Higher Education Institutions

HC Deb 21 July 1997 vol 298 cc731-8

Motion made, and Question proposed, That this House do now adjourn.—[Ms Bridget Prentice.]

6.4 pm

Dr. Alan Whitehead (Southampton, Test)

I am grateful for the opportunity to speak about an issue that is pertinent to the debate that we have just had and to the imminent publication of the Dearing report. We do not yet know the contents of that report, although they have been widely speculated on. All the discussion in newspapers is currently about the Government's likely stance on charging for tuition fees.

The spotlight is rightly on finances, because the sector has delivered on a huge expansion in student numbers in the past decade with very little new funding. The unsung stars of that expansion are the university lecturers, who have performed feats of increased productivity that would have been hailed as a miracle if they had occurred on a manufacturing production line.

It is right to spend a little while reflecting on the management of the change, the supervision of the finances that have supported it and the extent to which we have emerged from the decade of explosive growth in student numbers with the principles of free inquiry in an academic community, which underpin the idea of a university, intact. Have we delivered on the governance of institutions of higher education as well as university lecturers have apparently delivered on the increase in student numbers over the past decade?

I am not sure exactly what Dearing will come up with. I am glad that we shall have an extensive debate on the report. My understanding is that there will not be substantial mention of governance in it. That is a shame, because, after the events in some institutions over the past few years, many people in higher education have expressed justified concern about how well some of our institutions are governed. My contention is that, in some areas, we have fallen woefully short of what we should reasonably expect. Unfortunately, there appears to be no solution in sight.

The danger of doing nothing is that, as we enter the next decade of tight financial settlements and continued pressure to achieve more results with less cash, the pressure on vice-chancellors and directors of higher education institutions to cut corners and take liberties with the proper procedures for good governance will become enormous. As we have seen from the small, but important, number of cases in higher education, several of which have been investigated by the Public Accounts Committee, the potential for that already exists and has been demonstrated as a significant problem.

We need to be clear about the consequences of doing nothing. British higher education has an international reputation and attracts thousands of overseas students because of the quality of its courses and the facilities for study that are available. Visiting students provide a massive foreign exchange earning for the United Kingdom. The international research reputation of UK universities and the value placed on UK degrees is high throughout the world. For that reason, many institutions have begun to offer degree courses validated by United Kingdom institutions but taught overseas. If UK higher education is seen to suffer as a result of a crisis of governance, that confidence will be damaged irrevocably, with profound consequences for the whole of the sector and for the British economy.

Lord Nolan, in the second report last year by his Committee on Standards in Public Life, reported on, among other things, the standard of ethics in the governance of higher education. By and large, he gave the sector a clean bill of health. The 13 recommendations he advanced were universally regarded as being relatively minor, yet the problems persist and they can be identified quite specifically in origin and in structural cause.

The major disputes that have hit the headlines in recent years in higher education in Huddersfield, Portsmouth, Bournemouth, Swansea and my own city of Southampton have all occurred in the new university sector which was established after the Education Reform Act 1988 and have all involved former polytechnics and colleges of higher education previously under the control of local authorities.

We can say with some certainty that Nolan aggregated his evidence and failed to distinguish between the old university sector, with its system of charters individually approved by Parliament, and the new sector which came into existence as incorporated higher education institutions with a significantly different system of internal governance and regulation. It is true to say that the existence of the charters, with their entrenched right to representation of a variety of constituencies within the university and with their interlocking groups of decision makers in the senate, the council and the court—although they often reach decisions by a rather cumbersome process—means that, in general, the universities are well governed and largely free from the sort of complaint that has plagued the new sector.

If we look at the incidence of problems in the new university sector in isolation, we can see that, since 1989, more than 10 per cent. of institutions have been the subject of major problems—a very high casualty rate in fewer than 10 years of operation. Why is this so? We should first look at the nature of the disputes.

Overwhelmingly, the disputes relate to a breakdown of confidence between students, staff, governors and management of the institutions. Overwhelmingly, they are disputes where the actions of either the governors or the director or vice-chancellor—or both—seem to ride roughshod over legitimate grievances and protests, and where the protests are ignored or suppressed, sometimes by authoritarian means. All those disputes seem to take an interminable time to resolve, although the issues seem relatively plain to the outside world.

In the case of Huddersfield, trouble erupted when the governors attempted to remove all staff and student representation from the governing body. Portsmouth, Bournemouth and the Southampton institute all reflect in different ways the ability of a strong director or vice-chancellor to rule effectively by fear with the complicity of at least some of the board of governors, and with the inevitable reaction of staff and students against such tactics.

