Higher Education and Research Act 2017 (Consequential, Transitional, Transitory and Saving Provisions) Regulations 2018

Lord Hunt of Kings Heath Excerpts

Wednesday 9th May 2018 Lords Chamber

Moved by

[Lord Hunt of Kings Heath]

That this House regrets that the Higher Education and Research Act 2017 (Consequential, Transitional, Transitory and Saving Provisions) Regulations 2018 do not provide sufficient independence for the Office for Students (OfS) from Ministers; do not enable the OfS to engage effectively with students, student unions and the National Union of Students; do not enable the OfS to protect the institutional autonomy of universities, or the autonomy of the OfS board; and overemphasise the marketisation of higher education (SI 2018/245).

[Lord Hunt of Kings Heath (Lab)]

My Lords, these regulations relate to the establishment and operation of the Office for Students, the new regulator of higher education institutions. The OfS has replaced both HEFCE and the Office for Fair Access, which as a result of the regulations ceased to exist on 1 April this year, with the OfS taking on their statutory functions. I do not seek to challenge the passage of these regulations, but I welcome the opportunity to debate the establishment and future of the OfS at a time of major turbulence in our higher education system. We have seen the tripling of fees, the introduction of loans and the ending of maintenance grants promoted by a Government driven by a neoliberal ideology which places such faith in markets to the detriment of everything else.

What has been the outcome in practice? There is no competition in fees; students are leaving university with debts of around £50,000, a large majority of whom will not pay them in full; we have the most expensive undergraduate courses in the world; there has been a complete collapse in part-time provision; and a reduction in home-based postgraduate students. There is a huge uncovered gap in the public finances. The Education Policy Institute calculates that the contribution of student loans to net government debt is forecast to rise from around 4% of GDP today to over 11% in the 2040s.

Nor is it clear in what direction the OfS is going to take higher education. It is ironic that alongside the Government’s genuflection to free market ideology with the creation of the OfS, it brings with it the tools of what could be a heavy-handed regulator. It is an intention we have seen all too clearly in the character of the last Education Minister. One moment he was extolling the virtues of the market and new private providers; the next, threatening the same institutions with draconian punishments if they did not do what he, as the Minister, wanted. I fully accept that intervention in the pay of vice-chancellors might be justified in the public sector, but it sits rather uneasily in the competitive market that Mr Johnson was so keen on.

My key concern is whether Ministers, instead of promoting scholarships, encouraging research or a concern for truth, have as their goal turning the UK’s higher education system into a market-driven one at the expense of both quality and the public interest. This is not a broken system that needs shoring up and intervention; it is the second most successful higher education system in the world with four universities ranked in the top 10.

I imagine the Minister will refer to the regulatory framework for the OfS published in February this year. It certainly makes interesting reading and there are some positives. First, I am glad that it starts with an affirmation that our universities provide a world-class higher education sector. I am also glad that at page 15 it states that the regulatory approach is designed to be principles-based and that the imposition of a narrow, rules-based approach, with numerical performance targets or lists of detailed requirements, would risk leading to a compliance culture that would stifle innovation and prevent the sector flourishing. Spot on.

If the Minister wants to see a regulatory system that has all the wrong characteristics, look no further than the NHS, which seeks to combine the legal framework of a competitive market with intense micromanagement by Ministers and a plethora of regulatory bodies all pulling in different directions.

I welcome the statement, again on page 15, that once the regulatory framework is established its implementation will reduce bureaucracy and unnecessary regulation. My reservation is that in that framework I did not see what contribution the OfS would make to enhance the world-class status of our universities. Indeed, I could not see what the added value of the OfS was meant to be. I hope the Minister is able to explain that. The framework document seems to have an excessive belief in creating a market to drive competition, but nowhere have I seen evidence to suggest that this will enhance the sector overall.

The most depressing characteristic of the framework is that the language of the market is used so much. The use of the word “provider” is objectionable. No longer are Oxford, Cambridge, Imperial, Sheffield or whatever to be regarded as universities or higher education institutes—they are to be called providers. Why on earth are we not using “university” or “higher education institute”? If it is because the Government’s legal framework is designed to allow tin-pot little institutions to be suddenly called universities, I cannot think of a worse reason for introducing market ideology into a sector which has shown itself to outshine country after country. The one thing I would ask the Minister to do is expel the use of the word “provider”. It is a typical government approach to markets they do not understand, and which threatens to reduce the integrity of our university sector.

