HE Power List 2017: The rise of the regulators

One of the phrases of the summer has been “constructive ambiguity” which, though designed for a very different subject area, is a pretty accurate way to characterise the era of HE regulation on which the sun is now setting with the enactment of the Higher Education and Research Act (HERA).

Perhaps the degree of ambiguity was unsurprising, given that the regulatory landscape had evolved incrementally and in response to Government policy shifts rather than as a planned system: HEFCE was a funder asked to act as market regulator without the statutory authority to do so; QAA was a sector-owned quality assurance body asked to exercise quality regulation of alternative providers on behalf of the government; two of the most potent regulators, the Home Office and the CMA, came from outside the sector altogether. This led to a lot of “constructive ambiguity” or as it might better be described, fudging.

Remember when HEFCE suddenly remembered that it had apparently always had a duty to protect the collective student interest when referring to it in the first Memorandum of Assurance and Accountability published in 2014? Or the curious “voluntary” agreement relating to institutional designation for student support entered into between HEFCE and sector bodies in the same year? Or the quality wars which raged over whose responsibility the assessment of quality and standards was?

HERA does away with much of this ambiguity and in its place creates an explicit scheme of regulation with the potential to change the nature of both the HE sector as a whole and that of individual institutions operating within it. Small wonder then that the upper echelons of this year’s Power List contain the senior leaders of a number of sector regulatory bodies as well as the politicians to whom they will ultimately answer.

The “registered” sector

Take the OfS’s duty to establish a register, impose conditions of registration and impose sanctions for breach. Already this summer we have seen calls for those conditions to tackle issues as varied as: VC’s pay; the form and content of student contract institutions must use; and perceived grade inflation. These are issues that have exercised politicians for a long time (the grant letter to HEFCE has, for example, for many years urged action on perceived excess in senior executive pay) but now there is a clear legal path to taking action that hurts, all the way up to deregistration and loss of university title. How the OfS responds to pressure to take robust action will be extremely important in the future development of the HE sector. It has a duty to “have regard” to the need to protect institutional autonomy, but this is balanced against a range of other issues to which it must have regard, including promoting value for money, informed choice, competition and quality. The potential for autonomy to be eroded on pain of enforcement action is clear. How far will the OfS go in defending it?

There is a range of other ways in which the OfS will end up influencing the sector as we know it. The nature and number of new providers it registers, the relationship it establishes with the designated quality body, how it approaches student protection plans are all matters that could have a pronounced cultural impact at a sectoral level. At present we are used to thinking of the sector in terms of traditional and alternative providers. As the new “registered” sector beds down, these distinctions will become less meaningful, and we may start to see new alliances forming to lobby for particular treatment by the OfS. The already fractured voice of the sector could splinter further.

Then there is the impact the new regulatory scheme could have on the culture of individual institutions, about which I have written previously. The need to ensure cross-organisational compliance with regulatory requirements has had a big impact on the culture of firms in my profession, for example. We have had to make senior-level appointments as compliance officers; there has been a real focus on implementing and enforcing new compliance processes and systems and a need to take action against even high performers if they are compliance mavericks. 

For those who remain unconvinced about the degree to which regulation can change the sector, I would highlight the examples of the two regulators who have been unconstrained by the constructive ambiguity that has hitherto prevailed: the Home Office and the CMA.

The Home Office through the Tier 4 sponsorship system became in a relatively short space of time an incredibly powerful regulator of the HE system’s relationship with international students, dictating who could recruit such students, where they could teach them – they were not keen on satellite campuses in London, generally – which countries they could recruit from, and so on. Some would argue that Prevent represents another form of intrusive Home Office regulation of activities on campus.

The CMA took a much more extensive and interventionist role in the sector and successfully prompted a quite extensive change in the sector’s approach to consumer protection in the sector in a little more than 18 months. That has affected how institutions behave when bringing new provision on-stream or changing or closing down existing provision, facilities and resources. It has been about a lot more than a new set of terms and conditions.

For all these reasons, it seems to me that the unambiguous power the OfS and other regulatory bodies will have to influence the sector justifies their prominence in this year’s Power List.

See the full 2017 HE Power List on Wonkhe

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