The resolution of the conflicts in those three places did not really reflect the essence of the conflict. In Bournemouth and Portsmouth, directors left as a result of investigations into issues not really related to the central problems. At the Southampton institute, the director has recently taken early retirement. The dispute in Swansea related to the apparent lack of control over an entrepreneurial director who effectively launched a variety of poorly regulated businesses across the world selling the institute's degrees.

Both the issues at contention and the problems relating to their resolution seem to boil down to a central feature of the universities—the assumption of governance behind their incorporation. That can be seen clearly in their governing bodies. Lord Nolan described those governing bodies as follows: In England and Wales their governing structure is determined by statute (Schedule 7A of the Education Reform Act, 1988, as inserted by Schedule 6 of the Further and Higher Education Act, 1992) and so is much less variable than that in the old universities. New universities are governed by a board of between 12 and 24 members (and the principal unless the principal declines to be a member). Up to 13 members (described as 'independent') are drawn from those who have experience in industry, employment, commerce, or a profession. They must constitute a majority. Up to two governors may be teachers and up to two students; between one and nine may be co-opted members, and at least one of these must have experience in the provision of education. There are also colleges of higher education which are not universities but which are funded by the higher education funding councils. Their structures of governance are similar to those of new universities. It may be noted that elected members of a local authority are not eligible for service on the governing bodies of new universities unless co-opted as individuals. We can say, then, that the impression one can receive of these boards is that they are business-oriented governing bodies which are designed to oversee what is seen as the business of the higher education corporations. Indeed, asked why a version of the model of governance applying to the old universities had not been applied to the post-1988 new universities, Sir Peter Swinnerton-Dyer, the former chief executive of the now defunct Universities Funding Council, is reported to have replied: Kenneth Baker is among those ministers who distrusted experts and who believed that anything run by business … would be wisely and efficiently run". This model of business-based governance goes along with the presumed goal of the new sector, and of higher education generally in the age of restricted finance and almost unrestricted expansion, which is that the good business gets the funds for research and gets the student numbers simply by being a better business than the others.

Business methods prevail, with many boards running secretively, with the target goal for the institution being set as getting in more students and more funding. Provided that those two figures look good at the bottom of the annual report, little else seems to be of concern, at least to some governors of the new institutions.

Business men on such boards tend to appoint and support those who seem to be like themselves. The lack of checks and balances in the post-1988 system by and large allows governors to appoint each other. In some instances, it allows a powerful director or vice-chancellor effectively to hand pick many of the governors so that a seamless power nexus is soon established at the top of the institution.

In the case of the Southampton institute, with which I am very familiar, that extended to an armlock on information going to the governors and from the governors to the staff, to the discouragement of either governors or staff from seeking or supplying independent information, to the intimidation of dissent and to the establishment effectively of an inner power group of the director and a few governors which bypassed the constitutional processes of the institute.

Indeed, so far did the procedures become bypassed that a management-based, so-called programme planning committee effectively eclipsed the academic board on all matters of course development, on the ground that the development of courses was about student numbers and, therefore, essentially financial and that it involved management decisions with only ancillary academic content.

As the cases I have highlighted show, when things go wrong it is extremely difficult to penetrate the nexus that may have developed and put things right. The distinguishing feature of all the cases lies among other things in just how long the institution remained evidently dysfunctional before the matter came to a head, either internally or, at least partially, with the help of outside agencies of regulation such as the Higher Education Funding Council or the Higher Education Quality Council. It is significant that those bodies are seen in the sector as more regulators than anything else.

Although the charters in the new university sector do not exist in the same way as they do in the old universities, the bodies set up to ensure that they work properly are simply there to ensure that no one has his hand in the till and that academic courses are functioning correctly. They have little power to intervene on matters of governance and, by and large, they do not. Where they do intervene, they do so discreetly, round the back door, and slowly, so that those who are well entrenched in management positions in institutions that are not going well have a long time to fight their corner before justice is done.

The fact that the academic standards of such institutions during a crisis generally remain high and have done so to a remarkable degree at Southampton institute is a tribute to the resilience of academic staff in the face of such problems. That far more cases have not arisen, over and above those that I have outlined, is a tribute to the good sense and fairness of academic managers in most establishments.

We are stuck with a flawed system of governance in the new universities—a sort of quangoversity regime, where disaster is often averted by good fortune and common sense, rather than by anything in the system itself.

