Reclassification ghosts and jam tomorrow at stage 2 of Scotland’s tertiary bill

And if you were after an illustration of how governments can use technical objections to avoid substantive reform, the session very much delivered.

The bill, which shifts apprenticeship funding from Skills Development Scotland to the Scottish Funding Council and tidies up governance arrangements, attracted a surprise volume of amendments from across the parties.

Many of them sought to do things the Scottish Government claims to support – strengthening Fair Work practices, improving transparency, ensuring student and staff voice in governance. Most of them went nowhere.

The star of the show was the Office for National Statistics – or rather the spectre of ONS reclassification – invoked repeatedly (and potentially spuriously) by newish Minister Ben Macpherson to explain why amendments that would impose conditions on universities couldn’t possibly be supported.

Hence Conservative MSP Miles Briggs’s amendment 63, which would have required the SFC to attach conditions ensuring institutions provide student mental health and wellbeing support, was batted off like this:

I cannot support the amendment because there is a need to respect the autonomy of our HE institutions in particular, and to avoid attaching so many statutory conditions to their operation through funding that we risk those bodies being reclassified as public ones by ONS.

Despite the fact that it’s a risk that seems to have been non-existent in Wales, he went on to explain that reclassification:

…would create huge issues for government, but also for our institutions, not least compromising their independence, their ability to raise funds from other sources and to act commercially where it is appropriate to do so.

When SNP MSP John Mason asked how much headroom there actually is, and where the line falls, the minister’s answer was, generously, vague:

Through the last months, I have engaged with Universities Scotland on the question of ONS classification and the careful balance and sensitivities that there are around it… collectively, with my advisors here in government, we have, of course, thought carefully about the balance, and we just need to be very careful about the cumulative effect.

Scottish Labour’s Pam Duncan-Glancy pushed further:

I have also discussed this with Universities Scotland, and there seemed to be a lack of understanding or knowledge as to how it would actually be triggered. So what will happen? Does it have to be 10 amendments are passed, and it was the 10th one that triggers ONS to say you have lost your classification?

The minister’s response?

My understanding is that it’s the cumulative effect.

The spectre of ONS reclassification deserves particular scrutiny. When FE colleges in England were reclassified in 2022, it was because the Secretary of State gained powers to intervene for undefined “mismanagement” and could appoint or remove governors – direct control mechanisms over institutional governance.

The amendments being batted away here – funding conditions for mental health support, Fair Work practices, governance transparency – were qualitatively different beasts. They were requirements attached to public funding, not intervention powers. Wales has implemented far more extensive registration and regulatory requirements through its new Tertiary Education Act without triggering any ONS interest. You get the sense that the MSPs today persuaded to “not move” will pursue an interest in the real risks here.

Governance reform hits the buffers

It mattered most for Scottish Green MSP Maggie Chapman’s suite of amendments on governance transparency and accountability. The former party co-convenor – and current Rector of the University of Dundee, which does concentrate the mind on governance failures – had proposed a comprehensive package of mandatory publication of governing body papers, governance publication schemes, remuneration committees with staff and student input, whistleblowing procedures allowing direct disclosure to the SFC, and conflict of interest policies.

Her argument was straightforward:

We know that Dundee’s crisis was not inevitable. The McGillis report said clearly that it was caused by failure of financial oversight, poor internal controls, lack of transparency, weak governance and a culture that discouraged dissent or scrutiny… We cannot rely on goodwill, reputational pressure or voluntary codes alone.

The minister’s response invoked the cumulative ONS risk, but also argued that “some of Maggie Chapman’s proposed statutory conditions are unnecessary as they already exist in practice.” Which did miss the point that the existing arrangements manifestly failed to prevent the Dundee debacle.

In the end, Chapman’s amendments on transparency of governing bodies (52) and putting the Scottish Code of Higher Education Governance on a statutory footing (53) both fell 1-9. Several others – including on governance publication schemes, remuneration committees, and whistleblowing to the SFC – weren’t moved at all after the minister made clear he couldn’t support them.

The exception was amendment 60, on conflict of interest policies, which the minister supported because “it simply gives statutory effect to what is already done in practice.”

The employment law excuse

If ONS classification was the excuse of choice for university governance amendments, employment law served the same function for Fair Work conditions.

Scottish Green MSP Ross Greer had tabled a substantial package – a 10:1 pay ratio between highest and lowest paid staff, elimination of zero hours contracts, payment of the real living wage, and bringing college principals into the public sector chief executive pay framework. All of these, the minister argued, would breach the reservation of employment law to Westminster.

