The Office for Students loses in court – with major implications for the sector

Just about the last notable thing to happen before the pandemic took hold was the news that the Office for Students (OfS) B3 Bear had been in court – and won!

But that was March, and now it’s emerged that the Bear has been back in court and lost on appeal. And the judgement has far-reaching implications for the regulation of higher education in England in the future.

The full appeal judgment in the case of Bloomsbury Institute vs the Office for Students has now been published. It’s not a fatal blow for departing OfS Chair Michael Barber’s entire design of regulation – focussing as it does on the “outcomes” of higher education providers – but it is a sharp rebuke for what we might call here the behaviour of the regulator, and it’s a significant win for those of us that like to debate policy before it’s implemented.

A quality bit of work

When OfS decides whether to allow a higher education provider onto its register, one of the things it does is apply some baseline “quality” thresholds on things like non-continuation rates and employment outcomes. There are some details in this piece from March on the court case, some further detail on the process in this piece from November, and this from September on provider refusals.

It’s been an important process to watch for a few reasons. First, the threshold acts as a kind of blunt number control – the figures used by OfS when testing providers against the B3 baselines aren’t benchmarked, and the worry has been that it might be shutting out good WP providers (often in the FE sector). The other concern is that if it raises the baselines (not least because Gavin Williamson asked it to last October), then some existing providers and their students might suffer – or be siphoned off into whatever vocational fantasies the government has for them.

That has been a concern principally for the SME/FE parts of the sector – that’s where the registration refusals have been so far. But a wider concern has been that when you have a large university, the use of thresholds is blunt – and we’ve been predicting for months now that OfS will soon start to apply them at something like subject level within universities. You can see what we’re getting at here – OfS later confirmed its intent in its letter on what’s coming in the Autumn last month as follows:

In the regulatory framework, we committed to tackling poor-quality provision. To date, we have refused registration to eleven providers because the outcomes for their students were unacceptably weak. The baselines we set for initial registration were generous, as we gave the benefit of doubt where performance was of concern across the whole provider, and did not assess it at subject level. However, we now wish to go further in tackling weak performance, and this autumn we will consult on changes to condition B3 (student outcomes), to raise the bar for all providers and address poor quality at subject level.

Then as if by magic

Funnily enough, on the same day (30 July) that letter went out, something rather unexpected appeared. It emerged that a one-day appeal hearing had already been held – that OfS had lost – and that therefore OfS’ decision of 23 May 2019 refusing Bloomsbury’s application for registration “will therefore be quashed”.

Last July (2019) the old London School of Business and Management (renamed as Bloomsbury Institute) became the first provider to be refused registration on the basis of quality (continuation rates from first to second year, and the rate of progression to graduate employment). It had been to court to challenge the decision, and lost. The OfS board papers from July told us that the appeal had gone in and that we were to expect a one day hearing on points of law in September.

As we said at the time, if you’re keen to know more about how OfS’ outcomes-based regulation works – or if you’re just bored or self-isolating – the full judgment from March should definitely be on your reading list, as it sets out pretty clearly the background, the legal battle and the rationale for the outcome. If not, the full appeal judgement is also a fairly interesting read – or try our edited highlights from time of the original judgement.

Until today we knew that Bloomsbury had appealed on several fronts. It tried, for example, to appeal the findings in relation to the Public Sector Equality Duty and whether the B3 bear was compliant, but the court was having none of that. Where Bloomsbury got permission to appeal was about three things – OfS’ scheme of delegation, the transparency of its approach to regulation, and rationality of its approach to assessing student continuation and outcomes. We’ll look at these in turn.

It’s up to you

The first issue surrounding delegation will be familiar to anyone who has chaired or clerked a board – it’s a remix of this old Yes Minister segment about the difference between policy matters and administrative/operational matters.

To cut a long story short, here’s what happened.

• The original OfS regulatory framework (RF) was formally consulted on, but it said that some baseline minimum performance thresholds (like these B3 ones) would be set. It also talks about securing decent outcomes for “all students”— all obviously “policy” stuff.
• OfS then gathered data for the indicators set out in para 340 of the RF: continuation and completion rates, degree outcomes, and progression rates. The data is broken down by level of study (such as “first degree” or “PhD”). So, for example, an OfS assessor was able to examine continuation or progression rates for first-degree students.
• The data was then broken down by study mode (full-time or part-time), enabling OfS to examine continuation or progression rates for full-time first-degree students and part-time first-degree students.
• That allowed OfS to apply one of its “initial baselines” – a series of percentage figures set out in a table by OfS staff which indicated whether the data was “of concern” or “of significant concern” (or “of no concern”). For example, a provider’s continuation rate would be of “significant concern” if the proportion of its full-time, first-degree students who continue their studies from year 1 to year 2 was 75 per cent or less.
• The second stage was something called “demographic group threshold analysis”. A bit like in TEF, the data is broken down by demographic group (such as ethnicity, age etc.), which OfS calls “split indicators”, so it can work out the number of students within each group. OfS then works out the continuation and progression rates for that group to establish whether the group has at least one outcome “of significant concern”.
• Then (I know, I know) OfS works out whether each individual student at the provider in question falls within a demographic group that is “of concern” or “of significant concern” and if more than 75% of a provider’s students are “of concern” or “of significant concern”, there is a presumption that Condition B3 will not be satisfied.
• Next, allowances were made for demographic factors – the presence in the student population at providers like Bloomsbury of significant numbers of students disadvantaged by socio-economic factors, or by having left school without taking A-levels. OfS did this by reducing the baselines or thresholds generally, making a further reduction of 15 per cent in the case of part-time courses, and then refusing to make further reductions for courses whose students have never taken A levels and who start with a foundation year before going on to what would otherwise be a 3-year first-degree course. Phew!
• Finally, the third stage is “context” – an assessor then takes into account “the context in which the provider operates, such as the type of provision it offers and its size”.