I conclude, therefore, that the system overall is a monument to the "markets good, participation bad" assumption of that period of public policy madness between 1987 and 1989. It is, in essence, all of a piece with the monsters that we have created in parts of the NHS, in local government quangos, where power has been taken away from directly elected local representatives and put in the hands of appointees, and in our feeble regulation of the privatised utilities.

A new Government who do not share those values should act to ensure that good governance—a balance of representation, and a sharing of views and decision making reflecting a balance of interests within the academic community—is restored.

We are not short of suggestions about what might be done. I have recently been in correspondence with the Association of University Teachers, which advocates, among other things, the restoration of the university visitor system, which is largely falling into disuse in the higher education sector. Although that may not be a perfect solution, it means that there is an independent voice—someone who has the right to go in and investigate, take up grievances and speak independently on behalf of those who otherwise might have no voice.

David Triesman, the general secretary of the Association of University Teachers, wrote to me that he had suggested to Lord Nolan that all HE institutions should have a charter as do the pre-1992 universities. The text of charters can be modernised but they provide a clear expression of the mode of decision-taking including who is entitled to be involved; they provide guaranteed checks and balances; they reserve academic decisions for the academic community—members of that community include students (of course) and other staff; they express accountabilities; they set out responsibilities as well as rights. The Council for Academic Freedom and Academic Standards wrote to me recently, stating that it has an extensive reform programme which includes independent scrutiny of institutions; broadening of governor membership; advertising of vacancies; maybe elections; model disciplinary and grievance procedures; all minutes on webpages; stronger Senates. My personal view encompasses the idea that new universities should have a much larger base of governor election and appointment—a base too large for a few people to control, and made up of all sections of the local community, including the students, the staff, the business community, the education community, local authorities and voluntary organisations. Such a range of people will have a stake in the success of that higher education institution.

That body, comprising perhaps 60 or 70 people, should be charged with the oversight of electing a smaller group of people who presently sit as governors of new universities, so that people cannot hand pick those with whom they will work, and those who sit in judgment on the dealings of the professional managers and their relationship to the academics of the institution have to contend with people who have an independent view, an independent constituency and have been elected or appointed by independent means.

I shall read the definition of "university" in the "Shorter Oxford Dictionary". It states: The whole body of teachers and students pursuing at a particular place the higher branches of learning; such persons associated together as a society or a corporate body, having the power of conferring degrees and other privileges, and forming an institution for the promotion of education in the higher branches of learning. That definition is good enough for me. It emphasises the involvement of the whole body of teachers and students". It is not the property or prerogative of a few people, through which to pursue their ambitions. It must be well managed, but it must be "a corporate body", with all the reciprocal rights and responsibilities that that entails. We are far from that common-sense view, following the marketisation of higher education in the 1980s and 1990s. We must urgently address the issue in the remaining years of this millennium, if we are to carry forward recognisable traditions of academic excellence and inquiry into the next century.

6.25 pm

The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells)

I thank my hon. Friend the Member for Southampton, Test (Dr. Whitehead) for selecting this important matter as the subject for his first Adjournment debate. I welcome the opportunity to discuss the governance of higher education institutions.

My hon. Friend described well some of the problems that can affect higher education institutions. He gave examples of mismanagement, institutions divided by poor staff-management relations, ill-considered financial ventures and issues of accountability.

Of course, I was aware of my hon. Friend's close personal interest in the subject, having read his article in The Times Higher Education Supplement at the beginning of July. In that article, he made a number of pertinent comments about accountability based on his own experience and knowledge.

Before I respond to some of the specific points made by my hon. Friend, it may be helpful if I set out the current position and the new Government's view of those arrangements, and suggest how some of those issues may be developed over the coming months.

The House is well aware of the Government's commitment to ensuring openness and accountability in public life. With considerable sums of taxpayers' money invested in higher education, we need to ensure the highest standards of conduct in those who run higher education institutions, be they universities or colleges.

The effectiveness of any organisation depends on the effectiveness of its management and governance arrangements. My hon. Friend made that clear, and it is imperative that those arrangements are sound and are seen to be working.

The second report of the Committee on Standards in Public Life—the Nolan committee—which was published in May 1995 looked closely at various types of public spending institutions. It devoted considerable attention to higher and further education. The committee found that

the firm view of our witnesses and those who wrote to us was that the standards of conduct in higher and further education were generally very good". I know from my hon. Friend's article and speech that he has some doubts about the committee's findings, which he described as an aggregate of the evidence that was presented, but I am sure that he will not want to dissent from the view of the committee—which I share—that standards of conduct are very good.

