Higher Education and Research Bill (Fifth sitting)

Lord Johnson of Marylebone Excerpts

Committee Debate: 5th sitting: House of Commons
Tuesday 13th September 2016 Public Bill Committees

[Gordon Marsden]

It is indeed a sunny morning, Sir Edward; it is also a rather airless one, so I am happy to see that the window is open. That leads me, reasonably effortlessly, on to the subject of transparency, covered by the amendments.

Without straying outside the narrow confines of the amendments I would just pause to reflect that when any new organisation is set up in government, it should reflect the mores of the time. The mores of our time are those of transparency. Transparency is an interesting word. When I was growing up it had a slightly different meaning. If someone was said to be transparent it meant they were trying to conceal something—or one might say “His arguments are transparent.” Now the English language takes it to mean, “Let a thousand flowers of information bloom.” That is an interesting development in the language.

Today the specific focus is on the office for students as a new organisation. We now conduct our proceedings in this place with transparency, and we believe in public transparency in the matter of remuneration, allowances and expenses. I do not need to remind you, Sir Edward, that we had our own trenchant discussions of transparency in Members’ expenses some time ago. That revealed much about what the general public thought about the lack of transparency on those issues in this place. I do not see why new Government bodies should be exempt, and I think transparency would strengthen the image of the OFS.

Similarly, with respect to amendment 132, there should be transparency on compensation. The other day we had a debate about the reasons why the Secretary of State might think it reasonable to discharge a member of the OFS. There are perfectly reasonable circumstances in which people might leave or settlements might be reached, or in which there might be no particular reason for the Secretary of State to have a person continue in their post. In those circumstances, subject to the civil service code, among other things, it might be perfectly reasonable for some forms of compensation to be made available. However, again, the same principle should apply: subject, obviously, to there not being undue private intrusion, the details of the compensation and what it is for should be made publicly available.

That is an important principle for the Minister to effect. If he agrees with the amendments but considers them defective and tells us that he will present something later, we will accept that. If not, we would like to hear some strong reasons—other than the usual “Well, it is inconvenient”—why there should not be transparency in the two key areas I have outlined for a newly appointed public body.

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

It is indeed a beautiful day. However, it is tinged with some poignancy and sadness because the former Prime Minister, my right hon. Friend the Member for Witney (Mr Cameron), was a great supporter of transparency in everything he did in his last role. He was also a great supporter of this Bill. It was presented by the then Secretary of State and supported by the former Prime Minister and the current Prime Minister, reflecting the commitment across the two Administrations that have followed the general election to push forward these reforms and to transparency as a great driver of quality and choice in our higher education system.

Amendments 131 and 132 relate to the disclosure of the remuneration and compensation of OFS board members. I welcome transparency, which is a vital element in the effective functioning of the sector, and the Bill champions transparency from universities by requiring them to publish information on their records. Although we do not oppose the intention behind the amendments, we do not accept them on the grounds that such specification is unnecessary in the Bill.

I can confirm to the hon. Member for Blackpool South that once they are appointed, and in the usual way, the OFS chair and chief executive’s salary will be included on a list of senior civil servants and senior officials in Departments, agencies and non-departmental public bodies that is made publicly available on an annual basis.

On the transparency of expenses, allowances and compensation, ultimately the chair and chief executive will be responsible for accounting for OFS expenditure and the finer details of their approach to transparency will be for them to determine. However, the Government are committed to greater transparency, and we expect that, in their annual reporting, NDPBs will publish data on board member remuneration, allowances, expenses and other payments, such as compensation, in line with guidance in the Treasury’s financial reporting manual. I fully expect that the OFS will follow this practice.

Therefore, as the amendments refer to approaches to transparency that are already common practice among NDPBs through successful delivery of the Government’s transparency agenda, the provisions are unnecessary and would restrict future flexibility. If legislation starts to stipulate specific provisions of this type for public bodies, they will inevitably soon become out of date as the transparency agenda progresses. That may then require further primary legislation to deal with any inconsistencies or anomalies that arise. The Government therefore do not propose to accept the amendment and I respectfully ask the hon. Gentleman to withdraw it.

[Gordon Marsden]

I thank the Minister for responding in the spirit of the amendment, even if he did not feel able to respond in the letter. It is a pity that we cannot have the provision in the Bill to send out the message I have talked about, but I accept the Minister’s points. It is important that agreements in the terms of the chief executive and chair are made public in a public fashion, if I can put it that way, and not just tucked away at the end of a list of things that might not attract the attention of Members of Parliament on an off day. I accept the Minister’s assurance.

When I hear Ministers or civil servants talking about flexibility, I sometimes feel that I should reach for my reach for my revolver, because flexibility can cover a multitude of sins. On this occasion, not least because the Minister has made it very clear on the record—that will obviously form part of these proceedings—and because I welcome and respect his commitment to transparency, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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[Joseph Johnson]

I thank the hon. Member for City of Durham for allowing me this opportunity to explain further how the office for students and UK Research and Innovation will work together on a range of issues relating to their respective remits. Clause 103 proposes safeguards to ensure joint working, co-operation and the sharing of information between the OFS and UKRI, which reflects the Government’s commitment to the continued integration of teaching and research within the HE system, and the clause goes far beyond the image that the hon. Member for Blackpool South conjures up of two or three meaningful lunches between the high-ups, agreeable though that sounds in some respects—I hope I might receive an invitation to one of them.

