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

Gordon Marsden Excerpts

Wednesday 8th May 2019 General Committees

[Gordon Marsden (Blackpool South) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Hosie, and to discuss and debate the regulations. The Minister and I may have some sense of déjà vu because we were in this exact room at the exact same time last week. However, this is a case of sliding doors, for those Members who have seen the movie, because the outcome will be different today—we will not oppose the regulations. Having said that, these are important regulations that deserve to be probed properly. I will therefore ask the Minister a number of questions pertaining both to what he has said and to the content and implications of the regulations.

Talking of déjà vu, it is a great pleasure to see—I will not call him my old opponent—my old sparring partner from the Bill, the hon. Member for Orpington, on the Committee. I hope he does not have too many senses of déjà vu, because I will be returning to one or two of the arguments we talked through on that Bill.

The Minister has laid out in considerable technical detail how this process has come about. That is welcome, as is the fact that the Government have listened to some of the elements relating to the operation of the penalty clauses.

On the subject of participation, I absolutely agree with the Minister. Indeed, I will praise my friend, as I can call him in a non-parliamentary position, the right hon. Member for South Holland and The Deepings. It is extremely important that the letter of the regulations embodies the spirit in which access and participation need to go forward, to which I will make a couple of references.

For the moment, I would just ask the Minister two or three questions on the text of the draft regulations. He referred to monetary penalties, a matter to which the OfS has regard. I refer to regulation 4, which mentions having regard to

“any financial or other gain made by the provider”

or “loss avoided”.

It is true that paragraph (g) refers to the impact this is likely to have on students on higher education courses, and on students in general. However, this matter goes beyond the implications for students of a particular refusal or monetary penalty. In my view, which I will come to in relation to another part of the proposals, the measure needs to involve as closely as possible both students and staff at the institutions concerned.

There is a grave danger, as we discussed previously with the Bill, that we talk about the actors as though they are simply the university bodies and the Government or the Government’s new organisations, in this case the OfS. That is not the case. The measures also intimately affect the people who work day to day for those higher education providers and the people who study with them. I am interested to hear the Minister’s comments on that area.

Regulation 5 talks about

“the impact that a decision under section 21(2) of the Act is likely to have on—(i) students or prospective students on higher education courses at the provider”.

It would again be interesting to hear the Minister’s explanation as to how that might be addressed in practice and what discussions there might be between the OfS and the Department on how that matter would be taken forward. The Minister will understand that one of the things I am probing here is what precisely the future relationship between the OfS and the Department will be.

We debated that issue long and hard during the passage of the Bill. Now we have an opportunity, with these statutory instruments, to see how the measures will work in practice. The Minister will be aware, as was the previous Minister, the hon. Member for Orpington, of our concerns that the OfS should not simply be a micromanager implementing minute Government decisions. In cases such as this there is an important argument for discussion.

Those are the main points I would like to raise on the regulations. The only other point I would make relates to the explanatory note that says:

“A full impact assessment has not been produced for this instrument as no, or no significant, impact on the private, voluntary or public sectors is foreseen.”

I am not sure that I agree with that conclusion. We all hope, of course, that the regulations will be largely honoured in the observance rather than the breach. If a significant provider were to get into trouble and were to be subject to these penalties, I fear it would have a significant impact on the private, voluntary or public sectors.

I am not saying that there absolutely should have been a full impact assessment at this stage, but it seems a slightly cavalier way of looking at it. Perhaps the Minister would give some indication of whether, for instance, this might come as part of the OfS’s annual report to Parliament, maybe a year or so after these regulations have gone through. As I say, I hope we do not have such incidents, but if we do, I hope some account will be taken of their impact in the way I have described.

Those are the specifics of these regulations. On the broader implications, the Minister has talked about consultation, and it is true that there were considerable concerns across the university sector about the size and relevance of any potential fines. I think it is still the case that the sector, whether individual organisations or Universities UK itself, harbours, with good reason, some concerns about how the specifics of these sanctions might be taken forward. I want to probe the Minister about two or three of those.

In particular, UUK has talked about the way in which the OfS will judge higher education institutions that are judged to be of higher risk and that will need additional requirements for access and participation. In a note to me, UUK has said:

“While we agree that the approach by the OfS to access and participation would, theoretically, reduce burden for providers with a low risk of a future breach, it is currently difficult to understand levels of burden in practice without more detail on the risk assessment methodology. UUK would welcome more detailed clarity in the area of risk classification and associated timeframes.”

It may well be that such details exist at some level in the bowels of the Department and that it has not been felt appropriate or necessary to burden the Committee with them today. However, it would be helpful if the Minister were able to indicate whether such issues have been taken forward.

