"The Governor View" - Regulatory change

As the Office for Students (OfS) launches consultation on its new proposed strategy, the new Welsh regulator Medr does the same, and reforms are ushered in north of the border, regulatory change is on the horizon for institutions across England, Wales and Scotland.

Many themes cut across the plans being developed in the three nations, including quality of provision, student choice, skills development and a more coherent tertiary sector, as well as financial sustainability. 

As part of a five-year strategy, the OfS is planning to introduce a new “quality risk register”, on the back of its equality of opportunity risk register that has provided a framework for access and participation work. 

Aimed at encouraging providers to think about how they can enhance quality, the risk register will “direct regulatory attention to particularly problematic areas”.

It will also feed into the new iteration of the Teaching Excellence Framework (TEF), with assessment activity becoming “more routine and more widespread”.  Assessment reports will not only describe features of high quality, but identify areas that need improvement.

Financial sustainability is, of course, another priority in the current challenging climate. The OfS proposes to strengthen provider financial management and maintain an up-to-date assessment of market exit risk by collecting data “more frequently and flexibly”, increasing regulation on franchising activity and “equipping institutions to assess and improve their own capabilities”.

For governors, quality assurance and financial sustainability are two sides of the same coin. 

“We can quite legitimately agree, or indeed disagree, that moving from tenterhooks about securing gold, silver or bronze awards, to a risk review of the entire organisation, sounds like a good idea but it also sounds like it may require quite a lot more input,” said the governor of a new university in England. “But if you look at the number of organisations that are restructuring at the moment, a lot of these are going to need this requirement like a hole in the head.”

A situation where staff are wondering “have I got a job?” or “what are my responsibility in the new structure?” is far from conducive to a focus on quality, he argues.

“I think the OfS has to be quite sensitive about that and make sure it [the quality risk register] is delivered the right side of a financial restructure.”

Across the three nations, a driver of reform is closer alignment of HE and FE to ensure skills gaps are being tackled. In England, the OfS will work with Skills England to establish whether “the courses available deliver on skills needs, support the rollout of the Lifelong Learning Entitlement (LLE) and collect data about the aggregate impact of portfolio changes on student choice”.

One governor points to a possible tension between what students want and what the regulator deems are the country’s skills needs, citing quality issues that have surfaced in the past amid the huge demand for and supply of business and management courses.

A focus on outcomes, demanded by the introduction of the B3 conditions of registration in England, and on better quality assurance, though the new quality risk resister, could enable more oversight by boards in these areas.

One governor who sits on an academic quality committee points to a traditional hands-off approach on assurances about the quality of teaching and learning, where the “wisdom of an academic council is often left unchallenged”.

“Unless as a governor you try quite hard, you typically don’t get that much information on exactly what is going on,” he said. “The academic side come back and say ‘we are making sure courses stay relevant and respond to student need’ - that type of thing, so actually it is typically quite hard to stay on top of it.”

Governors welcomed the proposal in the strategy to develop a model student contract, particularly if it clarifies legal duties and obligations in controversial areas such as striking staff. One governor said he was wary of vaguer clauses on student wellbeing, for instance, that are not legally enforceable and open to interpretation.

New regulatory conditions on harassment and sexual misconduct, also mentioned in the OfS strategy, come on top of the already substantial work in this space carried out by institutions.

“There has been a lot of focus on this and it has come right up to the board on a number of occasion,” said one governor. “We’ve probably spent as much time and focus on that as on things like student mental wellbeing, so I don’t really know what is going to come out of the regulation that will improve what we have at the moment.”

Statements in the strategy about improving governance capabilities have so far provided little in the way of concrete detail. One governor expressed his support for the development of a policy governance model based on setting concise goals and boundaries.

It appears that governance has been found wanting in a series of recent OfS investigations highlighting serious issues with the quality of franchise provision, and the regulator plans to impose more regulation on partnerships. 

According to a governor at a post-1992 university, the findings call into question the efficacy of such arrangements generally. 

“I think we need to start with a presumption that the provider will do things themselves and not require a partnership,” he said. “Institutions should be able to respond to the question ‘why have you done that?’ with the answer that there is demand in this area, the institution does not have the capability to offer it alone and the skill that is being delivered is a vital one for the economy. If the answer is just ‘we want this on our portfolio but we don’t want the outlay expense’, then I don’t think that is a good enough reason.”

In Scotland, too, quality of provision is a concern that the Scottish Funding Council hopes to address with its post-school education and skills reform.
The funding council is rolling out a new form of assurance and accountability for 2024-25 which will ‘shift the focus from targets to what has actually been delivered’.

It involves a single Tertiary Quality Enhancement Framework (TQER) for assessing the quality of learning and teaching across colleges, universities and higher education institutions, using data collections on finance and performance including financial forecasts, college performance indicator returns, the HESA data for HE, and apprenticeship activity.

