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Higher Education and Research Bill

Volume 779: debated on Monday 6 March 2017

Report (1st day) (Continued)

Amendment 53

Moved by

53: Clause 15, page 9, line 19, at end insert—

“(3A) The principles must include principles applicable to an unincorporated designated institution.(3B) In subsection (3A)—(a) “unincorporated designated institution” means a designated institution which is not a corporate body;(b) “designated institution” has the same meaning as in section 129A(10) of the Education Reform Act 1988.”

My Lords, this is a probing amendment to clarify a situation which concerns, pretty specifically and possibly uniquely, the Guildhall School of Music and Drama. The Guildhall school is a very unusual institution, partly because of its history, and partly because of its ownership. It is an unincorporated body. It does not have the legal structure common among higher education colleges. It was set up 137 years ago, in 1880, by the City of London Corporation as a conservatoire, and has never changed its corporate structure since. It is owned by the City of London Corporation, its court of governors is appointed by the City of London Corporation and close to a third of its funding comes from the corporation. It is, indeed, an integral part of the whole structure of the City of London, in the same way that Hampstead Heath, Epping Forest, and various other schools are run.

This gives the problem under the Bill that the Guildhall is a body that does not really fit into the definitions of what the White Paper was trying to create. The White Paper, which informs the Bill, indicates that the governance principles of the Office for Students, under the powers conferred on it under Clause 15, will be,

“comparable to those currently required of HEFCE-funded providers in line with the HE Code of Governance”.

This code has been developed by the Committee of University Chairs, and has been deployed successfully by the Guildhall. There is every reason to assume that the governance principles envisaged by Clause 15, which the Office for Students will be developing, can be applied to the Guildhall with equal success. The clause, however, introduces statutory backing for the principles, and the concern is that in moving to this more formalised position, some of the current flexibility will be lost and the ability to take account of the possibly unique governance structure of the Guildhall will no longer be applicable.

The amendment is to try to flush out whether it is possible to have sufficient flexibility under the new structure to enable the Guildhall to continue in the way that it has in the past—in other words, to be an integral part of the Corporation of London. I am trying to work out whether things can go on as they are or whether they have to change for the Guildhall, possibly with unfortunate consequences. On that basis, I beg to move.

My Lords, I am grateful to my noble friend who, not for the first time, has raised in your Lordships’ House interests of concern to the City of London Corporation.

Clause 15 enables the OfS to take over the responsibility of scrutinising providers’ governing documents against the list of public interest principles. I can reassure my noble friend that we do not anticipate any impact on current higher education institutions being recognised by the OfS as higher education providers in the future. The intended practical application of the current and future list is to ensure best practice within already existing and recognised higher education providers’ governing documents, and it is not the intention of these principles to prescribe the corporate form of providers. I hope that gives my noble friend the comfort he is seeking.

The OfS must consult on the new list of principles. With the exception of the requirement that there should be a principle protecting academic freedom for staff, which I am sure the Guildhall has no difficulty with, the Bill does not prescribe what should be included in that list. There is nothing in Clause 15 that should concern the Guildhall School of Music, and it should be able to continue doing the valuable work it has been doing for so long. Against that background of assurance, I hope that my noble friend will be able to withdraw his amendment.

I am most grateful to my noble friend for that reassurance, because that is precisely what the Guildhall School of Music is looking for in terms of some sort of guidance as to how things will develop as the implications of the Bill become apparent. On that basis, I beg leave to withdraw my amendment.

Amendment 53 withdrawn.

Amendment 54

Moved by

54: After Clause 16, insert the following new Clause—

“Power to restrict enrolments

(1) If the OfS has reasonable grounds for believing that a registered higher education provider is in breach of an ongoing registration condition with respect to the quality of the higher education provided by the provider, or to its ability to implement a student protection plan which forms a condition of its registration, the OfS may place quantitative restrictions on the number of new students that the provider may enrol.(2) The Secretary of State may by regulations make provision about the procedures for imposing such restrictions and about rights of appeal.”

My Lords, the amendment is returning to a topic that was raised in Committee and discussed in some detail, but not extensively, in relation to what might happen in the hypothetical situation where a higher education provider is in breach of an ongoing registration condition relating to the quality of the education it is providing or its ability to implement a student protection plan. The Bill is good on these issues and it is important that we should have measures of this type in statute.

