The market is free, yet everywhere it is in chains

Image: IKON

You don’t know what you’ve got till it’s gone. It was certainly my overwhelming reaction to reading the Higher Education and Research Bill (HERB). Ever since I started practice, the defining piece of legislation on HE regulation has been the Further and Higher Education Act 1992 (FHEA), and like so many things, familiarity bred contempt to the point that I craved a new Act and a new, coherent regulatory framework.

On Thursday, I suppose I finally got it, with both barrels. “Be careful what you wish for” has rarely seemed more apt.

So what’s changing from the legal perspective? The short answer is “a lot” so I will focus on what I see as the big changes.

We will have the Office for Students (OfS), an organisation whose role and make-up, so vastly different from HEFCE’s, will in my view set a very different tone to regulation. The guiding principles under which OfS must operate are instructive: there must be more quality and choice for students, competition between providers, value for money, equality of opportunity in access and participation. Considerations relating to the interests of incumbent providers, or achieving a level of stability likely to be necessary to safeguard the overall reputation of English (and therefore UK) HE are conspicuously absent from the list.

The OfS is to be guided in the discharge of its functions by the Secretary of State, who, while having regard to broad concepts of academic freedom and the sanctity of academic judgment, may issue guidance by reference to “particular courses of study”, an express and pointed reversal of the position under FHEA where grant conditions were not permitted to be framed by reference to particular courses.

The OfS will be run by a board and chief executive appointed by the Secretary of State and capable of being removed by him for, amongst other things, “such [other] grounds as the Secretary of State considers appropriate. The members of that board must wherever possible reflect the desirability of having experience of: the interests of students, providing HE across the full range of provider types, employing graduates, promoting choice and competition in other sectors; regulating other sectors, and management and finance.

So in the OfS we will see the creation of a regulator whose role is about as far removed as it is possible to be from preserving the status quo, run by people whose collective experience will not major on HE as we know it, appointed by and far more explicitly answerable to a Secretary of State with greater powers to drive institutional behaviour from an academic perspective. Nothing to worry about there, then.

The OfS will have a wide range of functions, centred on the creation of a statutory register of HE providers. Registration will require compliance with a series of initial and ongoing conditions, including some that may be specific to individual providers. Aside from certain mandatory conditions, the power to impose conditions is constrained only by an express obligation to ensure that they are proportionate to the regulatory risk posed by the institution, defined as the risk of an institution failing to comply with regulation by the OfS.

Mandatory conditions include: obligations to provide information and notify changes to OfS; obligations on certain providers to publish admissions data by gender, ethnicity and socio-economic background; regulation of fee limits; and the requirement to have access and participation plans in order to charge higher fees.

An area where the power to impose conditions is expressly stated is in relation to quality and standards, including the power to require particular standards to be applied. “Standards” means “the standards used by an institution to ascertain the level of achievement attained by a student undertaking a higher education sector course provided by it.” The sector that for so long has guarded fiercely its autonomy over degree standards appears to have lost the battle; the grade inflation doom-mongers will be rubbing their hands with glee.

Some might point out that over recent years HEFCE, by generous and imaginative interpretation of its statutory powers and duties, has moved towards a more explicitly regulatory role and so question whether any of this will make any real difference. I think it will for many reasons. HEFCE’s incremental change in role occurred with the tacit support of a broadly homogenous, compliant sector that recognised that its interests remained at the heart of what HEFCE was trying to do. HEFCE did not have to cater for the challenges posed by some of the less desirable parts of the alternative provider market, or implement the policy of a government so overtly hostile to incumbency. But the main reason we will see a difference is because of the statutory powers of enforcement that OfS has, something lacking from the non-statutory regulatory framework that HEFCE built.

What will this enforcement entail? Fines for breaches of regulatory conditions, suspension of registration and deregistration principally, but also refusal to renew access and participation plans in appropriate cases. For particularly serious cases of breach of registration conditions, the OfS and/or Secretary of State can apply for a search warrant to enter premises for the purposes of investigating the alleged breach. I can’t imagine that this power is intended to be exercised to raid a meeting of an exam board because the grade boundary between a lower and upper second-class degree is not sufficiently robust, but in the regulatory brave new world we face, who knows?

Other key duties of the OfS include to assess or make arrangements for, the quality and standards of the education provided by English HE providers. This is a huge departure from FHEA 1992, from which it was clear (notwithstanding some impressively creative and concerted recent efforts to argue to the contrary) that standards were the preserve of institutions.