Both organisations also have a statutory duty to use their resources in an efficient and effective way, which means that they will look for all opportunities to collaborate and share information. As the new organisations are created, we will develop appropriate governance arrangements that embed joint working principles and practice in the framework documents for both organisations and in the informal agreements between them, such as a memorandum of understanding. Those framework documents will provide the hon. Member for Blackpool South with the clarity that he is looking for and will set out the working arrangements between the two bodies, which are highly likely to include regular senior level meetings that could be akin to a committee.

[Gordon Marsden]

I thank the Minister for his response thus far, which is encouraging. On the subject of the framework documents, we know that the process of merging HEFCE into the OFS, the Quality Assurance Agency for Higher Education and so on will be a complex one that will probably take two or three years. Where does the Minister envisage those framework documents coming in that process, as that will be crucial? It would be helpful if he could give us some timeframe for that.

[Joseph Johnson]

We envisage publishing the framework documents once the Bill has received Royal Assent, but I intend to write to the Committee to provide more detail about the co-operation arrangements that we envisage coming into existence as a result of the co-operation and information-sharing provisions in clause 103. For that reason, I believe it is undesirable and unnecessary to be prescriptive in the Bill. As I have said in relation to other amendments, the legislation must remain sufficiently flexible for the Government and organisations to be able to respond to the circumstances of the time. We would not want to restrict the areas in which the OFS and UKRI should work together, and the list proposed by the hon. Member for City of Durham of the important areas raised by the community is not actually comprehensive now, and nor is it likely to be at points in the future.

Let me turn to some of the points raised by hon. Members, the first of which was about postgraduate students. As now, the councils, through UKRI, will fund doctoral students, while the OFS will be the funder for masters courses, providing, for example, top-up teaching grant for high-cost subjects only. The OFS will be the regulator for all students, including all postgraduate students. As I have said, the Bill proposes safeguards to protect joint working, co-operation and the sharing of information between those two bodies, reflecting the integration of teaching and research at all levels.

Each organisation will be required to produce an annual report detailing its activities that will be laid before Parliament. To ask them to produce an additional annual report would, I believe, be duplicative and unnecessary. The Secretary of State also has powers to request any further information from those organisations if such reporting does become necessary.

Let me turn to the changes to the organisation of HEFCE and to the machinery of government. The OFS and UKRI will have distinct missions and it would not be workable to create one large body responsible for all the regulatory functions, as well as a specific focus on the student interest, while simultaneously acting as a funding body for the full range of research funding. The research funding role that HEFCE played now sits better with UKRI, a body explicitly tasked with bringing a coherent approach to funding research, than it would with the OFS, an economic regulator for the student interest.

Higher education and research policies are no strangers to changes in the machinery of government. Prior to 2007 they were also in separate Departments, with higher education in the Department for Education and Skills and research and science in the Department of Trade and Industry. Our partner organisations are already adept at working across departmental boundaries. For example, HEFCE has effective relationships with the Department for Education’s own National College for Teaching and Leadership and Health Education England as well as with the devolved Administrations. The OFS and UKRI will be no different.

Turning to the devolved Administrations, the White Paper is clear that it is our policy intent to ensure that Research England, as part of UKRI, can work jointly with devolved funders. That will mirror the effective working relationship HEFCE currently has in respect of the operation of the research excellence framework, for example, which it runs on behalf of the devolved funding bodies.

Research councils and Innovate UK will continue to operate throughout the UK. We will work closely with the devolved nations as UKRI is established to ensure that the UK’s research and innovation base remains one of the most productive in the world. I welcome the opportunity to provide assurances on joint working. I will write to the Committee to provide further detail ahead of the publication of the important framework documents that will formally govern those relationships. In advance of that, I call on the hon. Lady to withdraw her amendment.

[Dr Blackman-Woods]

I thank the Minister for his response. I would point out that clause 103 states that the OFS and UKRI “may co-operate”; it does not actually direct them to do so. I heard what the Minister said about providing the Committee with more information about the nature of the framework and what might underpin an MOU.

There is one other point that I want to make to the Minister. I do not see any reason why UKRI or the OFS cannot work together to produce a single report that would really help the sector at large to understand what is happening across the whole of it. It would be helpful if he could consider that when putting the framework together. On the basis of what I have heard, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Gordon Marsden]

I beg to move amendment 133, in schedule 1, page 66, leave out lines 9 and 10.

This amendment would prevent the Secretary of State’s representative from taking part in any deliberations of meetings of the OfS or any of its committees.