The question that arose during the earlier debate, and which arises still because the answer was not entirely satisfactory, is about the only penalty specified in the Bill being a financial penalty. In other words, in breach of the registration conditions in the terms I have just outlined, an institution would face a fine that is not specified but which could be quite substantial in relation to activities.

The point was made in Committee that there may be other sanctions available and the question is: why are these not specified in the Bill? It would be helpful for the OfS to have a range of possible opportunities to get redress from institutions and, in particular, not necessarily go down a financial route, which might have the ultimate result—one not entirely satisfactory in terms of the Bill’s requirements—of reducing the amount of money available to spend on teaching students. The question specified in the amendment is whether it would be better to have a numbers cap as well as a financial penalty in that area. I beg to move.

My Lords, within this part of the Bill concerning registration conditions and their enforcement, so far it appears that there is nothing much about restricting enrolment. Clause 16 enables monetary penalties where necessary and, in various other respects, Clauses 17 to 22 inclusive provide powers to correct and adjust, if and when desirable. Yet the latter will constitute relevant actions in the second place, and thus subsequent to the central matter, which is enrolment in the first place. In this context, by contrast, thus it appears anomalous that enrolments, and in certain circumstances a useful scope for their restriction, should so far not have been addressed at all. However, the proposed new subsections of the noble Lord, Lord Stevenson of Balmacara, redress that omission. His amendment is timely and very much worthy of support.

I support the proposition. When we discussed the matter in Committee, the Minister said that he saw no reason why there should not be a wider range of penalties at the disposal of the Office for Students. It would be very helpful to have that confirmed in the Bill, otherwise there is the possibility of challenge of the OfS exceeding its powers if it moved to restrict the number of students in a way that would seem on many occasions entirely appropriate.

My Lords, the noble Baroness, Lady Wolf, expressed these concerns in Committee, and I listened carefully to her very short speech just now. The noble Baroness, Lady Garden, and the noble Lord, Lord Watson, also spoke in Committee on the subject. This is the concern that the OfS would not have appropriate powers to restrict student enrolment at a registered higher education provider in the event of a breach of registration conditions, and would instead be compelled to either impose a monetary penalty or deregister the provider, both of which would have a negative impact on a provider’s enrolled students. It is our intention that such sanctions would be imposed only in exceptional circumstances. The OfS will operate a risk-based regulatory system, whereby any regulatory action is to be proportionate to the nature of the breach of a registration condition. The OfS will have an escalating suite of actions open to it, ranging from compliance measures, such as agreeing a support strategy with a provider or directing that certain actions should be taken, through to imposing specific ongoing registration conditions, and finally to sanctions.

The imposition of a student number control is precisely the sort of regulatory action that the OfS can use under the powers already contained in Clause 7, which allows the OfS to impose “specific ongoing conditions”. Imposing a student number control would not be to the detriment of students already studying with a provider and would help to ensure that new students who were subsequently enrolled would enjoy high-quality, suitably resourced teaching and learning. It is clearly not our intention that the OfS de-register institutions or impose monetary penalties, apart from in exceptional circumstances that merit such an intervention. We anticipate that such action would rarely be in the best interests of the student, the provider or the taxpayer. We have considered whether it would be appropriate to provide a specific power in the Bill for the OfS to impose student number controls. On balance, however, we believe it is unnecessary, as the Bill already provides the OfS with the powers necessary to limit student numbers where appropriate. With that explanation, I ask the noble Lord to withdraw his amendment.

I am very grateful to the noble Earl, Lord Dundee, and the noble Baroness, Lady Wolf, for contributing to this debate. The noble Earl picked up a point that I had not quite spotted myself, and I am very grateful to him for doing so. There is a bit of a lacuna here in terms of how institutions are going to be treated. The Minister has not gone as far as would be obviously the right thing to do. He made all the arguments—rather better than I did, in fact—but then held back at the last minute. At this time, I would like to encourage him to go a little further and would like to test the opinion of the House.

Clause 18: Suspension: procedure

Amendment 55

Moved by

55: Clause 18, page 11, line 24, at end insert—

“( ) specify what happens to existing students during the suspension period as documented in a provider’s student protection plan.”