However, my hon. Friend highlighted a few recent instances in higher education institutions where serious problems have arisen. Those have been investigated by the National Audit Office whose reports have made a number of useful recommendations which my Department and the Higher Education Funding Councils have noted.

It may help the House if I set out the background to what Ministers can and cannot do with respect to higher education institutions and the type of problems that my hon. Friend has outlined.

Higher education institutions are autonomous, self-governing, private corporate bodies. They are not controlled by the Government and they are not subject to ministerial direction. That position is clearly established in law by the Education Reform Act 1988 and the Further and Higher Education Act 1992. So Ministers cannot intervene in their internal affairs. That proscription extends to issues of governance as well as to course content, research programmes and the criteria for the selection and appointment of academic staff and for admissions policy. That position arose from a real concern in the House that academic freedom and autonomy should be preserved and safeguarded.

The non-centralised system means that there is no common system of governance in higher education institutions, which reflects the diversity of the sector and the origins of individual universities. I should perhaps explain that governance terminology differs in different parts of the UK, so for convenience I shall use English terminology, despite being a Welshman.

The council or board of governors of the institution is the executive governing body and has ultimate responsibility for all the affairs and activities of the institution. Its task is to set the strategic direction of the institution and to ensure that it achieves its primary objectives in teaching, scholarship and research.

There are broadly two types of institution in the higher education sector—old universities, which are those established before 1992 and whose constitution and powers are set out in charters or statutes, and post-1992 universities, colleges and institutes, whose governing bodies' powers and constitutions are set out in various Education Acts together with institutions' own instruments and articles of government. It is the latter type of institution that my hon. Friend is most concerned with and where he sees a general failure of their governance arrangements. I can understand his concern to promote the cause of good governance in all higher education institutions, but I cannot accept his contention that all governing bodies are necessarily flawed or bad.

Governing bodies are entrusted with public funds and, therefore, have a particular duty to observe the highest standards of corporate governance. In carrying out that duty, governors need to ensure that, at all times, they have due regard for the proper conduct of public business. The guiding principles are integrity and objectivity; openness and transparency; and accountability for the activities of the institution and for the stewardship of public funds. I am sure that my hon. Friend will accept that those principles are widely followed in the sector.

The accountability framework ensures that there are a number of checks in the system to ensure that the taxpayers' money voted by the House for use by the sector is properly accounted for. Universities and colleges are accountable in a number of ways. The funding bodies, such as the Higher Education Funding Councils for England and Wales, require, as a condition of grant, that all institutions put in place sound financial management and control systems.

The funding councils' audit service has a right of inspection in all universities and higher education colleges to check on their stewardship of public funds. It also reviews governance arrangements to ensure that the financial control systems in place are properly used and work. If necessary, the funding councils have the power to suspend payment of grant, in whole or in part, to safeguard public funds. The National Audit Office is also able to go into institutions to carry out inspections. As the House well knows, that can result in the Public Accounts Committee holding hearings if necessary.

Another important strand is the work of the newly established Quality Assurance Agency. The agency will take over work previously carried out by the Higher Education Funding Councils' quality assessment divisions and by the Higher Education Quality Council. The QAA will look at institutions' internal mechanisms and structures for assuring their academic quality and standards. It will, as now, continue to produce public information on their quality audits and subject assessments at institutions.

My hon. Friend made it clear that governance is not just about financial management and accountability for public funds, but I hope that he will realise that, under current arrangements, Ministers are unable to intervene directly. We are, however, conscious of the need to ensure that current arrangements are reviewed to see whether they are the best that can be achieved. We have much to learn on that subject and my hon. Friend's contribution is much appreciated.

It is clear that, despite ongoing problems, governance in higher education is generally good, although a few unfortunate instances have pointed up weaknesses in internal arrangements at particular institutions. Those who run institutions must learn from those lessons and avoid anything similar happening in future.

I can reassure my hon. Friend that the Government see the need for revised guidance to be issued to the sector, building on lessons learned and good practice. My officials have been helping the Committee of University Chairmen in developing a revised version of its guide for members, and the Higher Education Funding Council is in the process of drawing up a revised code of audit practice. We will monitor compliance with those guides.

I also await with interest the Dearing inquiry recommendations on governance issues. The Government will, of course, want to consider what the committee recommends very carefully. Where the case for action is made, we will take it. I assure the House that my right hon. Friend the Secretary of State for Education and Employment and I intend to take these issues forward vigorously. Suggestions from my hon. Friend will be welcome. I am grateful to him for raising the issue and I wish only that the House had been fuller to hear his important contribution.

Question put and agreed to.

Adjourned accordingly at twenty-four minutes to Seven o'clock.