The OfS will be responsible for authorising degree awarding powers and university title and revoking DAPs and UT for both new providers and incumbents, except, it appears, where university title was secured through the Companies House “route”. The reason for excluding universities registered via this route is not clear to me; colleagues in my corporate team have suggested it might be because a separate process for revocation exists, but it seems a missed opportunity to regularize the position for all providers. No doubt the thinking will become apparent as HERB moves through its Parliamentary passage.

Removal from the register of higher education providers (or indeed not being on it in the first place) appears to be grounds to revoke university title, giving extra teeth to enforce compliance with registration conditions, and perhaps also preventing institutions from deciding to try to operate outside the registered system if at all possible.

All enforcement decisions by the OfS can be challenged in the First Tier Tribunal, a court established to deal with appeals against decisions from various regulators such as the Charity Commission and the Information Commissioner. Looking again at the sorts of conditions that the OfS can enforce, there is the possibility of the Tribunal becoming involved in matters of academic quality and standards in a quite unprecedented way.

The OfS will be responsible for the approval of access and participation plans. Again, the Secretary of State can make regulations about what needs to be included in the plan and therefore what institutions should be doing to improve access and participation, including how underrepresented groups should be targeted, and what financial support should be available to them. The scope for erosion of institutional autonomy is clear.

The Secretary of State has the power to confer supplementary functions on the OfS. It seems very likely that the Prevent monitoring duty will be transferred to it; less clear is what will happen to HEFCE’s principal regulator role for HE providers who are exempt charities.

The promised deregulation for higher education corporations in England is provided by allowing them to set their own instruments and articles of government, subject only to any public interest governance condition that the OfS impose on registered providers. Such a condition may specify different principles of governance to apply to different providers but must include academic freedom for academic staff at all registered providers. It seems that this will be extended to alternative providers, most of whom are not technically subject to the current protection for academic freedom, such as it is.

Higher education corporations in England will be given greater control to decide their own futures by asking the Secretary of State to dissolve them and transfer their assets and liabilities elsewhere, although interestingly have not been given the wider power FE colleges have to dissolve themselves by resolution. Speaking of FE, an FE corporation will be able to be re-designated by the Secretary of State as a higher education corporation irrespective of the percentage of its FTE students undertaking HE.

Some, maybe even a lot, of this may change as the Bill works its way through Parliament, but the main principles on which it is founded are unlikely to. We will undoubtedly be left with a more explicitly regulated, less autonomous and less stable English higher education sector, with greater risks for prospective students, students and graduates alike. I only hope that the upside, whatever Ministers think that might be, is worth it.

3 thoughts on “The market is free, yet everywhere it is in chains”

  1. Mike Picken says:

    Important set of issues covered here.

    I wonder how far the Supreme Court decision in the New London College case 2013 (a case involving the powers of a different government department – the Home Office) acts as an ‘enabler’/’green light’ for the power of a Secretary of State to make binding regulation on the HE sector outside the scrutiny of parliament? The New London College case doesn’t prevent future judicial reviews of incorrect decisions, but basically says that if you want to join a club, you don’t have any power to challenge the rules even if they can be changed at will and by administrative processes by those making them outside any democratic scrutiny. It is nearly 40 years since Lord Hailsham famously coined the phrase ‘Elective Dictatorship’ – in relation to HE regulation this phrase seems to fit the zeitgeist more and more.

  2. G.R.Evans says:

    It is to be hoped that both houses of Parliament will put up as effective a fight against the creeping intrusion of state control into academe as they did before the passing of the 1992 Act. That got us the protection Smita mentions, that ‘grant conditions were not permitted to be framed by reference to particular courses’, now to be removed.

    My own concern is that a Secretary of State is not likely to have time or energy to do all this decision-making personally. The Carltona doctrine can still allow civil servants to make decisions on behalf of Ministers (Carltona Ltd -v- Commissioners of Works CA [1943] 2 All ER 560). Is BIS going to have a field day exercising these new powers to interfere in academic matters itself?

  3. David Melville says:

    Excellent analysis Smita. This is a radical break up of a covenant which has enabled a tacit partnership between universities and the state and in turn facilitated a world renowned HE system. I fear that with all of the attention on the transient issues of the TEF and fees, the sector is sleep-walking into future which puts its very nature at huge risk.

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