I have already spoken this morning about setting out guidelines and principles for the OFS. I know that the Minister is keen for the OFS to be seen as having independence under broad direction from the Secretary of State. If it is to function effectively and correctly, it is extremely important that it is seen as independent—after all, it is an arm’s length body. It is worth looking at this in context, because there is a section on procedure on page 66. It states:

“A representative of the Secretary of State is entitled...to attend any meeting of the OfS or of any OfS committee”.

The practicalities of that and how it would work out are obviously a matter for the parties concerned, so I have no problem with someone attending a meeting.

However, parts of meetings fall into different categories, as they do in Select Committees when we have a public session and a private session. I am not sure about the representative of the Secretary of State taking part in OFS deliberations, even though there will be a veto over the decision. I do not know whether this Government are fans of nudge theory—we have not heard the new Prime Minister pronounce upon it yet—but the previous Government and the coalition Government were greatly in favour of the principle of nudge. They believed that people should be nudged towards things rather than legislating on matters. I have observed on occasions that there is nudge and nudge, and sometimes there is iron nudge.

I would not want it to appear, either for the Secretary of State’s reputation or for the subsequent independence of the OFS, that a functionary of a Secretary of State—if I may be so crude as to put it that way—sitting there quietly in the best traditions of Whitehall and observing the deliberations of the committee might cast aspersions on its ability to make judgments independently. I am genuinely curious to know why the Minister feels it would be necessary for a representative of the Secretary of State to take part in deliberations. I think that it would be wholly otiose and that it would send out the wrong signals. Therefore, in the spirit of transparency that we talked about earlier, and the need not to apply undue pressure to the new body, I hope that he will be able to give us a favourable response.

[Joseph Johnson]

The amendment seeks to remove the ability of the Secretary of State’s representative to take part in OFS board meetings. I understand the hon. Gentleman’s desire to ensure—

[Gordon Marsden]

I am sorry to interrupt the Minister, but this needs clarification. We have not sought to stop either the deliberations of the board or having the representative at a board meeting. We have said—this applies to other committees and organisations—that when the board is deliberating on things as opposed to receiving reports and so on, the Secretary of State’s representative should not be present. I beg the Minister not to misinterpret or to allow officials to misinterpret the situation and set up a straw man by saying that we do not expect the representative to be in any shape or form at the board meeting. That is not the case.

[Joseph Johnson]

I understand that difference, although it does not change the substance of what I am saying. Although I understand the hon. Gentleman’s desire to ensure the independence of the OFS board, I do not believe that his amendment, well intentioned though it is, is the right way to achieve that, because it would effectively make the representative a silent observer of the deliberations. It takes us a step back from the arrangements that have worked successfully for the HEFCE board for more than a quarter of a century and it risks the OFS not having access to the Government’s latest policy thinking when it considers how it should act.

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[Gordon Marsden]

I beg to move amendment 135, in schedule 1, page 67, leave out line 31.

This amendment would prevent the OfS from accepting gifts of money, land or other property.

I move from a part of the schedule that caused me some bafflement to one that causes me substantial bafflement. The Minister was talking about good lunches earlier, so in that vein I was surprised to see on page 67, line 31, the list of things the OFS may do. It may do anything except borrow money, but, slightly curiously in that context, we are told that it can acquire and dispose of land and other property, enter into contracts and invest sums. I assume that the Minister will elaborate on some of those examples so that we can be clear that the OFS will not go into offshore investments or anything similar. The serious provision concerns the acceptance of

“gifts of money, land or other property.”

I am by training a historian. We talk about Henry VIII clauses in this place, and when I read this I had an idea of the Tudor way of doing things and of getting things done. The idea that the OFS, which is supposed to be a reputable and even-handed body, would be accepting

“gifts of money, land or other property”

without some aspersions—or nasturtiums, to use the old phrase—being cast on the motives for those acceptances is one that I fail to understand. I look to the Minister to reassure me as to why paragraph 15(2)(d) is included. What sort of gifts of money, land or other property is it envisaged would be accepted? Is he concerned that they would inhibit or influence future decisions, which at that stage the OFS might not be able to foresee, involving the people who had given the gifts? I will simply conclude—going back to our lunch analogy earlier—by reminding the Minister of the saying “there ain’t no such thing as a free lunch”, or in this case, free

“gifts of money, land or other property”

and I look forward to his further explanation.

[Joseph Johnson]

I am very happy to explain the provision. The amendment would remove the OFS’s ability to receive

“gifts of money, land or property”.

Although I think I understand the motivation behind it and even though we can sympathise to some extent with the hon. Gentleman’s underlying concern, we will resist the amendment. In practice, it would remove from the OFS an ability HEFCE has always had—an ability that would allow the OFS to manage any issues raised by the public ownership of some of the land and property of some existing HE institutions if those institutions merged or ceased to operate, and to ensure that the assets were managed effectively. I accept that it may seem odd for any public body—particularly an independent regulator—to be empowered to accept gifts, but there is a specific reason for the existence of this ability in the current legislative framework, and for why we need the OFS to continue to have it.

