A gamekeeper turned poacher reflects on the step-change to statutory regulation

During my years in senior roles as a public servant in the UK, regulation became all the rage.

After working in several Government departments I moved into professional regulation at the General Medical Council, then into regulating regulators of the healthcare professions, then regulating postgraduate medical education, and then regulating exams and qualifications (in England) as the first CEO of Ofqual – at the time a new statutory regulator.

I remain in the regulatory world today through membership of the board of Qualifications Wales, but am also at the receiving end of the new regulatory arrangements for universities as an independent governor of the University of Hertfordshire and the University College of Osteopathy. So, from experience at the giving and receiving ends of statutory regulation, as well as of medical professional (self) regulation, what observations can I offer as the new universities’ regulator sets up its stall in England? Here’s a summary of my presentation to Wonkhe’s It’s Alive! conference on 20 March.

A step-change

My primary message is that the move from internal quality assurance (within a profession or sector) to statutory regulation is a big step-change. In my time at the GMC, there was a deliberate move to greater involvement of patients in the values and processes of the profession, but the reason for doing this was enlightened professional self-interest. It was seen to be in the interests of the profession to reform itself before someone else came in and did it for them (a fear which, to an extent, was realised). Arguably, HEFCE could be seen in a similar light – it was there to improve the sector, even if its interventions sometimes felt “external” to the universities at the receiving end, just as the GMC’s did to some doctors.

Statutory regulation is a structured relationship, often (as with the OfS) based on registration. Acceptance to the register is through a series of prescribed steps, with each applicant assessed against published conditions (which have been the subject of consultation) in a way that will stand up to scrutiny and challenge. Information provided for registration becomes the regulator’s database, and there is inevitably a front-load of work – for everyone concerned – to obtain and store that information.

If a regulated body breaches any of these conditions, or falls short of the standards that the regulator thinks the public would reasonably expect, the regulator will take action. Normally there is a graduated series of sanctions available, including fines and culminating in deregistration – a severe penalty indeed if access to public funding depends on being on the register. Regulators always start by saying that they see these sanctions as a “last resort” and that they will be reluctant to use them (as I said in the first years of Ofqual), but they probably will use them at some stage (as Ofqual -rightly, in my view – did later). Any imposition of a sanction is a public event and the reputational damage to the miscreant can be much more damaging than the penalty itself. Of course, most staff who work in regulatory organisations are sensible, reasonable, people who will be as helpful as they can. But the structured and transparent nature of the relationship is distinctive and different.

More than a nod

There is a strange verb which features in the legislation setting up most modern regulators (including the OfS). It is “having regard”. The regulator is required to “have regard” to a list of things – for OfS these are spelled out in S2(1) of the Higher Education and Research Act 2017. Qualifications Wales has a similar list, as does Ofqual. To the casual reader this may seem just legal-speak for “the best of all possible worlds”, but it is worth reading the list carefully, as it will inform the regulator in setting its priorities, and the courts will look to it if (or rather when) a regulatory action is challenged. At meetings of the board of Qualifications Wales I usually have the “having regard” list in front of me.

The “having regard” list usually highlights the interests of particular sectors of society – typically the recipients of regulated services, those who use the outcomes of regulated services, and those who pay for them. In the case of OfS this means students, employers, and taxpayers. There is a reference to protecting the autonomy of HE providers but not to protecting their existence or viability. And these days the language of markets may feature on the list, often based on the assumption that competition is in the interests of consumers. In the case of OfS that is balanced with a reference to possible benefits from collaboration between providers. Market regulators who are charged with encouraging competition will be particularly concerned where market levers appear to be too sticky – for example, through monopolies or price-following behaviour by the regulated sector. So, watch this space carefully for the OfS.

A statutory regulator will typically be expected to give priority to the interests of the most direct recipients of the regulated service (in the case of OfS, to students). They are its fundamental reference group and also the main source of its legitimacy with the wider public. A new regulator will be on the lookout for an early opportunity to establish its reputation by intervening publicly in the interests of this group, preferably on an issue which the public will understand, and on which most people will take the students’ side. Arguably, lecturers’ pensions is not such a topic…

The public good

Fundamental to understanding the step-change to statutory regulation is understanding what it means to be a statutory body – a creature of Parliament, with its legislation policed by the courts. Its underlying allegiance (over and above the “having regard” list) is to the nation as a whole – to the public good, not the collective private good of the regulated sector. That does not mean unthinking attention to tabloid headlines or public prejudices about regulated bodies, but it does mean considering what the public could reasonably expect of a regulated body. That may be different from the views of students – or, in the case of a listed company, of shareholders. For example, as the on-off saga of VC pay rumbles on, the regulator can be expected to stand back and ask this question.

Good regulation

For over a decade, UK governments of different political hues have subscribed to the five “principles of good regulation” – proportionality, accountability, consistency, transparency, and targeting. These have been written into the legislation establishing many regulators, including OfS. In the early noughties, these principles were associated with “light touch” regulation, though that phrase took a severe mauling in the light of the financial crisis of 2008.

In the subsequent debate, the wording was cleverly morphed to “right touch”, but throughout that debate there has remained an expectation that regulation will be “risk-based”, with the regulator intervening where they see the risk as highest, and keeping out of low-risk areas. That sounds reassuring, but a few home truths need to be considered. First, no regulator is omniscient. In order to assess risk the regulator needs information (which regulated bodies will need to provide). Second, the regulator’s Board will be tasked with defining the organisation’s risk appetite. On issues which they see as endangering public confidence in the whole regulated system, you can expect their risk tolerance to be quite low. And last, what the regulator sees as a risk-based approach may not feel like light – or even right – touch to the regulated body.

So, you should expect a structured, publicly visible relationship with the regulator, based on information which you will be required to provide. Expect a regulator which will be prepared to exercise its powers, will emphasise the interests of students, and will have a view beyond the collective interests of universities. Welcome to the world of statutory regulation, good luck!

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