Out-Law Analysis 9 min. read
15 Jan 2016, 11:12 am
The government's recent 'green paper' on the future of higher education is an important statement of intent which faces up to and proposes ways of tackling a number of unacknowledged and longstanding issues for higher education in England. However, in order to protect the sector from reputational risk and effectively protect public funds, it will be vital for the government to prioritise the primary legislation that will be needed to bring forward some of the most significant proposals.
As a law firm which advises a large number of UK and international higher education institutions, as well as aspiring market entrants, suppliers to the sector, regulators and sector bodies, Pinsent Masons has considerable practical experience grappling with these issues. Here, we set out our position on some of the key points raised by the green paper consultation process, which closes today.
Teaching Excellence Framework (TEF)
The government's proposed new framework for recognising and rewarding quality teaching will increase focus on teaching excellence and has the potential to make it easier for students to compare courses at different institutions - but it will only be effective if the judgments are based on valid, robust, comprehensive, credible and current metrics. Without such reassurance, providers and students will quickly lose confidence in the system.
It is difficult to see how the metrics proposed in the green paper meet these criteria: employment, retention and student satisfaction data are affected by a number of issues, many of which are unrelated to teaching quality. For example, a student's commitment – or lack of it – and family circumstances will affect employment choices. In addition, the information that providers themselves will be expected to produce is likely to lack the required level of robustness unless it can be independently verified.
A more credible method of judging teaching standards would be to measure the learning gain of students while they are registered with the provider. Perhaps the subsequent technical consultation on the design of the TEF could consider if there is any data available which could show the level of learning gain.
The government has suggested that the criteria and metrics used for the TEF will develop over time. We understand why this may be necessary but such evolution has the potential to create a confusing system for providers and make it difficult for them to plan for the future. In order to create a fair and transparent system, and to avoid future legal challenges, it must be absolutely clear which criteria and metrics are to be used as the basis for making a decision about teaching excellence. Similarly, providers must be provided with sufficient notice about these criteria and metrics together with any changes.
Decision making
Given the proposed consequences of an award of teaching excellence, the judgments made by the panels are likely to be of critical importance to the providers. It is therefore crucial that providers are able to understand how judgments are to be reached, that reasons are provided for the decisions made and that providers are given a proper opportunity to appeal those decisions. The grounds for appeal could be limited, for example to those that are used in judicial review proceedings, to prevent an appeal being made in respect of every adverse decision.
Precondition
The proposed requirement that providers observe published guidance by the Competition and Markets Authority (CMA) on how consumer protection law applies to higher education providers is, in our view, unworkable and could lead to perverse and unfair outcomes.
In particular, it is important to note that the CMA has stressed that this material is only guidance and that it will ultimately be for the courts to decide whether a provider has breached consumer law. A provider could therefore be penalised for something which is entirely lawful. There are also significant practical difficulties around who decides whether a provider has complied with the guidance and how to provide for fair and proportionate decision-making. For example, it would be unreasonable for a provider to be prevented from applying for TEF due to a minor and immaterial point of non-compliance with the guidance.
Consumer legislation and the CMA already offer students protection in relation to their consumer rights. There is no need to deal with this issue as part of the TEF. Indeed, the use of such a pre-condition could undermine the entire process.
Social mobility and widening participation
In order to ensure that providers continue to focus on the need to widen participation, they are currently required to set targets which are reviewed by the Director of Fair Access to Higher Education.
The government has asked whether a new regulator, the Office for Students (OfS), should have the power to set targets where providers are failing to make progress. In our view, this would be counter-productive. This is because the issue of social mobility is very complex and the factors which influence it vary from area to area and from provider to provider. The provider is, therefore, in the best position to set the targets based on its knowledge and experience. It would take a significant amount of resource for the OfS to obtain the same level of knowledge and understanding.
Although the focus of the paper is on the higher education sector, the role of primary and secondary schools in encouraging social mobility must not be overlooked. The majority of students make the decision about whether or not to apply for higher education while they are at school. Consequently, focus must be placed on ensuring that action is taken at the earliest possible stage to ensure that students from disadvantaged backgrounds and under-represented groups are taught the core skills required to access higher education and encouraged to make the appropriate applications and continue with their studies.
Name-blind applications
It seems to us that the proposal to introduce name blind applications is likely to make it more difficult for providers to take positive action in relation to students from disadvantaged or under-represented grounds. In particular, it may impede a provider's ability to assess the comparative academic achievements of students from different backgrounds or influence 'tie-break' decisions.