My Lords, we come to Amendments 55, 56 and 57, all of which concern protection for students. We are to some extent returning to an issue touched on in Committee although the specifics vary somewhat.

We have heard often enough that it would be a very rare occurrence for any institution to go bust and drive itself into the sand. Of course, we are ready to believe that. We desperately hope that that is the case. However, it could happen and at some stage it is pretty much certain that it will. When it does, the people who must be everyone’s main concern are the students, those men and women who have taken out student loans to study at the relevant institution, identified that as the place they want to be, commenced their studies and, in some cases, nearly completed them. These three amendments deal with various scenarios that students might face if their institution gets into grave difficulty or perhaps folds completely.

Amendment 55 proposes that when the Office for Students suspends a registered higher education provider’s registration, various provisions have to be specified in relation to what the notice of suspension must promote. Various provisions are specified in subsection (6) of Clause 18. However, none of them mentions what happens to existing students during a suspension period. The purpose of Amendment 55 is to put that right. The Minister has mentioned on several occasions, and specifically in relation to amendments earlier today, the proposal to change the name of the Office for Students. He said that that was not possible because students are right at the centre of this legislation and the Government want that to be very clear. If that is to be clear, students must surely be accommodated within the clause to which I referred.

Amendment 56 seeks to ensure that students at an institution that becomes deregistered are fully notified about when that will happen. This issue was covered in Committee. It seems to me self-evident that that should take place. I cannot conceive of any reason why that would not be the case. They should also be told the expiry date of any access and participation plan.

In many ways I think that the most important of these three amendments is Amendment 57, which is about ensuring that where a higher education provider ceases to be able to provide courses for its students, the Office for Students must seek to place those students on similar courses at another provider. As I said, if the Government are committed—as I believe they are—to having students at the centre of the legislation, why should they be left to suffer through no fault of their own when a higher education provider is no longer able to deliver the service for which they signed up? If another course cannot be found for them, they will probably be left out of pocket over fees because loans have to be repaid. We believe that the Office for Students has a duty to assist them in every way possible and ensure that they can complete their studies. That is what Amendment 57 is about. However, overall, these three amendments are about protecting students, which I think is a cause to which everyone in your Lordships’ Chamber would be happy to subscribe. I beg to move.

My Lords, I support Amendment 57. At earlier stages of the Bill I have welcomed the provisions of Clause 13, which provide that the Office for Students can generate student protection plans. That is to be welcomed but, as the noble Lord indicated, the problem is that we do not know what form that protection will take and more needs to be set out on the face of the Bill. I moved an amendment in Committee to try to address this issue but, at that stage, the Government were not receptive. Therefore, we really need to come back to it.

As the noble Lord said, it is the Office for Students—students are meant to be at the heart of this measure, yet they will have no idea of what protection they have when they undertake a course of study. When it comes to protection, Clause 13 gives the example of a course failing to be provided. So precisely what protection is being accorded to students? They need that reassurance if they are to sign up for and pursue courses in the first place. Amendment 57 gets at this problem and I welcome the fact that we are again considering it. As I said, students deserve to have some idea of what protection they will have when they undertake a course of study.

My Lords, I support the amendments to which I have put my name and agree with everything that both noble Lords have said so far.

When the Higher Education and Research Bill was first introduced, both Ministers pointed out that the environment in which higher education takes place has changed dramatically in recent years, and indeed it has. Very large numbers of students now take out large loans in the belief, and with the confidence, that the institutions they attend have in some sense been guaranteed by government—that what they are doing is safe in that they will be able to complete their studies. Fortunately, in most cases that is true, but of course it is not always or necessarily true. Anybody who looks at the experience in other countries will realise that institutions do fail, and indeed some of our non-degree-awarding institutions have failed in the past. The Competition and Markets Authority says cheerfully on its website that the sign of a healthy sector is that some exit occurs. Exit sounds quite cool—unless you happen to be one of the students in an exiting institution.

At the same time as this Bill is going through, the Technical and Further Education Bill is being debated, mostly in the Moses Room. As I attend the sittings of both Bills, part of the time I whinge but mostly it is a very informative exercise because we now have a tertiary sector as much as anything else. However, the protections being introduced for students in further education colleges go well beyond anything that has been specified for students in higher education, and that is highly regrettable. It is really important that in this new and changed environment, we realise that students need new and changed protection.