HEFCE was created at a time when a Conservative Government were implementing substantial reform to the HE sector. Central to that was allowing our polytechnics to become full universities—the single biggest institutional expansion of the sector ever. Before this, as the hon. Gentleman knows well, polytechnics had been owned by local education authorities. Some of the property and land used by some of these institutions was owned by the local authority, meaning that it was public property, so the Further and Higher Education Act 1992 gave HEFCE powers to accept this public property to ensure that if any of the institutions failed or merged into new forms, then HEFCE would have the powers to manage these changes effectively.

As we now know, the former polytechnics have thrived as universities and made a huge contribution to our sector as a whole over the intervening decades, and no one is suggesting that any of them are at any sort of risk of collapsing or even merging, but the fact remains that the public retains some ownership rights of some of the land and property that these institutions use, and no responsible Government can simply give those rights away—indeed, Government need to retain the ability to manage these assets effectively should that ever prove necessary, and the most effective way to do this is to give the OFS the power to accept those assets on behalf of Government.

[Gordon Marsden]

I thank the Minister for his explanation, which I assume he has not concluded. I entirely understand the context of HEFCE and the 1992 legislation. We could have an interesting discussion about whether HEFCE and the OFS are ultimately the same sort of beast, but I do not intend to pursue that argument. I merely say that I do not think that the analogy between what HEFCE did and what the OFS will do is entirely accurate. The OFS will be doing all sorts of things that HEFCE did not do, but we will let that pass.

If I heard the Minister correctly, this is essentially what one might describe as a reserved power, to be exercised in the limited circumstances that he has described—and he described them very accurately in the context of what needed to be there post-1992. I understand the context of making the provision, but I remain concerned that the terms of reference are extraordinarily wide. If I am not to press the amendment I would therefore urge the Minister to put his explanation in writing to all the members of the Committee, so that everybody—not just those here today—can clearly understand the circumstances in which the Department intends that the OFS should use this power, so that there is no doubt that it could not be used for, for the sake of argument, a group of people who wanted to set up a new organisation—

[Gordon Marsden]

It is very long, Sir Edward, and I will shut up at this point.

[Joseph Johnson]

I got the gist of the hon. Gentleman’s point. I would like to provide him with some additional reassurance on one of the other aspects of his earlier remarks in relation to individuals within the OFS taking gifts or money, and that sort of concern. This power only enables the OFS as an organisation to accept gifts. It will obviously be for the OFS to set the terms and conditions of employment for its staff, but we see absolutely no reason why these would not include the standard public sector rules on gifts and hospitality, which set out that a public servant may only accept gifts or hospitality of a purely nominal value. I hope that that provides some reassurance about the seemingly wide scope of this provision. Of course I am happy to set out in writing many of the points I have just made if that would provide reassurance, and I commit to doing that now.

To sum up, in these respects the Bill replicates the arrangements in the existing legislative framework for precisely the same reasons as those arrangements were first put in place. As I said, the amendment would unpick those arrangements. If at some point in the future, for example, one of the former polytechnics were to want to merge, or if it faced a collapse—obviously we hope that would not happen—the OFS would be unable to accept any part of the assets that the institution held over which the public had any ownership rights. This is a failsafe power. We do not anticipate that it will be used frequently, if ever, but it is an important power because in its absence there is a risk of loss to the public purse. For that reason we resist this amendment, and I respectfully ask the hon. Gentleman to withdraw it.

[Gordon Marsden]

On the basis of the Minister’s extended explanation of the circumstances and his promise to put this in writing for the members of the Committee, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1 agreed to.

Clause 2

General duties

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[The Chair]

Minister, would you like to read out your speech for our delectation?

[Joseph Johnson]

I will happily do so, Sir Edward.

These amendments recognise the importance of widening choice and opportunities to students from all backgrounds and all parts of the country. The Government wholeheartedly support that ambition, but it is crucial that we ensure that those choices are made alongside the available technical and vocational options. There will be opportunity to discuss that in more detail as we take forward both this Bill and the skills plan. However, the OFS’s duties to have regard to the need to promote greater choice and competition already give it the responsibility to focus on those issues.

On amendment 15, widening access to higher education is a priority for the Government. Good progress has been made, and record numbers of young people from disadvantaged backgrounds are going into HE: the proportion has risen from 13.6% in 2009-10 to 18.5% in 2015-16, and provisional figures for 2016 indicate an entry rate of 19%. The hon. Member for Blackpool South acknowledged that the alarmist warnings about the impact of the tuition fee increases have not been borne out by events, and that the pips have not squeaked, at least in the traditional sector. We share his concerns about part-time study, and I will address in greater detail later exactly what we have done and will do to support it.

[Gordon Marsden]

For clarification, my remarks about the pips not squeaking in the traditional sector referred to the period up to 2010. After then, as the Minister is well aware, the tripling of tuition fees in 2011-12 had a dramatic effect on the traditional cohort—we can never demonstrate how many people were deterred from going forward in that process—and there was a dramatic fall in part-time and mature students, which can be closely correlated with the tripling of tuition fees.