Disabled Students Allowance (DSA)
The government's policy for DSA for 2016/17, which was published in December 2015, effectively reduces the availability of funding for disabled students and places greater burdens on the providers and students themselves. There is a significant danger that such a change could result in a fall in the number of disabled students who progress into higher education. This would have a detrimental impact on social mobility.
This does not appear to have been taken into account in the green paper, and we believe that it should be considered.
Opening up the sector to new providers
As part of the proposed reforms to open up the sector to new providers, the green paper notes that there may be a greater need to provide for the imposition of sanctions on institutions which cause concern. The current proposal is for a power to suspend and remove degree-awarding powers (DAPs) and university title.
If any such regime is put in place, it should be one which clearly sets out the circumstances in which the power may be exercises and there should be a number of stages before a final decision is made. We would strongly recommend that the initial stages of this process be confidential, as any indication that a regulator is considering removing DAPs or university title from a provider would cause very serious reputational and financial damage which could threaten its very future regardless of whether or not the concerns are valid.
The insolvency problem
The proposed new requirement that providers have contingency arrangements in place to support students in the event that their course cannot be completed should be effective in the event that a course or campus is closed, or the provider is forced to exit the market by the regulator. In each of these scenarios, the provider would still be trading and so should have access to funds that it can use for this purpose.
However, one of the biggest risks of opening up the sector to new providers and making changes to the allocation of funding is the risk of insolvency. The green paper proposals do not provide any protection for students in such circumstances. Indeed, the only way to provide such protection is to obtain a financial guarantee and/or ring-fence funding for that purpose. However, this raises the issue of who would be responsible for providing such funding, how much funding would be required and who would manage the process (payments to students could be unlawful unless they were made in accordance with insolvency law).
It would be extremely difficult in practice to obtain such financial security. For example, a requirement that any entrant has to come up with a contingency package which includes financial guarantees is likely to be commercially unattractive and create a barrier. If existing providers are required to provide funding or financial guarantees then that could force those that are currently struggling into financial difficulties and trigger an exit. An alternative requirement that contingency plans be supported by collaborative or bilateral agreements with other providers would be ineffective if both providers were financially weak, and would be a barrier to entry if there were limitations on which providers could provide support.
A new regulator
We agree that the higher education regulatory architecture is outdated and needs to evolve. We support the establishment of a new regulator for all providers and the creation of a single, transparent regulatory framework. However, great care has to be taken to ensure that the regulator takes into account all relevant issues and factors when making decisions and does not place undue importance on one particular element of higher education.
The green paper envisages that most of HEFCE's functions would be transferred to the OfS. However, a number of these functions do not directly refer to students. While we understand the desire to put students at the heart of higher education, it should be recognised that the sector has a much larger role in our society. Higher education providers are also one of the largest employers in this country, and research and commercial collaborations are absolutely critical to maintain innovation and economic growth. The interests of students cannot and should not always take precedence over other considerations and this must be reflected in any new regulatory regime.
In these circumstances, we would recommend that the new regulator's statutory duty should not be to "promote the interests of students to ensure that the OfS considers issues primarily from the point of view of students", as stated in the consultation paper. Instead, it should be to act in the best interests of the public as a whole: students, taxpayers and employers. If the regulator has a statutory duty to consider issues primarily from the view of students, that could lead to some perverse decisions which are not ultimately in the best interests of the public because the impact on the economy and society would necessarily be classed as secondary considerations.
Deregulatory Measures
Reforms to the constitutional arrangements of Higher Education Corporations (HECs)
Constitutional reform for higher education corporations is important and long overdue as HEC’s current constitutional arrangements are outdated and unnecessarily restrictive, putting them at a disadvantage constitutionally when compared with institutions established by Royal Charter or under company law. Deregulatory reforms to the constitutional arrangements will require primary legislation in order to deal with the restrictions on their powers set out in the 1988 Education Reform Act and deregulating the HEC instrument and articles of government will require approval from the Secretary of State.
Role of the Privy Council
The Privy Council Office is helpful and efficient and not responsible for delaying reform. In our view, the long term proposal of the government to remove the requirement for the Privy Council to approve amendments to institutions’ governing documents is not appropriate because the changes are potentially significant and require care and a level of supervision.
However, we agree that the key principles of public interest over which the Privy Council should have oversight could be significantly reduced. We believe that it is important for the Privy Council to maintain oversight over name, university title and degree awarding powers but provisions covering governing body composition and democracy do not necessarily require Privy Council supervision as they are essentially governed by charity law principles.
Nicola Bradfield and Nicola Hart are universities law experts at Pinsent Masons, the law firm behind Out-Law.com.