On the positive side, Universities UK and the Opposition welcome the fact that these plans now focus strongly on access and participation, and we support many of the OfS’s wider measures to make progress in this area. We particularly welcome the ability of the OfS, and its new director Chris Millward, to look at the performance of institutions on access and participation over a long period of time—three to four years. However, that has to be balanced by the ability of the OfS to act sharply, and of the Government to support it in that process, if institutions appear to be in a rocky position.

UUK also says that it would welcome

“access to more contextual data to inform universities' access activity”

and

“a suitable basket of indicators of disadvantage”.

Here, again, I wish to pick up on a point made by the right hon. Member for South Holland and The Deepings. He made a specific and important point about disabled students that could be made about other areas, such as potential students from a black and minority ethnic background, service veterans or care leavers. This has not been discussed in detail today, but there are worrying signs that, in some areas, the Government are not necessarily following through on some of the promises they have made to care leavers. I therefore ask the Minister for an assurance that the Department will convey to the OfS the importance of looking at people who come from a care-leaver background; I hope that the OfS would do so anyway.

The issues about access and participation cannot be understood unless there is clarity and assurance about the minimum entry requirement. This obviously depends on what happens with the Augar review. However, there are concerns that a minimum entry requirement based on prior attainment would disproportionately affect young people from the most disadvantaged areas and under-represented groups.

In particular, it would severely disadvantage adult learners wanting to return to higher education because, by definition, in many cases they would not have those formal prior attainments—certainly not in the form that is required. I press the Minister on that issue. The master of Birkbeck College, David Latchman, and various other people have made those points, too. We want to ensure that these groups are not caught out by the unintended consequences for access and participation that might come from this legislation.

[Sir John Hayes]

I do not intend to delay the Committee unduly, Mr Hosie—not that you would allow me to. On that point, the key is the structure and nature of courses. Birkbeck’s success—the hon. Member for Blackpool South knows that I know that place well—is borne from the fact that people study in the evenings, in modular fashion and part time. All those things allow all kinds of learners who would not otherwise engage to do so. It is high time that we revisited the structure and character of how people learn to allow them to engage.

[Gordon Marsden]

I thank the right hon. Gentleman for his observations, with which I absolutely agree. I also agree with the revisiting to which he refers. I have had conversations—I am sure the Minister has had similar conversations—with the Office for Students about the issues around adult students and how we deal with them in the context of standardised access and participation measures. I am not saying that the Government are not considering those things, but it would be useful as we move along to have a bit more detail.

There are a couple of other points in that particular area on which it would also be good to have clarity. For example, it would be useful to have clarity on what might happen regarding fines for providers, as detailed in the regulations, that are subsidiaries of larger organisations, some of which will be based overseas. I do not propose to reopen the debate I had with the hon. Member for Orpington about our concerns on how those processes with new providers might work, but it will be a fact—it is not necessarily damnosa hereditas—that a number of these new providers will be subsidiaries of overseas organisations. It would therefore be helpful if the Minister clarified how they will be dealt with and how the opportunities for evading such fines or instructions might be avoided.

We are talking today about a situation where we have come to the eleventh hour and various pressures have been put on by the OfS and the Department, and the institutions concerned have not budged. It is important that the Department and the OfS, in particular, keep a very close eye on how new providers, particularly those without much of a track record, go forward. That relates to the issue we most want to avoid. It is one of the reasons why we were concerned, and remain concerned, about the proviso that new providers can assume all the advantages of university status, including access to public funding, from day one.

I want to conclude by returning to a couple of points that we raised in the Bill Committee in September 2016. Those points related to how decisions would be made in the OfS. On that occasion, the hon. Member for Orpington and I had a detailed set of exchanges. We would have liked the issues to be resolved in legislation. They were not, but we had a number of assurances from him. However, with all due respect to him, I want to make the points again to the current Minister, because he is responsible for taking such things through.

One of the things we were most concerned about—something that was certainly given in evidence to the Committee by Professor Les Ebdon, the previous director for fair access and participation—was where the ultimate responsibility for decisions lies. That is not stated in the Bill. I said in the Public Bill Committee that

“the ability of the director for fair access and participation to negotiate with institutions...would be seriously compromised if the director did not have the ultimate authority to approve or refuse access and participation plans.”––[Official Report, Higher Education and Research Public Bill Committee, 8 September 2016; c. 132.]

We also pointed out that the way in which the director had operated under the previous structures had led to some useful improved targets at various institutions and an increased level of predicted spend.

I will not return to the debates about whether the Higher Education Funding Council for England did better than the OfS—they are different bodies designed to do different things—but how the functions will be carried out remains an issue. It is crucial that the director for fair access and participation has the independence to challenge higher education institutions robustly, particularly in such areas, so I would welcome any further thoughts or clarifications that the Minister can offer.

--- Later in debate ---

[Chris Skidmore]

I thank hon. Members for their participation in the debate. The hon. Member for Blackpool South said he wanted to probe me properly, and indeed he did. I was also suitably amended by my hon. Friend the Member for Orpington. I will touch on some of the points raised and valuable contributions made.