[Joseph Johnson]

The office for students brings together the responsibilities of the Director of Fair Access and HEFCE for widening access and promoting the success of disadvantaged students. The Bill will rationalise those activities and ensure they are a key part of the OFS’s remit. Placing a requirement in legislation to publish a strategy is restrictive and unnecessary, and setting a rigid three-year timetable in legislation may in fact limit, rather than encourage, regular review, as the focus would be on the timescale, rather than on when such a strategy might most be needed. Under clause 2, the Secretary of State can issue guidance to the OFS, and the OFS must have regard to the guidance. Such guidance, which provides greater flexibility, is a more appropriate vehicle for setting out expectations with regard to the broader strategy in connection with access and participation.

We are not complacent. We want to do more to continue opening up higher education to those from all backgrounds and ensure that they have successful outcomes, including by ensuring that those who go to university stay to complete their qualification.

On amendment 20, we too want to see an increase in apprenticeships, which are a powerful motor of social mobility and productivity growth. Our ambition is to reach 3 million apprenticeship starts by 2020. Higher and degree apprenticeships are widening access to skilled trades and professions, and are providing the higher level technical skills employers need to improve productivity, while giving young people a career route as equally valid as going to university.

The hon. Member for Blackpool South asked about the join-up between our HE and FE reforms. We are carrying out two reform programmes—in HE and technical education—at the same time. That gives us the best opportunity to ensure that they are complementary and that learners benefit from the changes as soon as possible. The reforms are not about diverting people from academic HE into technical education or vice versa. We want everyone who can benefit from the education they choose to have the chance to do so. Our reforms are focused on strengthening the whole education system, based on a common set of core principles improving the quality and value of learning and its relevance to learners’ future choices; enabling learners to make well informed decisions about the value of their learning options; ensuring learners have the opportunity to move between academic and technical education if they feel their original choice no longer suits them; and giving learners the opportunities and choices that will help them to achieve their potential.

[Gordon Marsden]

No disrespect, but the Minister is reading out the boilerplate of the Government’s aspirations for co-operation in this area, which we fully share. The question is: what is actually happening on the ground? Without diverting too much, what is happening on the ground is that there are major concerns about apprenticeship levels, the numbers of apprenticeships, and the ability to deliver all this in the next 12 months.

I know apprenticeships are not the subject of the Bill, but with the Government saying that degree apprenticeships are so crucial, the Minister has a vested interest in the success of the apprenticeship programme. So far today, he has not given us any indication of the practical integration of discussions on these clauses by officials from his Department and the Institute of Apprenticeships. Nor has he given any indication of conversations he may have had with the Minister of State, Department for Education, the right hon. Member for Harlow, though I know the latter is relatively new in post.

[Joseph Johnson]

The hon. Gentleman asked about degree apprenticeships. I point him towards provisional figures, released in June, that show a dramatic increase in the number of people starting higher apprenticeships. The official figures show that there were more than 37,000 people participating in a higher apprenticeship between August 2015 and April 2016. The figures also show that there are more young people starting apprenticeships, with more than 108,000 starts by under-19s between 2015 and 2016.

We do not agree with the hon. Gentleman on his points about funding. The spending review was a good settlement for the skills and FE sector. We will double spending on apprenticeships by 2019-20 from 2010-11 cash terms, including through the new levy, and will protect the £1.5 billion funding for the core adult skills participation budget, in cash terms.

The combination of the levy, the protection of the adult education budget, the extension of loans and the introduction of the youth obligation mean that by the end of the Parliament, the cash value of core adult technical education funding to support participation will be at its highest ever. The total spending power of the FE sector to support participation will be £3.41 billion by 2019-20, which is a cash-terms increase of 40% compared with 2015-16, and 30% in real terms. The area review programme that the hon. Gentleman mentioned aims to put the FE college sector on a strong financial footing, so that it is better able to meet the educational and economic needs of local areas, including at higher levels.

To finish my comments about the links with the FE reforms under way elsewhere in the Department, led by my able colleague, the Minister of State, Department for Education, my right hon. Friend the Member for Harlow, with whom I have regular conversations, even though he is new to his post, I remind the hon. Member for Blackpool South of the support for the entirety of our package of reforms from the Association of Colleges, which said:

“Choice, access and quality are the welcome watchwords of the Government’s long-awaited plans to open up higher education and to allow more colleges to award HE qualifications. This step change away from the country’s traditional university system will empower more people than ever before to access HE in their local area through a college. It will also provide a wider choice of courses that are linked to employment.”

In response to the higher education White Paper, the AOC said:

“We welcome much of the Bill’s content, as it has been one of AoC’s key long-standing policy objectives to make it easier and quicker for high performing institutions, including colleges, to achieve their own awarding powers.”

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[Joseph Johnson]

To carry on, we are supporting growth in degree apprenticeships, including by making available an £8 million development fund. That will build on the rapid progress that we have been making over the past year. It will help universities and partners build capability and capacity among HE providers to meet employer demand.

