Higher Education (Monetary Penalties and Refusal to Renew an Access and Participation Plan) (England) Regulations 2019

Lord Bassam of Brighton Excerpts

Monday 20th May 2019 Lords Chamber

It is planned that the regulations will come into force on 1 August 2019. This will permit the OfS to start imposing monetary penalties where it appears to it that there is, or has been, a breach of a registration condition. The Government firmly believe that the higher education regulatory system must be one that can effectively protect the interests of students, especially the most disadvantaged, in the short, medium and long term. The regulations support that as they enable the use of two important tools that will enable the OfS to carry out its core task of the effective stewardship of the higher education landscape. Therefore, I hope your Lordships agree that the regulations are ultimately of benefit to students and the sector alike. I beg to move.

[Lord Bassam of Brighton (Lab)]

My Lords, the regulations before your Lordships’ House relate to the power of the Office for Students to impose penalties for a breach of regulations, and I am grateful to the Minister for setting out the Government’s explanation of them. Of course, ultimately they are a reflection of the marketised system that we now have and the necessary bureaucracy that comes with that form of regulation, which intervenes and seeks to make the market perform better.

On this side of the House we have no qualms about the basic principles in the system. There must be a system that ensures that higher education providers comply with the regulations, and for that reason we have no intention of opposing their passage. I will, however, register a number of our concerns in the hope that the Minister can assure the House that these regulations will be efficient in their aim of promoting greater regulatory compliance in HE access and participation.

Before moving on to the specifics of these regulations, I draw attention to the fact that, despite the enormous potential consequences for any HE institution at risk of non-compliance, the Government have chosen not to publish any form of impact assessment for them. This is not the first time that the Government have laid such significant secondary legislation without the publication of that information.

In the Explanatory Memorandum produced by the Department for Education, the department’s failure to produce an assessment is excused by the idea that there will be no financial impact on those providers that are compliant. Well, there will be implications for those that are not. Surely an assessment should have been produced, at least internally, of the financial impact on providers that, for whatever reasons, fall short. If it has been produced, why is the House not privy to that information? In the absence of such an assessment being provided to the House, can the Minister at least offer Peers a brief estimate of the effect of this instrument on providers who are not compliant? Does the Minister anticipate that they will be put into financial difficulties as a consequence, and does he believe there will be any knock-on impact for students at such providers’ institutions?

Turning to the specifics of these regulations, I will use the bulk of my time to focus on the nature of the monetary penalties. Of course, it has to be right that those who fail to comply with the necessary regulations face some variation of a punishment. But such penalties must find the right balance between being stern enough to ensure compliance and not so harsh as to create extraordinary financial difficulties for providers that receive a penalty.

In previous consultations, the maximum fine suggested was 5%, as the Minister said, rather than 2%. Although I think the House will agree that the latter is the better choice, I would welcome the Minister’s saying how the Government reached that conclusion and chose to pitch at the lower level. Did any stakeholders suggest that a higher limit would be better or preferable? What factors did the Government assess when deciding on the nature of the penalties?

I am particularly concerned that, if the penalties are too overbearing, they will create insurmountable financial trouble for providers that are already struggling, as the Minister will be aware. Indeed, reports emerged in late 2018 that up to three higher education institutions may be on the brink of bankruptcy, and last month, the Guardian reported that 25% of English universities were in deficit. Post Augar, this picture could worsen. Can the Minister hint when the Augar review will be published and explain the relationship between that and this system of penalties?

The regulations make it clear that the OfS has the discretion to impose a monetary penalty but are not entirely clear about what factors will be considered. For example, will the financial position of the provider be taken into consideration? Universities UK has made it clear that penalties must be awarded proportionately and effectively, and that what this looks like will vary according to individual circumstances and the position of the institution involved. I urge the Minister to ensure a degree of flexibility in the application of penalties.

On communicating these changes, it is right that the Government make sure that those who will be impacted upon fully understand how the new regime will work, as with any regulatory change. Although higher education providers should be aware of their access and participation responsibilities, they should be reminded of monetary penalties that could be awarded if they fail to comply. How has the Minister’s department communicated the monetary penalties to the 350 education providers now registered with the Office for Students?

Before concluding, I will touch briefly on Regulation 9, which allows the Secretary of State to appoint either an individual or panel and pay remuneration and allowances. Aside from the fact that this must comply with the code on public appointments, the regulations give no further indication or clue as to what factors will be considered when making appointments of this nature. Could the Minister explain why not? How will the Secretary of State make such appointments? Will there be a need for a further statutory instrument?

In conclusion, the concerns that I have raised are not enough for us to oppose the regulations in their entirety; indeed, we welcome the Government’s limited attempt to promote greater regulatory compliance regarding HE access and participation. However, I ask the Minister to take far more ambitious steps to ensure that we make higher education more welcoming for students from all backgrounds. Given that over 12,000 fewer English undergraduate students from low-participating areas now start courses each year than did so in 2011-12, we cannot underestimate the scale of the challenge. I would welcome any details from the Minister on how his Government intend to rectify this and ensure the access that I think all sides of your Lordships’ House would very much welcome for HE students.

[Baroness Garden of Frognal (LD)]

My Lords, we too understand the need for these regulations and thank the Minister for setting them out. Universities certainly need to be held to account for widening participation and supporting students from under- represented backgrounds throughout their studies, and monetary fines need to be part of the mix of sanctions available. However, I note that the Minister himself mentioned the concern that this might take away from provider income, and that in the notes the consultation process identified some concerns that monetary penalties could take away provider income that would otherwise be used for the benefit of students. Are there any safeguards to ensure that that will not actually be the case?

We certainly wish to ensure that all universities work to widen participation across the sector and prioritise their work with schools and colleges that have not traditionally been ones where young people went to universities, and we need every university to be transparent about selection criteria. However, we would also like to see the Government doing their fair share to widen participation by reinstating maintenance grants for the poorest students to ensure that disadvantaged young people do not have the highest loans to repay.

We note that the trend is narrowing but we see also that UCAS warns that for the fourth consecutive year limited progress has been made in reducing the size of the multiple equality measure gap, which remains at a similar value to that seen in 2014. Surely that should be a concern too. It also concluded that among the universities with the highest entry requirements the entry gap is widest, and in 2018 the most advantaged students were 15 times more likely to enter than the most disadvantaged. We have quite a long way to go with this.

The Minister and the noble Lord, Lord Bassam, have touched on most of the issues that I would have mentioned on this, but I have a question for the Minister. Where will the money from these funds go? Will it just go straight back to the Treasury and get lost in the general pot, or is there any suggestion that these fines will be put into a separate fund that will help to benefit disadvantaged students? Money that just disappears into the Treasury is not going to do anything to help the students that we most want to help but, if there were some suggestion that it could be used beneficially for those students, that would be a very reassuring move.

As I say, there are some concerns about the effect of the fines, which I hope will be monitored as we go along to see whether they have an adverse effect on universities being able to provide for disadvantaged students. If not, of course, we have no intention of imposing this measure.

--- Later in debate ---

[Viscount Younger of Leckie]

Yes, they are numerical. I will certainly write to the noble Lord with more information about the targets that we have in mind.

I believe I have covered all the questions that were raised—

[Lord Bassam of Brighton]

I do not believe the Minister has covered my point about the Augar review and when it will be reported, and the relationship between these two things.

[Viscount Younger of Leckie]

The noble Lord is right. He is as sharp as anything; in fact, I wrote that very question down. I reassure him that the Augar review is going to be published shortly—very soon. I have said that for a while, but I promise that it is due out shortly. I am afraid that I am not in a position to say anything further about the timing of the Augar review.