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Anti-competitive practices in HE?

November 17, 2011

An interview with Vince Cable at the Association of Colleges event.

Following on from his speech at their conference in March, he again makes reference to validation arrangements (whereby an institution with degree awarding powers approves a higher education course run at a further education college). 

The reference to ‘restrictive practices’ indicates that he is worried about universities withdrawing from these arrangements in an environment that sees direct competition between universities and FE colleges. (Especially, in the competitive bidding for the ‘margin’ of 20 000 places).

 On the back of the BIS technical consultation document – which warns against ‘abuses of market position’ and the need for a memorandum of understanding between Hefce and the Office for Fair Trading – my worry is established universities are going to be treated like a monopoly which needs to be broken up or restricted in the short term.

Bids have now closed for the 2012/13 marginal places – 35 000 have been proposed with 20 000 coming from 167 FE colleges and 15 000 from 34 universities charging under £7,500 pa.

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2 Comments
  1. Useful link. Thanks.

    Vince actually refers to franchises rather than validation arrangements. It is possible that he is speaking loosely, but if he isn’t then the issue is about FE colleges funded via universities rather than those merely validated. That makes sense, because funded (or capped) numbers are the key resource that people are competing for at the moment.

    He also talks about asking HEFCE to handle the issue. Since the issue arises from HEFCE’s funding practices, I’d guess that they are likelyt to find that everything is pretty much OK as it stands.

  2. Hi Andrew. Thanks again for commenting. I’d assumed he was talking loosely and meant partnerships in general. Validation rather than franchising struck me as the main issue here, since all bids for degree courses coming from FE colleges would have to be validated by an HEI and hence would potentially be in direct competition with the validating partner. (Excluding from discussion foundation degrees, HND & HNC).

    I think you have more familiarity with this particular issue than me, but since this cheaper competition is only viable because of such partnerships, then exiting from those partnerships would be a sensible strategy for the HEI.

    This is the text from the letter BIS sent Hefce on 28 June 2011:

    “14. It is for the Council to determine the process by which these places are allocated. But it should pay attention to value for money and quality, particularly encouraging bids from FE Colleges and alternative providers with
    the capacity to introduce new, or grow existing, higher education provision.
    “This includes those who want to use an external validator with UK degree awarding powers, and FECs offering HNDs and HNCs. It has hitherto been difficult for some FE colleges to offer HE. This process is intended to make it easier for such institutions that can attract students to be able to expand to meet demand and the Council should take this into particular account in its allocations. The Government also expects both HEIs and FECs to behave responsibly when winding up existing or establishing new franchise agreements or validation arrangements, recognising the HEFCE currently has no power to intervene.”

    I am interested in the ‘currently’ in the last sentence and how that matches up with the new powers for Hefce in the technical consultation.

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