To give an example, for a long time the training sector has had many quite small, and sometimes quite large, rapidly changing institutions. Just before these Bills were introduced in the House, we heard the first story of a training provider that went into liquidation, leaving many people with outstanding loans and no obvious recourse. In the few weeks that both Bills have started to work their way through the House, there have been two other such failures. I shall be happy to give their names to anyone who is curious to know them, but, once again, we are left with, in this case, adult learners who have loans but no ongoing course.

When I raised this issue with the Minister and officials, I was told that the risks were lower for university students because they were more mobile and less local. However, that really is not true. It is not true of my own, but it is true of many of our university institutions that they have home students who are almost all highly local—often because they come from less advantaged families and are very unhappy about taking out major maintenance loans. So they are very local, and if their institution fails, they do not have anywhere else to go.

I hope very much that Ministers feel able, ideally, to accept Amendment 57, which seems to me the least that we can do in an environment where we are, in effect, making a promise to students. If it turns out that, for good reasons, that promise cannot be kept, they ought to be looked after.

My Lords, I have spoken before in this context as chancellor of the University of Birmingham, chair of the advisory board of the Cambridge Judge Business School and an alumnus of Harvard Business School. However, years ago, when I was qualifying as a chartered accountant with the Institute of Chartered Accountants in England and Wales, I spent a year at what is now the London Metropolitan University, where I would later spend time as a visiting professor. I want to draw an analogy. In 2012, the London Metropolitan University lost its right to recruit international students. At that time there were 2,700 international students with valid visas, who had come here in good faith. They were given 60 days to find a place at another institution. That not only jeopardised their lives and futures but jeopardised and placed in crisis an institution with 30,000 students and 2,000 staff. That has implications for not only the institution but international students—as I know as the president of UKCISA, the UK Council for International Student Affairs.

Today, Universities UK has released a report showing that there are almost 450,000 students in the UK, of which almost 130,000 are from the European Union. The contribution they make to the British economy in gross terms—what they spend directly and indirectly— is £25 billion. With Brexit coming up, the uncertainty for international students, let alone EU students, is already there. It is not right that they have the added uncertainty that if, for whatever reason, the institution they join fails, they will be left high and dry. It will affect our economy and our ability to recruit international students. As it is, we have immigration rules that are against international students, which we will talk about later on Report.

I urge the Government to take this measure very seriously. It will give security to our domestic students and it is important for our international students and our reputation around the world.

My Lords, I did not intend to speak on this issue but I want briefly to say something very important. If any of us had children who we sent off to higher education, we would expect that institution to give them the support and development they needed. There are private colleges that have their courses validated by individual universities. Of course, those private colleges could, under certain circumstances, get into difficulties and cease trading. What happens then to the students and to their student loans? As the noble Baroness, Lady Wolf, rightly said, we are seeing this already in further education, where training providers are going into liquidation. They are all right—they have gone into liquidation—but the poor student is left high and dry. I hope that when the Minister replies he might give assurances on this matter.

My Lords, I am grateful to all noble Lords who have spoken in this debate, which has raised the important issue of student protection in the case of suspension of registration or indeed deregistration. I think that there is no disagreement that student protection is important, and that is why in this Bill we have gone further than ever before by including an express provision that will enable the OfS to ensure appropriate protections for students through a key condition of provider registration. The noble Lord and others have made some helpful suggestions regarding the likely content of student protection plans, which we agree need to be robust and comprehensive in their coverage. These plans are likely to include a diverse range of measures to protect students, as well as a diverse range of possible triggers for a student protection plan, including suspension of registration.

In response to the concerns that have been expressed in the debate, I can say that draft guidance will be prepared for consultation with the sector and with students as part of the regulatory framework consultation later this year. We would expect it to include information on how and when a provider should refer students to its student protection plan, for example during suspension of registration. It would be wrong to pre-empt the consultation by including these measures in the Bill itself, but I would seek to reassure noble Lords that the measures I have just referred to could include, for example, provision to teach out a course for existing students; offering students an alternative course at the same institution; making arrangements for affected students to switch to a different provider without having to start their course from scratch; and—in response to an issue raised by the noble Lord, Lord Watson—measures to compensate students who are affected financially. I hope that these examples provide some reassurance to noble Lords that we do have in mind the contingency arrangements they have outlined in the debate.

