Has the Office for Students got its thinking straight on governance?

The registration process for providers hoping to be on the new OfS Registerlisting all the English higher education providers officially recognised” opened on 3 April. The first parts of the Register will be published in July, with more providers added as they are approved.

It will be possible to “provide higher education” in England without being on the Register, with some estimates of c.522 such providers. However, the governing body of an unregistered provider will still be required to provide OfS with the information it needs to perform its functions, though it is not clear how that could be monitored now the Basic category of Registration has been dropped.

The new Register is designed to include a far wider range of types of provider than HEFCE’s previous Register. Identifying the governing body of a provider will be hugely important to the integrity of the OfS process. A provider’s governing body will be responsible for making the application and for appealing if it is refused. It will be responsible for complying with the conditions of registration, both mandatory and specific.

If OfS informs the provider that it intends to deregister it, the governing body will be responsible for making representations about the stated reasons. It will also be told if its Access and Participation Plan is to be rejected by OfS, and be responsible for amending it.

Its governing body will receive any public funding for which a registered provider is eligible, and will be informed of any OfS intention to revoke the provider’s degree-awarding powers or university title, and may make representations about that too. If the provider wishes to appeal to the First Tier Tribunal against an OfS decision, that is the responsibility of the governing body.

What does a provider gain from registration?

One option available to a provider which chooses not to engage with OfS more than the minimum extent would be not to register at all. The “benefits” of being registered will be mainly financial. A Registered provider may apply to be placed in one of two categories: Approved, and Approved (fee cap). The second category will give access to public grant funding (the remainder of the old block grant), for teaching and research. Research funding under this category must be made available to the governing body through Research England, as part of UKRI.

Providers in both categories will have access to public grant “project” funding administered through the seven UKRI research councils, and their eligible students (both undergraduate and postgraduate) will be allowed to apply for taxpayer-funded student loans, as well as for Disabled Students’ Allowance (DSA). Both categories will be eligible to apply to the Home Office for a Tier 4 Sponsorship Licence, so as to recruit international students. Both will also be able to apply for degree awarding powers and university title.

Governing a provider in the “public interest”

In setting out the requirements for Registration (or identification for default information-gathering purposes) OfS seeks assurance that a provider will be governed in a satisfactory manner.

  • Condition E1 is that: The provider’s governing documents must uphold the public interest governance principles that are applicable to the provider.”
  • Condition E2 is that: “The provider must have in place adequate and effective management and governance arrangements to: (1) Operate in accordance with its governing documents (2) Deliver, in practice, the public interest governance principles that are applicable to it”.

This appears to distinguish “governance” from “management”, but whereas the HEFCE Register – which included mainly publicly-funded universities and further education colleges offering higher education – was usually able to assume that the “governing body” would be both identifiable, distinct from “operational management”, that will not be the case for the OfS Register, which must be designed to include alternative providers of various legal forms and sizes. There will not always be any separation between governing body and operational management.

OfS provides a questions and answers document to assist providers. Question 30 asks how to respond to requirement to identify “key individuals”:

Does this refer to our senior management team or members of the governing body?”

The answer given is that these should be:

“the people who either own or have ultimate control of your provider.”

But it is not straightforward to say who these are, for:

in many providers, this will refer to the governing body. It does not include the senior management team unless its members are also directors of the provider”.

So complex may this become that providers will be asked to describe their legal form, including Company or Charity number if applicable, in order that OfS may be able to check that the various bodies of information it is given refer to the same entity. The governors of an exempt charity will be its trustees, but will the directors of a company necessarily form a provider’s governing body for OfS purposes?

Separating “governance” and “management”

In the new Register, then, it will be possible to find providers which do not make the separation between oversight and management which could be expected in publicly-funded universities. The latter are of familiar types: statutory corporations, whose required governance was set out in the Further and Higher Education Act 1992; providers with royal charters; and the two ancient civil corporations (Oxford and Cambridge). Schedule 8 of the Higher Education and Research Act 2017 (amending the Education Reform Act 1988) adds stipulations about the governance arrangements of higher education corporations in England.

However, it does not address the problem OfS has encountered in providing distinct definitions of a “governing body” and “operational management”.

Doing it by self-assessment?

The “How to submit your application for registration with the OfS” document contains the full OfS guidance available on this point. To satisfy Condition E1 the provider may submit its own “Management and governance self-assessment.” Yet in order to include a potentially ever-widening range of alternative provider-types, separation of “governing body” from “operational management” is left uncertain.

Trying to make sense of the definition in Higher Education and Research Act s.85, the FAQs even conflate the two, explaining that the “governing body” may be “any person or group of people responsible for the management of the provider/company”. Indeed a single individual may be both “the governing body” and “the operational management”:

Can “alternative provider” governance be in the “public interest”?

The OfS guidance requires a provider to “deliver in practice” the “public interest governance principles that are applicable to it”. The principles set out in the recently revised and formerly HEFCE-recommended Higher Education Code of Governance of the Committee of University Chairs were intended for the publicly-funded universities with the conventional separation of governing body and operational management (though with the Vice-Chancellor as CEO commonly present at governing body meetings).

It seems less than clear what “public interest governance principles” could be required to apply to a potentially ever-more-diverse set of alternative providers, likely far to outnumber the category served by the CUC. The view of the Lambert Review of Business-University Collaboration (2003) was that “the sector has reached a point where a voluntary code of governance should be developed, to represent best practice across the sector”. But Lambert primarily wanted to see universities run more like businesses for “business is critical of what it sees as the slow-moving, bureaucratic and risk-averse style of university management”.

And Lambert had barely glimpsed the possibilities which are now unfolding into problems: identifying control and liability in the case of for-profit providers which are operating within a hierarchy of holding companies, not necessarily registered in the UK and at the other end of the spectrum, instances where a single individual sets up a provider as a company which can be run for personal profit.

When the Lambert Review made its recommendations there were far fewer instances of publicly-funded universities setting up campuses elsewhere in the UK or overseas. But since, there have been multiple examples of universities setting up campuses with subsidiaries to run commercial interests under increasingly complex structures. The Office for Students may find it challenging to understanding fully how the “public interest” registration requirements operate across an increasingly diverse sector.

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