Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Monday 9th January 2017 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

2: Before Clause 1, insert the following new Clause—
“UK universities: establishment
(1) UK universities must be bodies corporate, primarily located in the United Kingdom, and established on a not-for-profit basis. (2) UK universities are public bodies, contributing to society through the pursuit of education, learning, and research at high levels of excellence.(3) UK universities (whether established by Act of Parliament, Royal Charter or by the Privy Council) may be awarded degree awarding powers in accordance with sections 40 to 50. (4) Private universities, colleges of further education and other higher education providers established by Act of Parliament may be awarded degree awarding powers in accordance with sections 40 to 50.(5) Only bodies under subsection (3) or (4) which have met the criteria relevant to the granting of degree awarding powers under section 40(1B) for at least four years may be registered as higher education providers, in accordance with section 3.”

[Lord Stevenson of Balmacara (Lab)]

My Lords, the amendment we discussed prior to the Statement was originally part of a combination of amendments, of which this is the second. It might be helpful, for the convenience of the House, if I explain a little more about that, as some of the questions that were raised during the earlier debate also have resonance here.

The issue that we faced in drafting these early amendments was that to promote a debate and discussion—eventually, that was successful—around the role that universities should play in the United Kingdom, we had first of all to assess what that role should be. It also raised questions about establishment and the position of universities with regard to the way in which previous regimes have created them and continue to do so. In Amendment 2, which I stress is a probing amendment, to which I hope the Minister will be able to give answers that will help to formulate our thinking as we go forward, we had to think first about whether universities were essentially put in a position where they had to be based or primarily located in the United Kingdom, which is the first point in the amendment, and what their constitutional or legal formulation was. Most of them—not all—are bodies corporate, and all of them are primarily located in the United Kingdom but have establishments overseas. So this is not just an idle question; these things are happening today and we need to make arrangements.

The third limb of proposed subsection (1) of the new clause in Amendment 2—the establishment on a not-for-profit basis—is, as we will have picked up from the earlier discussion, controversial. In all the analysis I have seen—I look forward to hearing from the noble Viscount when he comes to respond, as well as other contributions—as education is a charitable object, it would be odd if bodies established for educational purposes were also to be profit-seeking. However, I fully admit and accept—we were reminded of this in the earlier debate—that when in government my party previously accepted that it would be possible for some institutions to be established on a profit-seeking basis. However, the quantum of the profit to be distributed from the profits made is capped and specified, so there is an assessment of the issue but it is not a completely binary not-for-profit/for-profit operation. The noble Viscount mentioned this in his response to Amendment 1, and my noble friend Lady Cohen has views on this, which I hope she will share with us.

It is true, and it is important to bear in mind, that no institution will survive if it cannot make an excess of income over its outgoings. In a sense, therefore, all universities, whether they are for profit or not for profit, are in the business of ensuring that their income is greater or at least equal to their expenditure. Therefore, the issue that needs to be addressed is whether we are talking about profit distributed to the owners of the company or profit reinvested in an institution’s activities. That might include teaching, research and other things that we are in favour of with regard to what universities should be.

I raise this as a genuine issue, because in promoting this amendment, I suggested in proposed subsection (3) of the new clause that whether universities are established by Act of Parliament, charter or Privy Council, it will be a restriction on the universities that may be called UK universities that they are not for profit. I am not sure, having made that statement, that my argument will sustain itself through this debate; I look forward to that debate and to the Minister’s response. I have difficulties with it myself, and if I have difficulties, as a promoter of the amendment, clearly others will do too, and I am quite ready to be knocked down on this point. It is important that we understand better what we are trying to say about institutions.

It is, perversely, the area of the Bill where I agree with the original drafting. The Minister has now left us—maybe it was something we said; he is no longer in sight, although he may be around. It is easier to talk about “higher education providers” in this context, although it shames me slightly to say that, given that “university” is an important term and we should hold on to it. Presumably, we are trying to ensure that for bodies providing higher education of the type specified earlier in the Bill—it is extensively discussed later on—which are doing it either for profit or not for profit, to a sufficiently high standard and in a way that meets the criteria of the regulator, which we will establish later, it is sufficient that the question of whether these have to be for profit or not for profit is left open. Therefore, if you follow that logic, it is important to have definitions for both. I will pause at that point, because that is as far as my thinking has got. However, we should address this issue and bottom it out, because it will be important later on in the Bill.

