The state we’re in

If we look at the published ‘Higher Education Implementation Plan’, we can see another delay.  We have seen no detail  ‘on how and whether Government will proceed with a monetisation of the Student Loan Book’.  (As I suggested in an article last year, I believe the main plans for monetisation through bonds securitised against graduate repayments are unviable – see ‘Into the Shadows’ Research Fortnight 381,14 December 2011.)

Delay to these measures entails delays to drafting the relevant paragraphs in any Bill (for example, ‘monetisation’ would require the creation of a new special purpose vehicle to create the bonds).

What’s substantively new since December are the noises about the planned 2012 Higher Education Bill being postponed.  Though this has yet to be confirmed officially, the difficulties around the NHS Bill and changes to welfare benefits mean that in the interest of sensible tactics, the Government may choose not to open up another battle, and leave further contentious primary legislation alone at this stage. The junior coalition partners will also be in no rush to return to higher education debates that have been so problematic for them.

Besides this ‘high politics’, there are other indications that the government is engaged in a tactical withdrawal: reculer pour mieux sauter.

First, there must be primary legislation before 2014/15: Hefce need the power to control access to the loan book otherwise they will have no ability to control student numbers at that point.  New powers mean new primary legislation. (Hefce controls grants, the purse strings exact compliance; from 2014/15, many institutions will be receiving no grant and hence have no reason to heed ‘core’ allocations).  The Implementation Plan reads: “In 2012: Legislate to allow HEFCE the power to attach conditions to the receipt of grant and access to student loan funding, and to monitor institutions to ensure financial stability, and intervene if necessary.”

Further Developments

1. The government has commissioned a survey of private providers offering higher education in the UK.  The relevant tender was only published over the Christmas break.  I suggest that this survey will be purely instrumental – designed to produce evidence that can rebut the successful campaigning against for-profits and sub-prime degrees, which has often been conducted through comparisons with the failures of the US market.  Can the government find the ‘good news’ about how this sector works in the UK?

2. The Cabinet Office has announced a comprehensive review of the 2006 Charities Act and consultation which will close on 16 April 2012.  Lord Hodgson, the conservative peer leading the review, has a background in finance and securities.  He is seeking evidence on several topics including ‘exempt charities’, public benefit, and ‘mergers, restructuring and winding up’.  These have particular relevance for English universities. Most interesting is the call for evidence on ‘organisational forms’.  Within that document we find the following paragraph relating to charities with statutory and royal charters, a category which covers almost all English universities :

“A relatively small number of charities are constituted as corporations by legislation (statutory corporations) or by Royal Charter. Where these charities want to make constitutional changes there can be complex, lengthy and bureaucratic processes involved. The Law Commission will be considering issues that affect charities established by statute or Royal Charter as part of its Eleventh Programme of Law Reform, but it would be helpful if, as part of this Review, respondents pass on any comments they have on what they consider to be disproportionately burdensome requirements that affect such charities.”  (my emphasis)

This is exactly the same theme as was addressed by both Question 21 of the Technical Consultation, (“Would you welcome legislative change to make the process of changing legal status easier?”) and paragraphs 4.35 and 4.36 of the White Paper which positioned this possibility in relation to freeing up universities to better attract private finance. The Charity Commission responded to this clause by warning that any possibility of higher education institutions ditching their charitable status to attract equity investment would rewrite charity law.  This review therefore prepares the groundwork for one of the main aims of the white paper – enabling private equity investment in established universities, and even enabling their buy-out.

3. As rumors about HE moving out of BIS to the Department of Education gather pace, Michael Gove played his hand orchestrating the campaign against the appointment of Les Ebdon as Director of Offa. He has frequently demonstrated his powers as a political operator, seems to have David Cameron onside and will be the chief proponent for the machinery of Government changes that would see  universities transferred to his control, possibly with the loss of David Willetts in the process. Last week, Chuka Umunna tweeted “We are firmly of the view that higher education should stay within BIS but can Cable resist takeover attempts by Conservative colleagues?”.  Malcolm Gillies, vice-chancellor at London Metropolitan knows he needs whoever is in charge onside, so it may be no coincidence that had a lot of nice things to say about Michael Gove in this week’s THE.

4. The Sunday Times reported yesterday that there are discussions underway to allow universities to go private:

Officials are exploring whether universities could keep state funding for research, but opt out of government cash for teaching and student loans. They would also escape much of the regulation imposed by the Office for Fair Access (Offa), which polices the social composition of universities’ student intakes.

Some of the richer universities have long-threatened to take their institutions out of the public realm and this Government’s reduction of the teaching grant has laid the foundation for these sorts of policy questions to receive serious discussion. Further legislation would be needed to make this happen and it would be politically divisive – this would be one of the few clauses in an HE Bill that could be easily understood by a non-specialist audience and could attract a fair amount of scrutiny. The idea also raises some very difficult questions about how independent institutions could conceivably be part of the graduate repayment scheme or whether they would in fact need to charge upfront fees.

So where are we?  I believe this all points to the following conclusion: the Government intends to push through higher education legislation in 2013.  And if the charities review and the private providers survey produce the desired results, then policies will be broadly consistent with the plan laid out in last year’s White Paper. But with Gove in charge, the Tories will have a more effective caudillo to get the job done.

A version of this post originally appeared at Critical Education.