Higher Education and Research Act 2017

A new chapter in the regulation of Higher Education in England has been opened with the passing of the first significant piece of legislation affecting tertiary education for a generation. For general coverage of the Act and its implications, I recommend the analysis of team WonkHE (Be It Enacted being a good place to start).

Now that the “HERA” (for short) is law, what are the implications for establishing a Cooperative University? (For a blow-by-blow account from the Bill stage, see my previous post).

HERA2017: Implications for a Co-operative University

On the face of it, the HERA says nothing much about cooperation, but the Act enables cooperative higher education to become a viable form, by lowering barriers to entry for new institutions and establishing a level playing field for all HE providers. It also makes provision for a cooperative form of student finance.

A level playing field

The Office for Students (OfS) has an explicit duty “to protect the institutional autonomy”, “to promote quality, and greater choice (particularly between a diverse range of types of provider) and opportunities for students”, and “to encourage competition” in English Higher Education. In seeking this it is expected to have regard to principles of good governance and ensure it behaves in a way that is “transparent, accountable, proportionate and consistent”. This all sounds very noble, but is a good omen for a putative cooperative university, which might be regarded as offering a distinctive offering that creates choice in the HE marketplace, and which can expect its independence to be respected. Well, within reason. Institutional autonomy means inter alia “the freedom of English higher education providers within the law to conduct their day to day management in an effective and competent way”. This is a constrained freedom: how judgements of effectiveness and competence are made will define the bounds of acceptability in the emerging English HE sector. The relative dominance of financial returns on publicly-underwritten student loans is the thing to watch. Happy students and graduates may not be enough if the financial returns on investment in HE do not meet the expectations of the Treasury.

All (or nearly all) HE providers will be entered on a public register, and there will be tiers or “descriptions” of providers in the Register, delineated principally by level of access to publicly-underwritten finance. It will be a matter of choice for the Cooperative University to determine the extent to which it wishes to raise capital from these sources, in exchange for submission to a more stringent regulatory regime (which involves a cap on fees, the provision of data and information, and compliance with various processes and conditions).

The new legislation ends a state of affairs where different types of HE are regulated differently (or not regulated at all) for essentially historical reasons. It establishes a single unified market logic for the risk-based regulation of the entirety of HE provision in England. There is nothing to preclude a cooperative higher education provider entering this market, and in fact it would appear to be encouraged by the Act.

Lower barriers to entry

Prior to the HERA, an institution needed 1,000 students to get close to applying for Degree Awarding Powers and University Title. One of the principal effects of the HERA is to lower barriers to entry for HE providers. The nature of the Register which the OfS will be required to maintain contains a range of “descriptions” of providers, and take a risk-based approach to the likelihood of their conditions of registration being breached. “The OfS must, from time to time, prepare and publish a regulatory framework.” While this has not yet occurred (and we will learn much when it does) we can gain some insights as to the conditions that might initially prevail from a number of provisions in the Act. To summarise conditions that will be applied to providers on different parts of the Register:

  • There can be both generic conditions for particular descriptions of providers, and specific conditions for individual providers.
  • The basic mandatory conditions for all providers on the Register are that they make OfS aware of changes that affect their Register entry; to provide the OfS with information they require to perform their duties, and; to provide the Designated data publication body any information it requires.
  • Some providers will be required to provide transparency data about their admissions processes (including offer-to-acceptance ratios) and student attainment, split by a variety of protected personal characteristics.
  • Some providers will have fee limits set for regulated courses.
  • Some providers will be required to have an approved “access and participation plan” in place in order to access more generous fee limit conditions.
  • Other general conditions are allowed for, such as:
    • Relating to meeting applicable quality and standards
    • Relating to principles of public interest governance, over and above the basic protections afforded to all academic staff to “question and test received wisdom, and […] to put forward new ideas and controversial or unpopular opinions, without placing themselves in jeopardy of losing their jobs or privileges…”. Those principles apply to the entire Register, but other principles may differ for different descriptions of provider.
    • Provision of a Student Protection Plan (in the event of institutional failure, for example).
    • Payment of a fee relating to Registration.
    • Payment of fees to designated bodies or the OfS.
    • Working with relevant Electoral Registration Officers to facilitate the electoral registration of students.

What is not said is as important as what is said. There is no mention of precise conditions under which an institution may or may not be granted the power to award degrees or use the title “University” so the OfS will presumably have considerable latitude to establish conditions appropriate to the authorisation of “a registered higher education provider to grant taught awards or research awards or both.” This power will be exercised under a Statutory Instrument. This is an area to watch closely for signs of the emerging practice for authorising degree awarding powers to new entrants. The power for one provider to authorise another to be able to utilise its degree awarding powers is also controlled by the Act, and time-limits may also be set for awarding powers.

The scene is set for a diverse range of HE providers to be recognised, and regulated in a risk-based way, that explicitly recognises differences in size and mission. Barriers to entry are thus lowered for new entrants to enter the HE market, and the consumer interests of students are protected separately to the success or failure of the institution at which they study.

It would even be possible, in time, for cooperative higher education to develop a distinctive set of principles that could be recognised by the regulator as having validity within a “certain” “description” of providers: Cooperative Higher Education Providers.

Cooperative Student Finance

The current style of student loans are inequitable in that their use is incompatible with the precepts of certain faiths, notably Islam. This places an unnecessary and unjustified restriction on some students accessing HE. The HERA rectifies this by introducing the phrase “or alternative payments” after the word “loans” throughout the Teaching and Higher Education Act 1998. This has the effect of permitting the SLC to create a “Consolidated Fund” into which contributions can be made. This is in effect a State-backed mutual fund that can be used to fund HE studies in a way that has the same financial costs and benefits as a student loan, but is organised on a different set of principles that ensure no interest is charged. This is often referred to using the Islamic finance term “Takaful“.

While these are technical changes, a Cooperative University might decide to take a principled stance on the preferred method of publicly-backed funding students entering its courses should be recommended to consider.

In summary

While the market regulation approach HERA will not be universally welcomed, it is potentially a very positive Act under which the creation and growth of Cooperative Universities is made possible at lower cost and in a fairer way than was previously the case. Such growth could even be funded by a mutualised financial arrangement for the payment of tuition fees.

The passing of the Act creates an opportunity to be seized by cooperators in higher education, to create new organisational forms that are fully both “cooperatives” and “universities”.

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