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So where are we? Update

February 26, 2012

At the end of February, it is worth returning to the question I posed back in December: where are we with respect to the government’s plans for higher education?  Below I set out why I think we should expect primary legislation in 2013.

We have still had no formal response to the general ‘White Paper’ and ‘Technical’ consultations from last year (though the government has rejected the proposals in the separate consultation on levying additional tariffs on early loan repayments). 

 The Technical Consultation closed on 27 October 2011.  According to the government’s own targets, a formal response should be produced within three months: we are now a month past the appropriate date.  This has delayed the further the ‘Winter 2011’ consultation, which was supposed to look at allocations of teaching grant in 2013/14 and further liberalisation of student number controls.

 If we look at the published ‘Higher Education Implementation Plan’, we can see another delay.  We have seen no detail  ‘on how and whether Government will proceed with a monetisation of the Student Loan Book’.  (As I suggested in an article last year, I believe the main plans for monetisation through bonds securitised against graduate repayments are unviable – see ‘Into the Shadows’ Research Fortnight 381,14 December 2011.)

Delay to these measures entails delays to drafting the relevant paragraphs in any Bill (for example, ‘monetisation’ would require the creation of a new special purpose vehicle to create the bonds).

What’s substantively new since December are the noises about the planned 2012 Higher Education Bill being postponed.  Though this has yet to be confirmed officially, the difficulties around the NHS Bill and changes to welfare benefits mean that tactical sense would point to leaving further contentious primary legislation alone at this stage; nor are the junior coalition partners in any rush to return to higher education debates.

Besides this ‘high politics’, there are other indications that the government is engaged in a tactical withdrawal: reculer pour mieux sauter

First, there must be primary legislation before 2014/15: Hefce need the power to control access to the loan book else they will have no ability to control student numbers at that point.  New powers mean new primary legislation. (Hefce controls grants, the purse strings exact compliance; from 2014/15, many institutions will be receiving no grant and hence have no reason to heed ‘core’ allocations).  The Implementation Plan reads: “In 2012: Legislate to allow HEFCE the power to attach conditions to the receipt of grant and access to student loan funding, and to monitor institutions to ensure financial stability, and intervene if necessary.”

Further Developments

  1. The government has commissioned a survey of private providers offering higher education in the UK.  The relevant tender was only published over the Christmas break.  I suggest that this survey will be purely instrumental – designed to produce evidence that can rebut the successful campaigning against for-profits and sub-prime degrees, which has often been conducted through comparisons with the failures of the US market.  Can the government find the ‘good news’ about how this sector works in the UK?
  2. The Cabinet Office has announced a comprehensive Review of the 2006 Charities Act.  This consultation will close on 16 April 2012.  Lord Hodgson, the conservative peer leading the review, has a background in finance and securities.  He is seeking evidence on several topics including ‘exempt charities’, public benefit, and ‘mergers, restructuring and winding up’.  These have particular relevance for English universities. Most interesting is the call for evidence on ‘organisational forms’.  Within that document we find the following paragraph relating to charities with statutory and royal charters, a category which covers almost all English universities : 

     “A relatively small number of charities are constituted as corporations by legislation (statutory corporations) or by Royal Charter. Where these charities want to make constitutional changes there can be complex, lengthy and bureaucratic processes involved. The Law Commission will be considering issues that affect charities established by statute or Royal Charter as part of its Eleventh Programme of Law Reform, but it would be helpful if, as part of this Review, respondents pass on any comments they have on what they consider to be disproportionately burdensome requirements that affect such charities.”   (my emphasis)

    As you are no doubt aware, this is exactly the same theme as was addressed by both Question 21 of the Technical Consultation, (“Would you welcome legislative change to make the process of changing legal status easier?”) and paragraphs 4.35 and 4.36 of the White Paper which positioned this possibility in relation to freeing up universities to better attract private finance.

    The Charity Commission responded to this clause by warning that any possibility of higher education institutions ditching their charitable status to attract equity investment would rewrite charity law.  This review therefore prepares the groundwork for one of the main aims of the white paper – enabling private equity investment in established universities, and even enabling their buy-out.  

  3. Michael Gove has played his hand.  Orchestrating the press campaign against the appointment of Les Ebdon as Director of Offa, he demonstrated his powers as a political operator and seems to have David Cameron onside.  He wants universities to be transferred to his Department of Education over the summer (and Willetts out).

    Last week, Chuka Umunna tweeted “We are firmly of the view that higher education should stay within BIS but can Cable resist takeover attempts by Conservative colleagues?”.  Malcolm Gillies, vice-chancellor at London Metropolitan, used his THE column to brown-nose the new boss.  He needs whoever is in charge onside.

So where are we?  I believe this all points to the following conclusion.  The government intends to push through higher education legislation in 2013.  If the charities review and the private providers survey produce the desired results, then it will look very like the agenda of the white paper.  But, with Gove in charge, the Tories will have a more effective caudillo.

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