Ministers could gain the power to set variable tuition fee caps under government plans that also look to merge England’s funding council with the Office for Fair Access, creating a “new sector regulator and student champion” called the Office for Students (OfS).

The higher education Green Paper, published today by the Department for Business, Innovation and Skills, says that the OfS will have a different role and character from the Higher Education Funding Council for England, with even its title – echoing bodies such as Ofcom, Ofgem and Ofsted – indicating that it will be a market-focused regulator.

It would be responsible for overseeing the English sector’s quality assurance regime – and could either take that in-house or continue commissioning it from the Quality Assurance Agency.

The Green Paper – Fulfilling our Potential – Teaching Excellence, Social Mobility and Student Choice – also outlines further detail on plans for the teaching excellence framework and how it will be linked to the future ability to raise fees.

Proposed powers for the secretary of state in the Green Paper include “a power to set tuition fee caps”, with no mention of Parliament's role in the process.

However, a BIS spokesman later said that there was no intention to change the current process, under which any rise in fees above inflation proposed by ministers requires a vote in Parliament.

In combination with the plans to set several different levels of fee following the TEF, the Green Paper may be interpreted as paving the way to variable fees, in which some universities charge significantly higher fees than others. However, the Green Paper talks only about fee rises in line with inflation.

The document is a consultation, inviting responses to its proposals until a deadline of 15 January 2016. However, it is likely to lead on to a White Paper and then a bill. The creation of the new regulator would require legislation, for example.

Jo Johnson, the universities and science minister, told Times Higher Education that the Green Paper was about “reforming our higher education so that it’s more effective still at delivering value for money for students, for taxpayers, and does a better job still at delivering the pipeline of graduates we need for a 21st-century economy like ours”.

He said the focus was on “driving up teaching quality across the system” and “making it easier for new entrants to come in”, and also reflected the government’s drive on widening participation.

Mr Johnson continued: “To underpin all that, we really need a regulatory structure that puts the student interest at its heart – and value for money for the student, for the taxpayer, at its heart.”

He described the OfS as a “new independent, non-department public body” and as “an evolution” in the sector’s regulation. “It’s an evolution the sector itself has been calling for,” he added.

On fees, Mr Johnson said: “What we’re talking about in the Green Paper is just the inflationary uplift.”

On regulatory changes, the Green Paper says: “We now propose to establish a new regulator and student champion, the Office for Students, and to introduce a single, light-touch regulatory system for all providers of higher education.”

It makes clear that the new regulator will have a statutory duty “to promote the interests of students to ensure that the OfS considers issues primarily from the point of view of students, not providers”.

The Green Paper states that the “majority” of Hefce’s current functions would transfer to the new regulator.

Among the principles for reform cited by BIS are to “create an open, market-based and affordable system, with more competition and innovation, and a level playing field for private providers”.

The OfS would be an “arm’s-length public body” with duties including “operating the entry gateway” to the sector for private providers; “assuring baseline quality”; running the TEF; “widening access and success for disadvantaged students”; “ensuring student protection”; and “assuring financial sustainability, management and good governance”.

Asked whether that spelled the end for the QAA, Mr Johnson said that was not the case, as the agency is sector-owned and it is “not within our gift to change it”.

He added that “the duties that Hefce has to oversee the quality system would be transferred to the Office for Students. It would then be up to the Office for Students to contract to the QAA if it wished to. It might decide it wanted to do it in-house, but equally if it wanted to continue the present arrangements it would be a decision for the new Office for Students.”

The Green Paper outlines two options for allocation of teaching grant, currently carried out by Hefce.

One option is for BIS officials to “determine a formula for allocating teaching grant”. The other option is for the OfS to take responsibility for the allocation formulas, with the Student Loans Company or “another funding body” to make the payments.

Among the proposed statutory duties and powers of the OfS is one to “respect the institutional autonomy of higher education providers and the academic freedom of their staff”.

Meanwhile, the National Union of Students and students’ unions may react with concern to a passage that raises the prospect of reforms in the context of the government’s Trade Union Bill.

“The government is currently taking steps through our trade union reforms to improve union practices and increase transparency around how funds are spent,” the document says. “In this consultation [the Green Paper], we are asking for public views on the role of students’ unions and what further steps could be taken to increase transparency and accountability to individual members.”

The Green Paper also revives plans set out in the coalition government’s 2011 White Paper for changes to the constitutions of higher education corporations (HECs), the form taken by many post-92 universities.

Under the proposals, post-92 universities would be able to “dissolve” themselves as HECs to give them “greater flexibility”.

And the government also wants to “simplify and speed up the process for amending the governing documents of Hefce-funded providers”. The Green Paper says it is seeking views on removing the requirement for changes to governing documents to be approved by the Privy Council.

The Green Paper also raises the prospect that universities could be allowed to become exempt from the Freedom of Information Act, to create a level playing field with private providers, which are not subject to FoI. It says Hefce-funded institutions face “estimated” costs of £10 million a year as a result of being subject to FoI.

“In principle, we want to see all higher education providers subject to the same requirements, and wherever possible we are seeking to reduce burdens and deregulate,” the document says. “However we may wish to consider some exceptions to this general rule if it were in the interest of students and the wider public.”

john.morgan@tesglobal.com