I support the good intentions behind the amendment, and it will, of course, be essential for the OFS to work collaboratively with the Institute for Apprenticeships to increase the number, range and choice of degree-level apprenticeships on offer to students. However, the amendment is unnecessary to accomplish the hon. Gentleman’s entirely laudable aim. There are already powers in the Bill that enable collaboration between the OFS and other bodies. Clause 58 empowers the OFS to collaborate, where appropriate, for the efficient performance of its functions, and requires it to do so if directed by the Secretary of State. The OFS can use that power to collaborate and share information with other organisations, such as the IFA.

The Secretary of State will also be able to ask the OFS to work with the IFA through guidance and, in doing so, will be able to set out which areas of activity should be prioritised at any given time. That is a more useful and flexible tool for delivering the kind of increase in degree apprenticeships that we all want. That will enable the OFS to respond to the changing needs of prospective students and the labour market. The amendment would lead to an overly prescriptive approach, and would limit the flexibility that we need to ensure that our education system remains responsive to changes in the labour market and the needs of our economy.

Finally, I turn to amendment 28. I again welcome the opportunity to discuss the important issue of the geographical distribution of higher education provision. HE providers play a significant role in their local economies by supporting and enabling local growth. Access to HE acts as a social mobility catalyst that can improve the life chances of young people in disadvantaged areas or help retrain people later in life. It is important that all areas of the country should be able to benefit from that. HE provision tends to be clustered in cities, with less provision in rural or coastal areas. HEFCE has undertaken valuable work in recent years on the issue of cold spots. I assure the Committee that it is our intention that the OFS should continue doing that important work. However, the amendment is not needed to enable that; it would risk forcing the OFS to take an over-prescriptive and interventionist approach.

The Bill already gives the OFS a duty to have regard to the need to promote greater choice and opportunities for students. That is a broad duty that includes matters such as students having a choice about where to study. That means that the OFS will have a remit to be aware of cold spots, and to take action if necessary.

The amendment would also risk creating the expectation that the OFS would continually monitor the distribution of supply and demand for HE, perhaps in a bureaucratic and costly way. The OFS should be free to determine the extent of the monitoring needed, based on its market intelligence. The amendment would impose a legal requirement on the OFS to take action whenever there was unmet demand. I would be concerned about that, as it would be an over-interventionist approach for the regulator to take in every instance. In many cases, incidences of unmet demand could be addressed by the local area without any direct OFS action. The duty could therefore be inconsistent with the principle of taking regulatory action only when it is needed.

We have an active HE market that is well equipped to identify and respond to student demand with innovative and targeted provision. Our view is that local institutions and authorities are best placed to decide what is needed in their areas; that is in line with the spirit of institutional autonomy. For example, nearby providers and the local community can put plans in place for additional HE provision, perhaps through FE colleges or satellite campuses. The OFS can encourage and support that if necessary, but the decision should be for local areas, reflecting the principles of local devolution.

Our reforms will also support new institutions opening in cold spots where there is unmet demand. It will be quicker and easier for new high-quality HE providers to establish themselves. New universities can be agile and nimble, can respond to what students and the economy demand, and can equip students with the skills needed for the jobs of the future. I therefore ask the hon. Gentleman to withdraw the amendment.

[Wes Streeting]

I thank the Minister and the shadow Minister for their contributions. The Minister made a reasonable point about amendment 15 in relation to the prescription that the OFS should publish and review its strategy at least every three years. I agree with his general point that, where possible, legislation should not be unnecessarily prescriptive, and I am content to withdraw the amendment.

On amendments 20 and 28, I am not sure that I entirely follow the Minister’s argument. In the Bill, there is a whole range of instances of the OFS being given specific duties that might otherwise have been captured under the much broader, sweeping clauses. This is a matter of consistency. We are talking about two key areas that the Minister has acknowledged are important. The provision of higher-level and degree-level apprenticeships is important, and there really ought to be a statutory duty on the office for students to co-operate with the Institute for Apprenticeships, and vice versa. The shadow Minister made a compelling case for making sure that the higher education and skills strategies are joined up, and amendment 20 would facilitate that.

On the issue of HE cold spots and amendment 28, I am not sure that my reading of the amendment is the same as the Minister’s. He paints a picture of a bureaucratic nightmare in which the office for students is constantly monitoring supply and demand and frequently having to tinker with institutions and courses. The amendment is clear:

“The OfS must monitor the geographical distribution of higher education provision”.

We hope that it would do that, but there is no harm in making sure that it does. The amendment states that the OFS should

“introduce measures to encourage provision where the OfS considers there to be a shortfall in relation to local demand.”

There are two variables. One is the issue of measures, and it would be for the office for students to determine what, if any, measures are appropriate. Secondly, the OFS has discretion to determine where it

“considers there to be a shortfall in relation to local demand.”