I will make three other points. In proposed subsection (4) of the new clause, private universities are specified, but it also includes, importantly,

“colleges of further education and other higher education providers”,

which I have specified should be established by Act of Parliament. However, I also have a greenish edge about that proposal, because it may be cumbersome and practically not possible to require Parliament itself to review the body that sponsors the institution that we will allow to become degree-awarding and autonomous. But if we are not to require Privy Council or royal charter issuing to take place, which is what is in the Bill, we need some other mechanism, which needs to be robust and at an arm’s length from Ministers. Whether it is through secondary legislation or primary legislation, there has to be a check on Ministers’ ability, not just to create universities but to close them down, because these will be important decisions.

The second point in the list—we will go on to discuss it later but it is raised here because it is important—is that there has to be a provision relating to the length of time that challenger institutions need to exist before they are given the responsibilities of a university. At the moment, the Bill provides for that to happen immediately on a provisional basis, but this amendment and others in the group would hold that back, requiring four years to have elapsed.

--- Later in debate ---

[Lord Kerslake]

My Lords, I express my thanks for the support that I received from all parts of the House for Amendment 65. I am very aware of the hour and will not rehearse every argument made, but I will pick up on one point, which is that this amendment is not in itself a guarantee that Ministers or the Office for Students would act properly, but it would help. This is the crucial point for me. I am disappointed with the Minister’s response. I see this as a practical, simple and necessary amendment to secure institutional autonomy. Just to be clear, the amendment states:

“The Secretary of State, in issuing guidance and directions, and the OfS, in performing its functions, have a duty to uphold the principle of institutional autonomy”.

It is hard to see any situation in which that would lead to greater intervention rather than less. In the circumstances we are in, I shall not press the amendment. I hope there will be an opportunity for further conversation, and I give notice that I will return to this issue at a later stage.

[Lord Stevenson of Balmacara]

I thank all noble Lords for their contribution to this rather extended debate. I prefaced my opening remarks by saying that this is a complicated group, and it certainly proved to be so. We have got there, but by a rather circuitous route, and I am a bit confused about some of the things that the Minister said when responding. I am sure a lot of us will want to read Hansard very carefully.

It is clear that the position that we are moving towards—it is clear to me and I am going to advance this as a thesis as I withdraw my amendment—is that we want a healthy system of higher education provision in this country. There is no doubt or dissent about that, but it is not clear who decides which institutions that are providing higher education are going to be universities and what the criteria are. The university title follows a particular process which we have discussed and we know about, but who does it? Is it Ministers or civil servants, or is there another body yet to be set up? I would like the Minister to write to us setting out very clearly the structure he has identified today. Who maintains the register? The Minister said that it will be not a statutory register but a voluntary register. I agree that the carrots and sticks are very substantial, but it is a bit of a strange decision to have a regulator—the Office for Students—that does not have a regulatory function because it is voluntary. That needs to be unpicked.

We need to know who assesses the criteria under which higher education providers get on to the register, who assesses the threshold standards for degree provision that they are obliged to have, and who assesses the quality of the degrees they subsequently grant. There are amendments about this later on, but we must also ask who regulates the body appointed as the regulator for the system. Is there another body that we do not know about? A lot of this will be answered by transparency, and I would be grateful if the Minister wrote to us about that.

I was asked three specific questions that I am not going to be able to answer, but I will record them so noble Lords know that I have them in mind. I do not understand the issue about where an institution needs to be located, but I think it is intimately connected with the points made by the noble Lord, Lord Willetts, about who gets the benefit of the subsidy and the tax provisions that are available. It would be quite inappropriate for a body to be registered as a university within the United Kingdom and to receive tax benefits if it is not also providing a public benefit. It is obviously a circular argument; we are making the same point, and we need to have that bottomed out. I do not have a solution, and my amendment would not have taken us to that point. The situation needs to be looked at again.

The trustee model has served us well. The noble Lord, Lord Willetts, was not knocking it and recognises its value, but he wanted there to be other bodies such as enterprise institutions. I would like to see the evidence for that. He has no responsibility in this respect, and it is about time he told us where he thinks all these brilliant institutions are. Comments were also made on this side about that issue. I am very sceptical about whether that would be worth while, but it is a fair point to question.

My noble friend Lady Cohen and others on our side need to resolve our differences about this issue. I am not against an institution making a profit, provided that the arrangements under which it is made are transparent. Transparency is the issue, and I am sure we will come back to it. I beg leave to withdraw the amendment.

Amendment 2 withdrawn.