Higher Education (Industry and Regulators Committee Report)

Lord Norton of Louth Excerpts

Tuesday 21st May 2024 Grand Committee

[Lord Norton of Louth (Con)]

My Lords, I declare my interests as a serving academic at the University of Hull and as chair of the independent Higher Education Commission. The commission produced a report in 2013 on regulating higher education that included a recommendation for a protection or insurance scheme to insulate institutions against possible future financial difficulties or failure.

However, my starting point today is that regulators need a mindset of existing to get the best out of the bodies that fall within their responsibility. It is not just a mindset but an issue of how regulators are trained. The same applies to administrators within universities. They are trained in a particular set of skills related to their area of responsibility. They are not necessarily trained in what the body they regulate or work within exists to achieve. In terms of this debate, they are not grounded in what universities are for, which is to teach and research. Administrators need to focus on what they can do to ensure that universities deliver the best. That means going beyond a narrow focus on tick-box exercises, and concentrating instead on how regulations and rules can be utilised to facilitate, not constrain.

Doing so is important at all times but it is especially so now for the reasons advanced by the Industry and Regulators Committee in its excellent report. As it says:

“The higher education sector faces a looming crisis”.


That crisis is already upon us, having worsened since the report was published. As the report states, given the problems facing universities,

“it is … vital that the sector’s regulator is fit for purpose.”

I should stress that that is necessary but not sufficient. The conditions giving rise to the crisis also need to be addressed. The committee’s recommendations need to be seen as part of a wider strategy for enabling universities to thrive and remain world class, and to produce graduates who are essential to a healthy and vibrant society. If we are not proactive in addressing the problems, we will be left behind by other nations. It is not sufficient to say how many of our universities are in the top 20 globally; it is the trend that matters. The higher education sector is under threat.

On the OfS, the committee has produced a powerful and hard-hitting report. As it in essence argues, and as we have heard, the Office for Students has not lived up to its name. However, as the committee also recognises, there has been “a proliferation of regulators”—a virtual alphabet soup of bodies—in the sector, which has just added to the regulatory burden. The more regulators there are, the greater the chilling effect on universities, not to mention the demand on resources. As the noble Baroness, Lady Taylor, mentioned, research commissioned last year by Universities UK found that, on average, a university has almost 18 full-time equivalent staff dedicated solely to regulatory compliance. That is bigger than many university departments. Universities are meant to be autonomous institutions and are encouraged to be innovative, but they are notably risk averse and tend to treat guidance from regulators as fixed law, which some will then gold plate. Like the committee, I welcome the fact that the Government recognised the problem and intend to tackle it. I look forward to the findings of the review due this summer.

However, the principal value of the report is in demonstrating what is missing. The OfS lacks the power and, arguably, the mindset for enabling universities to thrive. That mindset may change but the OfS cannot expand its own powers. As we have heard, it has just published its report, in which it recognises the crisis facing universities. It is pressing them to have realistic funding models but it lacks the capacity to do much beyond that, not least in terms of protecting students in the event of some institutions failing. The Government have the power to help universities but appear to have gone AWOL. The Government constitute a significant part of the solution but they first have to recognise that they are a major part of the problem.

The report before us is hard-hitting and I endorse its recommendations. I very much agree with the argument on accountability. There need to be clearer lines of accountability. It may benefit government that the lines are not too clear, enabling it to eschew responsibility. I also very much agree with the recommendations on quality assurance. As we have heard, that is a task for the QAA or a similar body, not the OfS. We cannot continue with a situation where England, unlike the rest of the UK, is not aligned with internationally recognised standards.

I welcome the recognition that the OfS and government adopt narrow means of assessing the value of degrees. There remains a tendency to see graduates as economic units, with metrics that fail to reflect the value to the individual and to society, as well as the fact that it is difficult to measure economic value when we do not know what form future jobs will take.

The principal problem, though, is to be found in the Government’s response to the report. There is a tendency to ascribe responsibility to the OfS for problems that require action on the part of government. The OfS does not have the capacity to deal with the problems that it recognises now face the sector. Its recent report highlights the risks and the fact that some HE institutions have been overly optimistic in their planning assumptions. It also acknowledges the decline in the real-term value of income from UK undergraduates. Universities are having to subsidise the teaching of home students with income from overseas students.

In their response, the Government recognise the value of overseas students. As the response says, they

“bring significant economic and social benefits to the UK”.

The response welcomes the fact that universities are seeking to diversify their recruitment of international students. It then goes on to say:

“The UK continues to be an extremely attractive destination for international students, with an array of world-class universities, a competitive post-study work offer in the Graduate Route and a welcoming environment”.


That no longer bears a relationship to the reality. The Government have contributed to a chilling environment for overseas students based on presumption rather than fact regarding the graduate visa route. This has been exacerbated by the comments of some Members of the other place. The Migration Advisory Committee found little evidence of abuse of the system and that it was not undermining the quality of the UK higher education system.

It is not just universities that benefit from attracting overseas students, in terms of funding and contributions to research, but local economies; many local businesses are dependent on student patronage. There is also the long-term effect on trade. The export of higher education contributes significantly to the UK economy as well as to the UK’s global reach in terms of soft power. Overseas students are not taking the place of home students. The benefits are substantial—a fact recognised by the public. A recent Survation survey found that the public recognise the value of recruiting overseas students and support the retention of the graduate visa route.

People appear to recognise what separates overseas students from people who migrate to the UK. First, they pay to be here; secondly, they go home. Most return to their home country and contribute to its development. The UK benefits all round: the Treasury, the Foreign Office and the Department for Education all appear to recognise the value, but that benefit is disappearing. Applications from overseas students are declining. The Government are sending out completely the wrong signals.

The Government say there is overreliance on overseas students but make no acknowledgement of the fact that they are in large measure responsible for that situation. Despite inflation, the student fee has remained unchanged, so overseas student fees are needed to subsidise home students. The decline in recruitment of overseas students puts HE institutions in a difficult situation. Yet the Government act as if entirely detached from what is happening, putting responsibility on the OfS to monitor what is happening. That is unfair on the OfS.

The OfS can be more resilient and supportive in its approach, but it is the Government who need to act, and swiftly. Their response to the committee’s report is dripping in complacency. Basically, they are monitoring the situation, saying:

“The government keeps the HE system under review … and … plans to consider”


the funding position

“ahead of the next Spending Review”.

There is no self-reflection and no active recognition of their responsibilities to maintain a healthy HE sector.

I trust that my noble friend Lady Barran will not take up time telling us how good the HE sector is—we already know that—but instead devote her time to saying precisely what action the Government are taking, in relation to not just the Office for Students but the second part of the title of the committee’s report: “the looming crisis facing higher education”. Recognising that there is a crisis is necessary but it is not sufficient. What will the Government do, that otherwise they would not have done, because of this excellent report? That will be the measure of what my noble friend says.