It is important to repeat that the OfS can use the statutory power to sanction a provider only when it appears that there is or has been a breach of that provider’s ongoing registration conditions. Before that, as well as imposing monetary penalties as a last resort, the OfS may suspend a provider’s registration entirely or, for specified purposes, deregister a provider. In the case of a provider breaching an access and participation plan, it may refuse to renew that plan.

In addition to those formal sanctions, the OfS has other regulatory interventions available to it, which it is already using, such as enhanced monitoring of providers and the ability to impose specific ongoing registration conditions. Those less formal interventions may be used instead of or in addition to sanctions to address the specific risk presented by a provider. They may also be used when a registered provider is at risk of but has not yet breached an ongoing registration condition.

My right hon. and learned Friend the Member for North East Hertfordshire asked about monetary penalties and the amounts expected to be raised; this also touches on the overall impact assessment. We hope that such penalties will be used very much as a last resort when all other measures have failed. We do not expect this to be a revenue-generating exercise. Money from monetary penalties as well as income derived from its interest is required by HERA to go back to Her Majesty’s Treasury’s Consolidated Fund. That prevents the OfS from imposing penalties or charging interest to raise income, or of being accused of doing so. The OfS will account for all penalty income separately from its existing funds. It is important to put that on the record.

The hon. Member for Blackpool South touched on the processes of engagement. It will be for the OfS to work with providers on the implications for students and prospective students of refusing to renew an access and participation plan, as referenced in regulation 5. It is also legally required to have regard to those mandatory factors when deciding to impose a monetary penalty. At the risk of repeating myself, when making a decision it will need to have regard to its regulatory framework, its duties under HERA, and section 2(1) in particular, the regulators’ code and any Secretary of State guidance.

On Secretary of State guidance—this touches on the point made by the hon. Gentleman about the relationship between the Department and the OfS—it is important to note that the Secretary of State issues annual guidance but has the ability to update that guidance at any point. As Universities Minister, I have a regular monthly meeting with the chief executive of the OfS to talk about specific issues that might be coming up on the agenda that require a discussion between the Department and the OfS.

The OfS must also comply with the principles of administrative law, such as reasonableness and taking into account relevant considerations while discarding irrelevant ones. I will come on to legal processes in a moment. The OfS must also follow the procedures in schedule 3 to HERA when informing the provider of its intention to propose a penalty and the reasons for that decision. Importantly, that allows the provider to make representations before the penalty is imposed. The OfS will therefore need to be transparent about how it has balanced those mandatory factors and other considerations, such as the individual circumstances, to determine the final monetary penalty amount, if indeed it has gone down that route.

The provider can also appeal a decision to impose a penalty, or the amount, to the first-tier tribunal of the Health, Education and Social Care Chamber, which is part of the court system of the United Kingdom. The provider’s appeal can be on either the decision to impose the penalty or the amount, on the basis that the decision was based on a factual error, was wrong in law or was unreasonable.

The regulations include provisions to review decisions by the OfS to refuse to renew an access and participation plan. Since 2004, providers have been able to seek a review of such a decision. No such review has ever taken place. A new statutory reviewer was appointed as part of HERA 2017. Given the significant impact on a provider of a plan being refused—the provider cannot charge higher-level fees—it is right that providers have the opportunity to have such a refusal tested through an independent review.

The hon. Member for Blackpool South mentioned Universities UK. I, too, am keen to reflect on any of its concerns, ongoing or otherwise. I am assured that the OfS has considered the risk in developing arrangements for future access and participation plans. That has been subject to consultation with providers, and is being implemented for 2020-21.

A veritable feast of specific points came up that I could be tempted down the route of addressing. My hon. Friend the Member for Orpington raised Philip Augar’s report. Hand on heart, I have not read it, as I said on Sky News yesterday. I wish to make it clear to the Committee that I have not seen the report, which will be published in due course. I understand my hon. Friend’s frustration, and that he wishes to engage with whatever recommendations come out of it. However, he will be well aware that it is just one part of the overall post-18 review.

There has been additional work on the level 4 and 5 consultation that is taking place. I think there has also been some work by PricewaterhouseCoopers, looking at how much a degree actually costs a university. Whenever the report is finally published, I am keen to ensure that we engage and work with the sector.

[Gordon Marsden]

The Minister is being extremely helpful, and I do not wish to detain him from being so, but he referred to the report being published. Does that mean that it will be published for public or stakeholder perusal before the Government give their response?

[Chris Skidmore]

I am unable to comment on decisions that may yet have to be taken. I expect a report of this magnitude to be published and, when it is, I am keen to ensure that the sector—as I have said to it—has the opportunity to engage with the report and its consequences. I am on record on specific issues and rumours. I will not prejudge the contents of the report.