That is important in ensuring fair access to higher education, particularly given that, as I described earlier, many people, particularly from backgrounds where there is less of a tradition of participation in higher education, choose to study locally. It is an area that the OFS needs to keep its eye on, so there is no harm in putting this measure in the Bill and making sure that OFS minds are concentrated on this challenge. I am therefore not minded to withdraw amendments 20 and 28; I wish to press them to a vote. However, I beg to ask leave to withdraw amendment 15.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Joseph Johnson]

Clause 2 sets out a series of important duties for the OFS, including

“the need to promote quality, and greater choice and opportunities for students…to encourage competition between English higher education providers…to promote value for money…to promote equality of opportunity in connection with access to and participation in higher education”,

and to use

“resources in an efficient, effective and economic way”.

Amendment 137, the first amendment in the group, would require the OFS to have regard to all of those statutory duties equally. While the Bill does not place any particular weighting on the general duties, I believe that the amendment would seriously inhibit the ability of the OFS to make effective decisions, so I resist it. In practice, it is akin to telling the organisation to give equal priority to all of its priorities. That does not reflect how any organisation operates in reality. In the design of the OFS, there are a series of matters which it needs to take into account when carrying out its functions. We are also giving it statutory independence to act impartially and objectively in delivering those statutory duties in the light of the relevant circumstances of the time. For us, that has the distinct advantage of giving the independent OFS clear statutory responsibility for deciding what is most important at any one time.

In its day-to-day operations, the OFS will need regularly to manage its different competing priorities, some of which will need to take greater importance than others depending on the issue at stake. The amendment would restrict that independence. If everything were equal and equally important, the OFS would be unable to make judgments about relative importance—the kind of judgment that HEFCE currently has to make every day.

[Gordon Marsden]

Again, the Minister is deliberately setting up a straw man. We are not suggesting that the OFS board, to put it at its crudest, would have to divide its time at a meeting between x, y and z. Anyone in any organisation with any sense whatsoever will prioritise one thing at one time and others at other times. Macmillan’s “Events, dear boy, events” only makes that more important. The idea that we are suggesting that that should be reflected in a day-to-day mathematical formula is ludicrous. We are looking for some indication from the Government that they do not regard competition as the be-all and end-all of the OFS’s duties.

[Joseph Johnson]

They are all important duties, which is why they are all on the face of the Bill. As I said, we would not want to give them on the face of the Bill an equal weighting, because that would restrict the flexibility of the OFS board to take into account the different circumstances it might face at any particular point in time.

Before I get into the detail of the amendments on competition duty, I want to touch on collaboration, which hon. Members have raised. We will talk about it more when we come to the next group of amendments, but we may as well start now. Members are concerned about the scope of the competition duty in part because they worry it might stifle collaboration. I want to make it clear that I see promoting collaboration as an important part of the OFS’s role. I do not see competition and collaboration as being inherently in tension with each other. Competition between businesses that are also competitors is common practice in other sectors when there are mutual benefits to be gained from it. I want the OFS to support such collaboration where it is in the interest of students. The OFS will recognise the importance of collaboration between providers, especially, for example, where it might enable efficiencies.

The Bill does not prevent collaboration. The OFS does not need a separate duty on collaboration, as it has a general duty already to have regard to the student interest, and such collaboration would be in the student interest. Collaboration can take many forms, and we do not want to be prescriptive about what it should look like or create an expectation that the OFS should formally regulate this type of activity. That would be unnecessary. It is, however, part of the general overview of the sector and of the role of providers that we would expect the OFS to have, and we can make that clear in our guidance to the OFS.

[Dr Blackman-Woods]

I want to question the Minister a bit more about everything being in the interest of students. Ultimately, everything universities do will eventually help students, but they often act in the interests of a local community, wider society, the wider economy and how Britain is viewed internationally. It seems a bit strange that nothing in the general duties acknowledges the wider context in which decisions are made. Of course, we have something in the Bill about encouraging competition, but there is nothing at all in this clause about working in collaboration or acting in the public interest.

[Joseph Johnson]

We absolutely recognise the important role that universities play in society. As the hon. Lady says, as well as often being large local employers, HE providers need to be well connected with their local business community and other education providers. They often provide additional services and facilities that are important to local communities, but we do not want to be prescriptive about what that wider role should look like or create an expectation that the OFS should formally regulate this type of activity. That is unnecessary. It is part of the general overview of the sector and of the role of providers that we would expect the OFS to have, but we will make that clear in our guidance, if that is of any comfort to the hon. Lady.

The OFS’s general duty to have regard to encouraging competition recognises that higher education is a market and needs a regulator suited to dealing with that reality. The Competition and Markets Authority concluded in its report on competition in HE that aspects of the current system could be holding back competition among providers and needed to be addressed. Currently, as we heard in the evidence sittings, the sole option for providers new to the UK sector, or too small or specialist to gain their own degree-awarding powers, is to have their degree validated by an incumbent provider. Not only does that appear to frustrate competition, it stifles innovation and results in the entrenchment of the same model of higher education.