Greer wasn’t buying it:

We had, for example, before 2021… been told for around a decade that it was not possible for the Scottish Government to set conditions around procurement and grants in relation to the real living wage. And in 2021 the minister’s party and mine, together in September and October, simply delivered that. And it turns out that it was possible to do it.

Duncan-Glancy pressed the same point on Scottish Labour colleague Daniel Johnson’s amendment 73, which would have required value for money, Fair Work practices, and transparency on spend as conditions for grants to private training providers:

I am not sure that I consider that this would be outwith legislative competence, given that it is about when the grant is given to the fundable body.

The minister’s distinction?

There is a difference between grant funding conditions from a body and setting conditions in law which would breach the reservation in terms of employment law being firmly reserved to the UK Parliament.

So the Scottish Government can require the real living wage through grant conditions as a matter of policy, but it can’t put the same requirement in legislation because that would somehow be different. Greer’s response captured the frustration:

What I would say, though, is that the government should then make maximum use of its existing powers to set these conditions directly as a matter of government policy, rather than putting them into legislation… If the government were simply following through on the agenda that it allegedly believes in in relation to fair work, then we wouldn’t need to bring forward these amendments.

Student association funding

For students’ unions and associations, the most significant amendment in the pack was Ross Greer’s amendment 62 – which would have required fundable bodies to “ensure that adequate funding is provided to student associations and unions” as a condition of SFC funding.

Greer’s argument was straightforward:

It is really important for, just as we were talking earlier on, in relation to apprenticeships, for industry to have that independent voice. I think it is important for students at these institutions to be able to have their own independent voice as well. And that is the critical role that is played by student associations and student unions.

He was particularly focused on the college sector:

In the case of colleges, though, it is very often the case that student associations can struggle to sustain themselves in one particular year, and if they essentially fold at that point, it is really entirely down to the management of the college whether they want to put the effort in to restart the student association. That places all the power, then, in the hands of management, and not nearly enough power in the hands of students.

The minister’s response:

I cannot accept amendment 62. Not only does this risk overstepping into operations and funding decisions of universities, but we must consider what is adequate funding in the context of a diverse range of associations and unions, some of which are aligned with NUS Scotland, while others are not.

That last point was baffling – what does NUS Scotland affiliation have to do with whether institutions should adequately fund student representation? The minister didn’t elaborate, and Greer backed off.

In other news, Duncan-Glancy’s amendment 66 – which will require fundable bodies to inform and consult with unions, students and external partners before making decisions on provision, staffing levels and sustainability – passed without division.

The minister supported it, arguing it:

…would be desirable to make clear expectations for consultation, and I would contend, meaningful engagement, by underpinning it in statute.

So SUs now have a statutory hook for demanding consultation before courses are cut or campuses closed – they just don’t have any guarantee of the funding to make that voice heard.

What actually passed

It wasn’t all rejection. The committee agreed several amendments that will meaningfully shape the bill:

• Amendment 49 (Miles Briggs) – requires ministers to review the credit-based funding model for colleges. This was the Conservative alternative to Labour’s amendment 48, which would have required a new funding model within a year of royal assent. The minister preferred the review to the requirement, which tells you something.
• Amendment 55 (Ross Greer) – requires institutions to operate transparently and accountably. General enough to pass, specific enough to matter.
• Amendment 60 (Maggie Chapman) – conflict of interest policies with public registers updated within 28 days.
• Amendment 64 (Pam Duncan-Glancy) – whistleblowing procedures for staff and students, though notably not the direct route to the SFC that Chapman had proposed.
• Amendment 79 (Conservative MSP Stephen Kerr) – requires apprenticeship definitions to reflect Scotland’s economic needs. Passed without division.

Stage 3 promises

There were also some jam tomorrow moments. The minister gave undertakings to engage further on:

• Gender-based violence conditions (Conservative MSP Pam Gosal’s amendment 3)
• Fair Work First as a funding condition (amendment 50)
• Consultation with apprentices and trade unions (amendments 5, 6, 7)
• Foundation apprenticeship frameworks (amendment 84)
• Industry-led oversight bodies (amendment 24)
• Managing agent fee caps (amendment 51)
• Pay ratios and zero hours contracts (amendments 61a-e)

Whether any of these undertakings translate into government amendments at Stage 3 remains to be seen. As Pam Duncan-Glancy noted after one such exchange:

I am left a bit kind of unclear then as to the government’s position on whether or not they think it would be important to require these things as a matter of law.

The committee reconvenes on 3 December to continue Stage 2. Still to come are amendments on SFC membership (including whether staff, students and union nominees get seats), the apprenticeship committee composition, student support provisions, and private provider designation.