Good regulation requires “appropriate touching”

What can higher education learn from other sectors?

That was the title of the session I chaired a week ago today, at our regulation conference It’s Alive! The answer is a heck of a lot, especially in terms of how “light touch” the OfS might be (or not), as revealed by the two excellent speakers.

Isabel Nisbet has so many regulator hats I can’t keep up. She worked at the General Medical Council (GMC) regulating medical professionals, at the Council for the Regulation of Health Professions (CHRP) regulating medical regulators, at the Postgraduate Medical Education and Training Board (PMETB) regulating medical training, and was the first CEO of Ofqual, regulating exams and qualifications. Currently, she’s on the board of Qualifications Wales, again regulating exams, and on the receiving end of regulation on the boards of two universities.  

Wonkhe author Tim Aldrich is about to move from KPMG to the GMC, to set up their strategy function. He’s spent over a decade working in regulation across higher education, water, law, telecoms, and most extensively healthcare.

Regulating more publicly, and for the public too

Nisbet pointed out that statutory regulation is different, involving a structured, open relationship, based on registration. From next week higher education providers must work to get on the register and to stay there. Aldrich explained that in some ways registration and/or licencing are required in other sectors, whether it’s an NHS Foundation Trust being required to register with the Care Quality Commission (CQC) and get a Monitor licence, or Ofsted’s register of childcare providers. Regulators usually have a phased series of escalating sanctions at their disposal, from inspections and fines, through to deregistration. At each stage, those sanctions will be public.

Any regulator should be focused on those people who are receiving the regulated services in question – so in the OfS’s case, that’s students. But as Nisbet pointed out, they also need to give informed members of the public confidence in those services too, so that their “reasonable expectations” are met. This should be about more than just newspaper headlines. And it will be interesting to see where the interests of students and the public are seen to overlap, or not.

As a topical case in point, I think that the minister and UCU have been effective at being seen to champion student interests recently, whereas providers and the OfS have been slow. How might that play out if a university starts to fail? One of the wider debates at the conference was whether OfS will seek to “show it’s different” to its predecessor organisations by demonstrating that it is independent of the minister and Number 10, or by making an example of a provider or two. Given Sam Gyimah’s stated desire for OfS to “have teeth”, and which direction the power flows, there’s no doubt in my mind which of the two options it will be. If I was a struggling provider in greater London I’d be worried.  

Without speculating how actively “institutional failure” might be pursued, something that Nicola Dandridge had made clear earlier in the day wouldn’t be a deliberate intention of OfS, Aldrich pointed out the new system had been designed with an expectation of failure at some point, echoing Dandridge’s ”no more propping-up” statement. He explained how important “regulatory culture” is, and that “financial pressures and politics can trump regulatory policy”, as immediate crises overtake carefully laid out plans and processes. Will OfS shield the sector from any of that pressure as a HEFCE-style buffer-body, or will it simply pass it on, or even amplify it? In my view, early signs are of the second or even third of those options.

A parallel theme from the session (and the day) was that of “new market entrants”. It’s been received wisdom in parts of Whitehall for some time now that what the sector really needs is innovation and efficiency from new (alternative/private) providers. However, as the National Audit Office (NAO) has repeatedly found, it’s not that straight-forward. Earlier in the day, Mark Leach asked Dandridge if the sector needed a New Universities Network, akin to the controversial New Schools Network, an idea I first heard mooted by a minister’s adviser last year. She didn’t really comment on that, but it’s clear to me that faith in the impact of new entrants often overshadows what could be achieved if the existing players were “encouraged” to change, especially those that are the most set in their ways and rely on history, existing advantages, and reputation – rather than the value they add.

Regulatory powers get used eventually

Nisbet reminded us of the five principles of good regulation identified by the 1997 Better Regulation Task Force; proportionality, accountability, consistency, transparency, and targeting. However, she said that since the 2008 economic crash “light-touch regulation has had a bad name”. The higher education sector “should not expect light touch”. Instead, there will be a structured, public relationship – with the OfS prepared to impose sanctions and to consider interests other than those of the sector. This could include the role of “stewarding” on behalf of the wider public, but also for past and future students.

Where a market isn’t allowing choices – such as due to monopolies or price-following – the regulator may intervene. In Nisbet’s experience, a lack of choice due to price always causes the regulator to intervene, which has to be one possible outcome of the post-18 review.

Aldrich also pointed out the parallels between OfS and NHS Improvement (what was Monitor). After initially trying to focus on regulating a market, the latter has been forced by events and politics to instead focus on the messy and difficult task of improvement, not just regulation, especially as about twelve NHS trusts now have budget deficits. Apparently, there are now Monday morning meetings for NHS system leaders and “patient advocate” Jeremy Hunt, exactly what a “light touch market regulator” was supposed to avoid. Again, there are similarities in schools, where school improvement funding that was removed from local authorities is slowly being reintroduced via other means as political pressure grows around perceptions of slow progress or failure. Who wins if a hospital, school or university goes bust? And who’s to blame?

Aldrich saw some parallels between HERA2017 and the H&SCA2012, noting similarities in their rationale, passage into law, and controversy levels. He also highlighted the ongoing tensions being played-out in healthcare between the contradictory desires for “competition and integrated care”.

As written about elsewhere on Wonkhe, a “risk-based” approach requires data, and that invariably requires greater burdens. Aldrich suggested that although “low-risk, established providers” may initially have a “light touch” regulatory burden, it only takes one or two high-profile examples (think Mid-Staffs in health or Richard Reid in airport security) to increase burdens across the board.

For me, one of the most telling remarks came from Nisbet, who explained that in her (very extensive) regulatory experience, powers always get used eventually. No regulator, despite reassurances otherwise, had not, in the end, used the full extent of the powers available to them. Although I don’t think OFFA ever audited or fined providers over their access agreements, perhaps it was just a matter of time or personnel.

Nisbet also pointed out that there are likely to be legal challenges to sanctions. She used an example of when Ofqual had to be “quick and bold” in order to be seen to act in the public interest, eventually being proven right later in the courts.

Right touch not light touch

Aldrich pointed out that regulatory theory – apparently Dandridge’s current choice of bedtime reading – can be technical and hard to access, full of those long “economicky words” that can feel inaccessible and inappropriate to many working in public sectors such as health and education.

I was also reminded of the ongoing debate in schools about whether Ofsted should decide what good or outstanding is? Or, whether it should be more like the Food Standards Agency, just indicating if a provider is safely above a minimum threshold. We rely on Michelin and others for guidance on what “good” food is. We rely on the FSA merely to indicate if food is safe. It remains to be seen how nuanced OfS’s approach will really be in judging what is “the good, the true, and the beautiful” in higher education.   

Reflecting on nearly a decade as a school governor in East London, I’m also surprised that governance hasn’t featured more in OfS’s documents and statements, beyond its own “teething troubles”. As OfS steps back from HEFCE’s buffer role, institution’s boards and leaders are exposed to a growing list of issues and in new ways.

So, despite some warm words, it’s clear that regulation from OfS won’t feel light touch. It will be more open, more structured, more demanding, and at times – more heavy-handed. Whether it is appropriate – “right touch” as the Professional Standards Authority calls it – is likely to be an ongoing debate. We can expect the courts, the media, and the public, to all be involved in that debate. The smarter institutions will already be thinking about where they might not be meeting the expectations of students, or the public.

 

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