[Gordon Marsden]

I must challenge that statement, which has been repeated by the Minister. It was said in the evidence sessions, and has been said outside this place—and I have some sympathy with the view—that if, given the multitude of choices for validation from existing higher education institutions, those new providers cannot get anyone to validate them, they must be in a bad way. Only this week the Open University put itself forward, as the Minister will be well aware, as a potential validator of many new institutions and, indeed, some of the FE institutions that seek degree status. So let us have no more of the straw man—the argument that those poor small new institutions cannot be validated because there is a vested interest out there blocking them. If there was such a situation, it is rapidly being addressed, and what the Minister is arguing for is not needed.

[Joseph Johnson]

The hon. Gentleman should have listened more closely to the evidence that we heard last week from the likes of Alex Proudfoot, the chief executive of Independent Higher Education, formerly Study UK. He spoke powerfully about the flaws in the current system that we are seeking to address through our reforms. I remind the hon. Gentleman, who appears to have forgotten, that he said:

“Unfortunately, we find that, quite rightly within their own autonomous priorities and strategies, some institutions draw back from validation, leaving institutions and students high and dry. We see institutions blocking new courses from being validated because they compete with one of their own courses or, indeed, one of their own partner’s courses. Unfortunately, we see a very high cost and very limited transparency in the process across the sector––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 14, Q13.]

[Gordon Marsden]

I am sorry to come back at the Minister on that, but if he is going to trade quotes from the evidence sitting, Mr Proudfoot’s statements were entirely general. I think that the evidence will bear me out: he did not say anything in detail about numbers of organisations. Of course there will always be individual organisations that do as he said, but the general position is very clear. There is a host of institutions that can do validation and, as I have said, the Open University is now added to their numbers.

[Joseph Johnson]

Again, there was ample evidence in the sittings, with specific institutions that offer high-quality HE provision pointing to their problems in being validated. We heard, for example, from Angela Jones of Condé Nast College:

“We have just been through the whole process of finding a validating partner for our degree, and it was really difficult…For us, the idea of an office for students in a central place to go and be supported through that process is very helpful.”

Professor Philip Wilson said:

“We have seen a number of institutions pull the ladder up from colleges on validation powers with pretty much no notice, which has caused a number of issues—it filters down to the students and causes disruption.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 49, Q74.]

We could also point to the evidence from Paul Kirkham, chief executive of the Institute of Contemporary Music Performance, who told the Committee:

“There are significant risks to student and taxpayer of a very static, non-changing universe of providers and way too much emphasis on the three-year, on-campus degree.”––[Official Report, Higher Education and Research Public Bill Committee, 6 September 2016; c. 13, Q13.]

By placing a general duty on the office for students to have regard to encouraging competition between English HE providers we will foster a more competitive system and level the playing field for new providers, ensuring that regulation does not block new entrants from competing and providing the innovation the sector needs. The sector supports that ambition. As Roxanne Stockwell, the principal of Pearson College, put it:

“It is clear that the dominance of the one-size-fits-all model of university education is over. Fee rises have transformed students into more critical consumers and the government is right to recognise this in their reform package. Students are calling out for pioneering institutions offering alternative education models and an increased focus on skills that will prepare them for the careers of the future - with the mind-set and agility to fulfil roles that may not even exist yet. The government’s plans address this demand by making it easier for credible new organisations to enter to sector should be welcomed by all.”

Making it easier for high-quality providers to enter and expand will help to drive up teaching standards overall, enhance the life chances of students and drive economic growth, and will become a catalyst for social mobility.

The Bill makes explicit the fact that there is a general duty to encourage competition

“where that competition is in the interests of students and employers”.

In doing so, it emphasises that the student interest is at the heart of the OFS and recognises the wider public benefits associated with maximising choice and competition in the HE sector. Requiring the OFS to have regard to competition only where it is “shown to be” in the interests of students, employers and the wider public would be burdensome and inflexible. Amendment 139 appears to suggest that the OFS would in some way have to demonstrate that those various interests were met, placing an unnecessary evidential burden on the new regulator.

On the question of whether the OFS should have regard to encouraging competition where it is in the public interest as well as in the interests of students and employers, operating in the public interest is implicit in the role of the OFS. It will be a public body that is accountable to the Secretary of State and to Parliament. Moreover, there are general duties on the OFS to promote value for money, equality of opportunity and to operate

“in an efficient, effective and economic way.”

There are also significant assurances built into the Bill to safeguard the public interest, including a requirement that the OFS, through the Secretary of State, provides an annual report to Parliament on the performance of its functions and finances. For those reasons, I respectfully ask the hon. Members who tabled the amendments not to press them.

[Gordon Marsden]

Because of the lateness of our proceedings I do not intend to respond in great detail, but I profoundly disagree with the Minister’s cavalier interpretation of what one needs to do on validation. We can talk about bad examples across the board, but this will go from one situation to another. Individual organisations, whether Condé Nast or any other, will have to go through a proper process—that is the whole point of the thing. As we come to other aspects of the Bill we will see why the Government’s attitude toward new providers risks creating many problems for students. On this occasion, because the hour is late and we are about to conclude the session, I do not intend to press our amendments to a vote, but I assure the Minister we will return to the issue in some detail elsewhere in the Bill. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered¸ That further consideration be now adjourned. —(David Evennett.)