Policy or operational?

Buried in that tale are questions about who designed that stage 1 and 2, and who applied the thresholds that made numbers “of concern”, “of significant concern” or “of no concern” – the OfS board (and its quality subcommittee) or OfS staff. In other words, was all of that stuff about numbers and splits and thresholds a policy matter, or mere operational detail.

Crucially, very little of the approach underpinning the above tale went out to consultation, or even went to the OfS board or the OfS quality committee. Most of the above was set out in a “secret” document written by OfS staff. And therein lies the problem.

OfS tried to argue that there’s no “magic distinction” between a policy decision and an operational decision, and one of the judges agreed that there may be cases where it is difficult to say on which side of the line the decision falls. But on this one he considered that:

The baseline decisions I have just summarised fall well on the policy side of the line and could not by any stretch of the imagination be described as merely operational

Ouch.

As such, on the one hand, a technical tussle over who was allowed to do what might be easily fixable – OfS just changes the scheme of delegation in the future. But on the other hand, what we have here is a court saying “this stuff ain’t a bit of operational detail mate – it’s policy”. And once you’re there, old fashioned notions like consulting widely on things and having boards be responsible for considering things kick in. And that’s where the second grounds for appeal get interesting.

Transparency and consultation

Again for all the detail here read the judgement – but this second argument rested on whether, if these things that in the end affected Bloomsbury were actually policy matters, whether OfS should have done those things you have to do (under HERA) like consult, have people like me weigh up pros and cons in blogs, run roadshows, engage with students, and so on. That sort of stuff.

Again, OfS tried to play the operational detail card – but again, failed. OfS did comply with its obligations under s 75 of HERA to consult on and then publish the regulatory framework – but the killer for one judge was that neither of these made it clear that OfS was minded to make no special allowance for courses involving a foundation year. “This may not have mattered to most providers; but it mattered enormously to Bloomsbury”, he notes. He continues:

I consider that the foundation year course policy decision cannot properly be described as a matter of granular detail; and that the failure even to publish it, still less to consult on it when it was at the formative stage, constituted clear unfairness in the treatment of Bloomsbury. “

OfS then tried to claim that it only sent Bloomsbury a provisional letter and that it was allowed to appeal. But the court disagreed – arguing Bloomsbury was by then in a far weaker position than it would have been if it had been allowed to make representations at the policy formulation stage.

Come again

All of which takes us to the third grounds for appeal, on whether the actual use of the numbers and splits and so on was “rational”. Sadly, we don’t get a decision here. One judge actually says OfS’ explanation of the second stage of its demographic threshold analysis (see, you weren’t the only one) was “very hard to follow”, and “I believe that I was not alone in that respect”. In other words, he gives up working out how it worked – but in the end concludes he doesn’t need to know, because the appeal is allowed on the other two grounds.

So where does all that leave us? First, practically because the appeal is “allowed” OfS’ decision of 23 May 2019 to refuse Bloomsbury’s application for registration is quashed. That’s quite big.

There are then associated issues for what Bloomsbury does next, who’s paying the costs for all this, and so on. At the very least the court ordered OfS to repay Bloomsbury £144,500 – one large university’s whole registration fee, paid for from student fees, of course. The court also refused OfS’ application for permission to appeal to the Supreme Court.

Next, there’s a whole bunch of other providers who’ve been refused on the basis of the B3 bear who will be studying the judgment carefully and may well be arguing they should also be let onto the register. Everyone will want to avoid them having to go to court to get there.

Will this all make a difference? In theory, OfS just amends its scheme of delegation, consults on what’s there now, concludes it was right at board or subcommittee level, and then we’re back square one. But remember there’s still the lingering question of the “rationality” of the approach.

The whole case is a fairly stinging rebuke to the way that OfS worked in that period of initial provider registration. A much more open and transparent set of behaviours is likely to be now required, and specifically over these aspects of the application of baseline thresholds to outcomes of provision.

But most importantly, we’re going to need to see an OfS that debates – in public – the policy implications of its proposals on metrics. Remember that OfS has promised an autumn consultation on doing everything described above at subject level inside providers. That won’t be an easy consultation – if you’re a university whose outcomes for a particular subject would fall below the threshold, you’ll obviously argue about the proposal. But it will have to be done, in public.

It means – for example – being able to have a proper debate about non-continuation for certain types of student. It’s almost always framed as negative by politicians and by the regulator. But do we know? Is there robust data on why students don’t continue and do we know if there are differences in reasons for different demographics? Bloomsbury would assert there are – now it might get to put that assertion to OfS in public.

As we’ve been reminded repeatedly during the 2020 A level and Highers scandals – formulae and algorithms aren’t “pure” or mere “science”. They have real-world implications on people and lives, and the assumptions that go into their design have biases and are political. If there was ever a sector that ought to be defending the right to question, interrogate and debate those policy and political questions in public it’s undoubtedly higher education.

—

John Fairhurst, Academic Principal and Managing Director of Bloomsbury Institute, said: “This judgment is a validation of the professionalism and expertise of our staff and allows us to continue our mission to support students from diverse backgrounds who might otherwise not have the opportunity to enter higher education. Over 90% of our students come from disadvantaged backgrounds. Our goal is to make higher education an inclusive and open space, offering all people, from all backgrounds, the opportunity to define and pursue success through education.

An OfS spokesperson said: “The judgement raises important public interest issues for the OfS and other regulators and public bodies. We are considering the implications of the judgement and our next steps.”