As we embrace the new year, Lisa Randall, head of education at RSM predicts some of the key themes for the education sector in 2019.
1. Brexit and beyond
Brexit could have a profound impact on the education sector - impacting EU students enrolment; research funding; knowledge exchange; and the financial stability and contribution of the sector. HE leaders wrote to the Government in January 2019 to raise these concerns and the letter was signed by universities across the spectrum, the Russell Group, Million Plus and University Alliance, as well as by Universities UK and Guild HE. As we wait for more clarity, educational providers need to start planning ahead for potential scenarios, including how Brexit will impact regulation and compliance; financial planning and forecasting; people and talent management; and organisational management.
2. A focus on accessibility
This year will see the outcome of the Office for Student’s access consultation, and the details of the new approach that will impact access and participation plans. If the current proposals are accepted, then education providers could be faced with greater penalties for not meeting targets – highlighting a new risk for 2019.
3. An Apprenticeship opportunity
Following the introduction of apprenticeship reforms and the apprenticeship levy, the apprenticeship training landscape is increasingly complex with provision under both the levy and non-levy, and a system which the government is continually reviewing. The Register of Apprenticeship Training Providers has been re-opened for applications by new providers; and existing providers will also be required to re-apply, in phases. We have already seen turmoil in the independent training provider market. But, despite the initial challenges, could apprenticeships provide a key area of growth and revenue stream for further and higher education organisations as more employers seek to utilise the levy in 2019?
4. A change in focus
The changing of the guard from HEFCE to the Office for Students last year has changed the focus of the regulator for the benefit of current and future students rather than regulation for the benefit of higher education institutions. The full impact of this change has yet to be felt, but as the first stakeholders of the Office for Students will no longer be higher education institutions then this could be the year that institutions feel the full force of change. This could be especially pertinent given that it has been reported that a number of higher education institutions are in financial difficulty. Previously, HEFCE may have intervened to support the institution, whereas the OfS will intervene to support the students; and what is best for the students may be managed closure and re-provisioning.
5. The Augar effect
Many universities will be keeping a close eye on the outcome of the Augar review expected later this year. The review panel is looking at ensuring that the funding system provides value for money and works for both students and taxpayers; and that the right incentives are in place to promote choice and competition across the sector. The announcement before Christmas that the unrepaid element of student loans will now be on the Government balance sheet, and thus part of the deficit, will be part of the considerations of Augar and his team.
We anticipate that the review will call for the introduction of shorter and more flexible courses such as accelerated degree programmes and greater emphasis on technical qualifications to provide greater choice to students, which may result in reduced fee income for universities - posing a threat to income streams.
6. An insolvency first
In further education, a formal insolvency regime will come into force on 31 January 2019, with a special objective to protect existing students at an insolvent institution. When it becomes operational from April, how will it work alongside intervention? With the mounting pressure on struggling colleges, will we see our first insolvency case in the sector in 2019?
7. A sustainable future
With diminishing revenues and greater financial pressures from increasing staff and pension costs, budgeting on a longer term basis is becoming increasingly more difficult for multi-academy trusts. For some it is not obvious where growth will come from, however some will diversify income streams; others will streamline; and some will be looking to merge to gain efficiencies and scale. So, 2019 could be the year of ongoing change to ensure a sustainable future.
8. The right tone at the top
As multi-academy trusts get bigger, the ability to govern and implement a cohesive culture whilst ensuring consistency of performance and ethos across many sites can be tricky; so, governance and gaining the right tone at the top will be key to success in 2019.