I come now to the OfS and its independence. It has to be seen as an independent institution if it is to have credibility and inspire confidence among the public, students and universities. It has had a poor start. It was clearly complicit in the shambolic and over-political approach taken by Ministers to the board appointment process. It was not a good start by its chairman. The appointment of Mr Toby Young and his subsequent resignation was followed by an investigation by the Public Appointments Commissioner. He identified a number of problems, including all-male appointment panels, failure to provide information to the commissioner in good time and—this is the key point—risking the independence of the board by a too partisan approach to appointments. He found that the governance code was not followed, itself a breach of the ministerial code.

This is important because the composition of the board remains highly controversial even now. There is no active further education sector representative on the board, there is no one from the NUS and there is no voice for staff. The appointments process has been symptomatic of a Government who are clearly trying to use the OfS to pursue a deeply ideological agenda. At the moment the chairman seems to show no signs of resisting the Government’s intervention in the activities of this body.

On access and participation, which is the subject of this statutory instrument because of the changes it makes, the recent end-of-cycle report from UCAS offered concerning statistics, stating that young people from the most advantaged backgrounds are still 5.5 times more likely to enter a university with the highest entrance requirement than their disadvantaged peers. Les Ebdon, the outgoing director of Fair Access, said in response last month that,

“people with the potential to excel are missing out on opportunities”.

This is an unforgiveable waste of talent.

Within the new OfS structure we are to have a Director for Fair Access and Participation, but will that person have enough clout within the OfS to make a real impact on this problem? Will that person have a direct line to Ministers, and not simply report to members of the OfS board and the chief executive? Importantly, can I take it that that person will be directly available to parliamentarians?

The term Office for Students—which is slightly Orwellian—suggests that it is focused on outcomes for students. That we will see. However, a recent Treasury Select Committee report noted that without adequate information, an efficiently functioning market will struggle to develop. Prospective students face the unenviable task of determining whether to participate in higher education based on increasing quantities of university marketing material coupled with a lack of proven, reliable metrics for judging the quality of courses. Can the Minister say what the intentions of the regulator are in this regard?

I refer the Minister to Universities UK’s submission to the current review of post-18 funding, which made some very good points. First, it says that while students understand the general long-term benefit of entering higher education, they are much less certain of how that translates into benefits that relate to them personally and how benefits vary according to the choices they make; secondly, that government, in partnership with universities, should provide more targeted information to prospective students on the cost and benefits of higher education; and thirdly, that universities could develop their value-for-money statements to better explain how pricing decisions for undergraduate courses are arrived at. Those should explain how the university uses income from tuition fees and other sources of income to fund the student experience and other activities, such as research.

Finally, I come to private providers. In the Government’s desperation to promote new private providers, they are already playing fast and loose with the term “university”, handing it over without proper scrutiny or oversight. Every time the title “university” is given to a new provider, without ensuring that it provides a good education, that not only risks students and taxpayers being ripped off, but potentially damages the integrity and reputation of the whole system. The initial conditions of registration are designed so that providers do not need a track record in delivering higher education; nor do they need evidence of financial performance.

Those of us with some experience in the education sector know what happens when you do not have sufficiently strong entrance qualifications. I fear that we are going to see a train crash here. I come back to my original question about why the Government are putting the international reputation of our universities at risk. The health of those institutions is of crucial importance to the UK. Clearly, we need to do nothing that would put that position at risk. The OfS has a clear role in mitigating that risk, but it must respect the institutional autonomy of universities and resist the temptation to micromanage every corner of university life. Obviously, I wish it well, but I believe that its performance needs to be kept under close scrutiny. This debate is a good start. I beg to move.

[Baroness Garden of Frognal (LD)]

My Lords, statutory instruments are never the most exciting things to debate because there is very little we can do to them. However, I thank the noble Lord, Lord Hunt, for raising this, because it gives us an opportunity to raise concerns about the benighted Higher Education and Research Act and to ask the Government to clarify their position.

The noble Lord has expressed concern about many of the issues, which I share. The report of the Commissioner for Public Appointments into the OfS revealed a blatant cronyism in the appointments process, which was influenced heavily by the Prime Minister’s own special advisers. Apparently, special advisers at No. 10 blocked several nominees for the “student experience” role on the OfS board because they had been previously involved with student unions or had expressed opposition to the Prevent strategy. The report concludes that,

“the decision on whether or not to appoint one candidate in particular was heavily influenced, not by the panel but by special advisers”.

