Funding Council has contained the cost of its own regulatory
activities and has sought to minimise the burden of its activities
on higher education institutions. It has focused on supporting
those institutions at highest risk, whilst managing to maintain the
confidence of the sector.
The new funding framework for the sector is, however, likely to
increase the level of risk. There is already wide variation in the
financial performance of institutions.
The Funding Council's current assessment of financial
sustainability of institutions provides effective coverage of
medium-term risks. To detect short term risks the Funding Council
draws upon its contacts with the sector but it also relies on
universities themselves reporting potential problems - something
which the Funding Council needs to reinforce.
The Funding Council does not routinely publish its assessments
of individual institutions as part of its annual assessment of risk
within the sector, and delays its naming of "at higher risk"
institutions by at least three years to give them time to rectify
their problems. As a greater proportion of funding begins to follow
the student, the Funding Council needs to consider the balance
between protecting institutions and their students and enabling
prospective students to take more informed decisions on where to
study.
Some institutions in difficulty can take a long time to resolve
their weaknesses, even with close support from the Funding
Council.
Publication details:
HC: 816, 2010-2011
ISBN: 9780102969535