One governor said the SFC focus should encourage greater discussion at board level of issues such as quality assurance and financial sustainability. 

“The governing body often does not really grapple with these things,” she said. “The court is made up of different members some of whom are plugged into the HE sector and some of whom are not. There is a difference between understanding a subject and getting into the nitty gritty so you can challenge and push on it. When you only have a nodding acquaintance to the subject, you have to just take people’s word for it.”

The Quality Assurance Agency (QAA) has been commissioned by the SFC to develop the TQER. As QAA Scotland already reviews Scottish institutions, governors expect the new process to be similar and collaborative.

“We are used to the QAA as they come round about every five years. They meet with particular groups, everyone is on their best behaviour, and it is a quite collegiate process -- so I don’t think people are going to be scared of the new framework,” said a staff governor at one institution.

What does concern her, however, is the prospect of additional powers for the SFC made in a series of proposals that are currently being consulted on. It would mean new duties on organisations to provide better information to SFC on their financial health, performance and outcomes and give “additional powers for SFC in order to help ensure the post-school education and skills system operates effectively.

“This idea that the SFC, who are in charge of the money, be given new powers will be concerning in the current climate, particularly around something as vague as ‘effective operations’,” she warned.

Governors do acknowledge areas where improvements in governance are needed. Bringing together tertiary education is one. 

“I think we need to do more as a sector to ensure we have articulation between colleges and HE,” said the governor of one pre-1992 university. “Other universities do that better than us. We are very different beasts, but we ought to be able to pull something together that works across the sector.”

The other problem that institutions in Scotland, as well as England and Wales, are grappling with, is optimism bias in financial forecasting. 

“I feel as if there is a lot more to be done around that,” said one board member. “Are we really getting to get to grip with those underlying assumptions, so it won’t happen again? Boards need to get better at challenging and I think it is beginning to happen. If the executive is not being fully honest with the governing body the question is why? What do they think the governing body is there for if not to help them in challenging times? We can’t help unless there is an accurate appraisal and honest portrayal of the situation.” 

Meanwhile, Wales’ new regulator Medr has published its strategic plan. This outlines the development of a risk-based regulatory system, underpinned by a higher education register - a direction of travel not dissimilar to England.

Baseline data will be collected to “allow robust analysis of current performance and priorities for improvement”. Compliance with the regulatory system and a new “quality framework” will be monitored by providers themselves “in the first instance”, with institutions taking responsibility for their own performance and improvement strategies. However, Medr will “intervene as necessary where performance is below threshold standards”.

At the same time, a learner engagement code and guidance around learner protection plans will be developed, as well as a common framework for mental health and well-being. Regulatory conditions to promote equality of opportunity to increase participation, support retention, reduce gaps in attainment and support good outcomes for under-represented groups, will also be drawn up. 

Many of the proposals have a delivery date of August 2026 – just 18 months away.  One governor in Wales is concerned that with such an ambitious timetable, the scope may be “way too broad”.

“We’ve been crying out for HE and FE to be more joined-up and Medr is starting to get out there and visit institutions, which is good, but there are lots of deliverables that are only 18 months out and they are quite ambitious,” he said. “Do they have the people and size of team to do it in that time span?”

In common with governors in other parts of the UK, Welsh board members fear that the current financial challenges besetting the sector could hamper positive change.

“My concern is that the regulatory activity is overlaid on the ‘keep the lights on activity’ in Wales and the same over the border. HE is in trouble from a revenue down, costs up point of view,” said the governor of a new university in the principality. “There are redundancies left right and centre in Wales and in other parts of the country, so what are they going to prioritise?”

While some institutions on a better financial footing may be able to make progress with Medr priorities, others - often larger institutions - have yet to go through transformational change.

“The regulator can be your friend but it can also be a distraction,” said a governor of a small university. “At a micro level I think we’ll be left to get on with it because they have bigger organisations to think about and these are more important in making a bigger political impact in terms of what Medr has been tasked to do.”

More cooperative working and sharing of insights is already in evidence in Wales, with the chairs of university finance committees now meeting on a quarterly basis. 

“This forum is really good: we are facing lots of similar challenges,” said one chair. “If universities were part of a business empire, we would be looking at the landscape of individual businesses across the portfolio and there would be lots of opportunities to build shared services and to work more closely together to deliver products. Universities want to avoid duplication and be smarter about what we teach.”

The same governor cites finance departments as one area of business where shared services might work. 

“There is a big appetite for that because we all spend a lot of money on finance departments, to name but one administrative area, and we’d be much better pulling a central team together with shared systems and infrastructure.”

The problem in the current climate is that universities “can’t afford to do it alone,” he added.

“We need something like the regulator or the government to spend to make these things happen and to drive it forward in the first instance,” he said. “When spare cash is non-existent and everyone is cutting back, the power to innovate and improve, in line with regulatory demands, is limited.”

*These are the opinions of governors and not the views of Advance HE