It concluded that there was a “clear disparity” in the treatment of different candidates, and parts of the process,

“had serious shortcomings in terms of the fairness and transparency aspects”,

of the code governing public appointments. That was a complete failure of process that ignored due diligence procedures.

We know that Toby Young was, until March, CEO of the New Schools Network, which received several sizeable grants to provide advice to sponsors setting up a free school. Ministers say that that support is now under review, and the Liberal Democrats have been calling for a reassessment of whether the award of those contracts followed due process. His appointment to the board was rescinded, but it should never have been allowed to get that far, both on his credentials and on the offensive views he had expressed.

I absolutely concur with the noble Lord that, given the large number of HE students who take their courses in FE colleges, it is really disappointing that the board did not appoint anyone from the FE sector. It is a highly valuable and important part of our education system, which is all too frequently overlooked and underfunded. Having a representative on the board we see as not only desirable but essential.

The appointments process has undermined confidence in the board of the OfS. Universities no longer see it as independent of Ministers and its fitness to regulate the sector must be called into question. The OfS must operate in a way that is proportionate, risk- based and truly independent of government. It must also have regard to its statutory duty to uphold institutional autonomy. The Minister will well remember the concerns voiced in this House over universities’ autonomy.

--- Later in debate ---

[Lord Hunt of Kings Heath]

My Lords, I am grateful to the Minister for his full response, and to other noble Lords who have spoken. As the noble Baroness, Lady Garden, said, at the heart of this is our concern about the autonomy of our universities and the independence of the OfS. These become ever more important because marketisation increases the risk of perverse incentives being put in place, as well as the temptation to do so.

The Minister, commenting on what my noble friend Lord Hanworth said about the amenities arms race, said that you have to ensure that students have a good experience. I agree, but he said that when the reviews of students’ attitude to their university are done, which then feed into the teaching quality, often it will be the amenities that they judge. If those amenities are developed at the expense of investment in academics and the casualisation of those academics, with all the insecurities that that brings, it is a matter for some concern and at least debate.

My noble friend Lord Judd talked about the international standing of our universities, which he said depended on scholarship, learning and education as goods in themselves. I have seen nothing to suggest that the OfS has any understanding of those values, which is why we are so concerned.

The noble Lord, Lord Storey, raised the important question of these new private colleges—call them what you will—which are to be given university title and allowed into the sector without appropriate scrutiny of whether they are capable of taking on the awesome responsibility they have been given. So far, from what I have read of the OfS approach, the risk seems to be that colleges such as Greenwich will actually come under a lighter-touch regulation than institutions which have provided wonderful excellence over decades or hundreds of years. That is the charge that I put to the Government: why are these wretched private institutions to be given such an advantage when they come into a sector that is universally recognised as brilliant? The Minister has not answered that question. As for the gold star for Liverpool Hope University, the Minister forgets that it would have to be “Liverpool Hope Provider”.

I am grateful to the Minister for his very full response, which is always appreciated. He said that the OfS will be operationally independent and the Secretary of State’s powers of intervention are limited. The OfS has to show that it is independent. The chairman could have shown he was independent by resisting the intervention by special advisers in the appointment of Mr Toby Young. He did not. That is why his own position and judgment are in question and why he has an awful lot to do to show that he can carry out his job effectively. People are put to the test. He was put to the test. I do not think he succeeded.

Of course it is important to engage with students and the students’ panel is welcome, but it is no substitute for having somebody on the board of the OfS who can actually represent the views of the NUS. It remains a big issue for the credibility of that body.

On the core issue of marketisation, the Minister said that surely students have the right to good information. I totally agree and anything we can do to provide that information is to be welcomed; Universities UK’s evidence points to the direction. But students’ right to information does not equal a market or marketisation. That is why “provider” is such a pejorative term. For the sake of a few tin-pot organisations that are going to be allowed into the sector, we eradicate the concept of university and call them all providers. At the least that shows rather limited thinking.

At the end of the day the OfS has our good will. We hope it will do a good job. But we remain concerned that the Government’s intent is, in effect, to damage the university sector, with huge consequences for our country. I beg leave to withdraw the Motion.

Motion withdrawn.