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This is fine: regulation, autonomy, and fear

Autonomy and thoughtful assurance are noble aims, but David Kernohan suspects that threatening universities with fines all the time won't help us get there.

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David Kernohan is Deputy Editor of Wonkhe

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The Office for Students is at pains to be clear it is a risk-based regulator.

This is a common regulatory approach in a mature sector – the assumption is that the majority of participants are of good quality and act in good faith. Autonomy is granted, and the regulator would not step in unless clearly identified minimum standards are not achieved.

However, the lived reality of this regulation – in the registrar’s offices and boardrooms of English universities – is quite different.

Gold plating?

On Wonkhe this morning interim Chief Executive of the Office for Students Susan Lapworth expresses concern about providers focusing on what she calls “documentation” – the cumulative achievement of institutional quality assurance processes and multiple stages of oversight – rather than “compliance”.

She takes pains to encourage universities to focus on their own priorities – and she admits that:

My heart sinks when I hear mature institutions expressing uncertainty about whether and how they should respond to a routine letter from the OfS

In other words, the regulatory position is that universities are suffering from a lack of confidence – making poor use of autonomy and delegation, and managing perceived risk in a belt-and-braces sign with significant attention at a very senior level.

She wonders why this might be.

Fifty-five times universities have been threatened with fines since 2017

This is not an exhaustive list, and for obvious reasons focuses on public rather than private communication with the sector. There’s also a focus on government and regulators – how a record like this contributes to the wider public discourse is a matter for further debate.

2017 (4)

So very fine

I’ve heard it argued (not by a “senior source” I hasten to add) that much of this invective is aimed at voters rather than vice chancellors – a chance to see the government “clamping down” on things. But this is the mainstream media – the radio programme university staff turn on in the morning, the newspapers and websites they read. The repeated message is simple: if you do things we do not like we will fine you. Or deregister you.

The rash of articles after the passage of The Higher Education (Monetary Penalties and Refusal to Renew an Access and Participation Plan) (England) Regulations 2019 focuses on the maximum possible fine – £500,000, seldom noting that a secondary cap of 2 per cent of turnover (defined as fee income plus OfS grants) also applies. This is a discourse of “shock and awe” – feel the width of the fine and tremble.

The actual Office for Students approach to “monetary penalties” is surprisingly sensible in comparison. It takes into account the severity of any offence, the size and turnover of the provider, and the willingness of the provider to make changes (assessed in part via a track record of compliance”.

We do not, yet, have any evidence of how this works in practice. The Office for Students was unable to confirm that any fines had been levied outside what is listed on the monthly bulletin of regulatory activity. The two listed monetary penalties relate to access agreements – one (Writtle College 2018) claws back an underspend on financial support for students, the other (University of Hertfordshire, 2018) relates to fee overcharges on 44 students over three consecutive years. In the latter case the university repaid the students in question, and also received a small (£66,000) reduction from OfS grants the following year.

What to make of it

Threats lead to anxiety, which leads to compliance. That’s pretty much the point of threats. It betrays a limited theory of change – and yields a culture of tick box compliance. Universities very much do not want to be fined (for reputational as much as financial reasons), and will take very careful steps to avoid it.

It’s fair to assume that these careful steps may include the belt and braces approaches to assurance that – although not technically required by the Office for Students – allow senior leaders to sleep peacefully. The way the REF is perceived in universities – as described in Órla Meadhbh Murray’s superb piece for Wonkhe on the topic – offers research evidence for this effect in action as a part of another reputational (and in some cases, financial) risk management process.

I say risk management rather than risk avoidance because there is evidence from other sectors that the language of fines sits very close to the language of commerce – larger concerns in resource extraction or finance routinely incur fines as a part of a cost of doing business. It’s possible a contentious and politically motivated fine (on whatever “free speech” means this week, for example) would actually constitute an anti-establishment filip for a university looking to recruit from the progressive end of the student and staff market.

Approaches to regulation

Former OfS Chair Michael Barber has written a lot about regulatory approaches in and around the public sector. In How to run a government… he described five regulatory approaches:

  • Trust and altruism
  • Hierarchy and targets
  • Choice and competition
  • Devolution and transparency
  • Privatisation

Hierarchy and targets are used to get a public service from “awful to adequate” – an approach that Barber characterises as depending on “a steady supply of reasonably good data on which to base decisions”. It has weaknesses – targets can and do lead to game playing, and it is difficult to further raise from adequate to excellence.

In the early days OfS appeared (not least in the utterances of the then chair, and in the language around the 2017 Higher Education and Research Act) to be attempting to manage a shift between this phase of regulation and one more suitable to fostering excellence – language around student choice backed by high quality information comes straight from the “choice and competition” playbook. As Barber characterises it:

To make it work, the service user must be given real choice and the information on which to base decisions, the money in the system must follow those choices; as a result the more attractive or successful providers will gain and the less successful will struggle

This is market language in a quasi-market world – the government still retains control over inputs, but both government and regulator are becoming increasingly concerned with outputs and their political implications. In a world where we have “strategic priorities” around subject and place we can’t just let “the best” providers get bigger and others go to the wall. The ideas of 2017 have not worked.

Trying another way

So what seems to be happening instead is a move towards “devolution and transparency”. Applicants don’t seem to behave like customers, so we once again need regulatory accountability. To quote Barber again:

It involves devolving power and responsibility to managers close to the frontline and then, through transparent publication of data on outcomes, holding them to account

This is very much the “name and shame” approach borne out in the constant language around fines and interventions, in the “transparent public ranking” of TEF and the various dashboards and data releases, and in the push to give more protection to the regulator in calling out individual providers. The prevailing wisdom is that this approach can move you from “awful” to (maybe) “good”. (“Excellence” to Barber only comes from privatisation, or from giving public services money and getting out of the way, though he only really recommends the first one).

Begging the question

What was the state of the higher education sector before the advent of the Office for Students? Overall student satisfaction in England has been at above 80 per cent since we started to measure it in 2005 – it reached a peak of nearly 85 per cent in 2015 and has then declined in a stately manner since the advent of the new regulatory regime.

The world-class research seen in REF 2021 was primarily conducted in the times before HERA. The bulk of the growth in “grade inflation” and in conditional unconditional offers occurred after the demise of HEFCE. Most of the heavy lifting in widening access was done even before 2010. We could go on.

This crude comparison is unfair to OfS for two reasons – the regulator administers a larger and more diverse sector than ever before (though, to be scrupulously accurate, the overwhelming volume of provision is still in the old HEFCE sector), and the new regime has weathered a major pandemic and a geopolitical upheaval that have had far reaching consequences for data time series of all types.

But – to be frank – was the sector really that awful on 31 December 2018? What is the problem to which a move from “awful” to “adequate” (or “good” at a push”) is the only solution?

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One response to “This is fine: regulation, autonomy, and fear”

  1. “Threats lead to anxiety, which leads to [anxious] compliance [and nervous exhaustion]….”

    Reply

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