Clause 17 places a clear duty on the OfS to notify, through its maintenance of the register, when a provider has been suspended, and a similar duty is imposed on the OfS by Clauses 19 and 23 whenever providers are deregistered. The OfS already has the power, given in Clause 7, to require a provider’s governing body to make sure that students are promptly informed about its actions.

However, widespread publicity of preliminary compliance measures may not always be appropriate in every case. Before the OfS can impose a sanction of suspension and deregistration it must notify a provider of its intent to do so, unless an urgent suspension is being imposed, and then allow the provider the opportunity either to argue its case or to put matters right. As I am sure noble Lords will agree, the desired outcome for the benefit of students and the provider alike is that the provider takes the actions necessary to ensure that it complies with the conditions of registration that have been placed upon it, which would mean that no further action would be required.

There are also important matters of confidentiality at play here, which is a key concern that has previously been raised by Universities UK and a number of noble Lords in the debates in Committee. Higher education providers would not wish the OfS to announce that it was carrying out an investigation into a provider as this could lead to unnecessary reputational damage if the OfS subsequently decided not to take action. We must also be careful not to unsettle or panic students unnecessarily. Disclosing details of possible sanctions when the OfS has yet to decide to take action would not in our view generally be appropriate or helpful to students. It is the inclusion of the words “intention to” that I find real difficulty with in Amendment 56.

On Amendment 57, I have listened to the thoughtful debates we have had today, and indeed I read the debates in the other place, on the issue of student transfer. We tabled Amendment 100 on this important issue which we have already discussed. Our amendment will require the OfS to monitor and report on the provision of student transfer arrangements by registered higher education providers. It will empower the OfS to facilitate, encourage or promote awareness of these arrangements. In doing so, the Government are creating the conditions to allow the necessary flexibility for students to make the right choices for themselves and to have control over those decisions, whatever the reason for their transfer. The amendment that has been proposed and to which noble Lords have spoken would result in the OfS trying to make arrangements for students to be placed on other courses if their current course closed. However, the decision about what courses to offer falls within the institutional autonomy of each provider.

While I recognise the importance of students being able to transfer, particularly where their institution ceases to offer their planned learning, it is not and nor should it be in the OfS’s gift to determine whether institutions accept students from elsewhere. This has never been a role undertaken by the OfS’s predecessor, HEFCE, and there is no intention for it to be taken on by the OfS. It must surely be preferable for the sector to be in control of transfer processes, including where appropriate as part of the student protection plans, and for the OfS to play a greater role in facilitating and encouraging the availability and take-up of such arrangements.

In response to my noble friend Lord Norton, who was concerned that students would not know what protections they have, we have listened to concerns on this issue. That is why we brought forward an amendment in the other place to require plans to be published and therefore brought to students’ attention. This balanced approach is what our amendment sought to achieve. Against that background, I ask the noble Lord to withdraw Amendment 55.

I thank the Minister for that, but he rather gave the impression of a man thrashing around in a deep pool, desperately trying to find something to cling on to. I did not find his arguments convincing. When I moved the amendment I said that it has been stated time and again that the Government want students at the centre of the Bill. I did not quote Clause 18, but I will now. It says:

“Where the decision is to suspend the provider’s registration, the notice must …specify the date on which the suspension takes effect … specify the excepted purposes … specify the remedial conditions (if any), and … contain information as to the grounds for the suspension”.

It does not specify what happens to existing students during the suspension period, as documented in a provider’s student protection plan. Why not? How will that hinder any institution if that were to be placed in the Bill? Surely it is the sort of thing that students are entitled to know when their institution is getting into severe difficulty. I do not see why that should provide any difficulty at all.

I enjoyed the analogy drawn by the noble Baroness, Lady Wolf, between this Bill and the Technical and Further Education Bill, which, as she said, is substantially about the insolvencies of further education colleges. For the avoidance of any doubt, the Minister in charge of that Bill, the noble Lord, Lord Nash, assured noble Lords that that will never happen either. We are to believe that insolvency has no greater a chance of happening in the further education sector, yet three-quarters of the Bill is about insolvency.

It would have been helpful if the vehicle used for dealing with insolvencies in the further education Bill—the special education administrator—had had some equivalent in this Bill, because situations will arise where that kind of role will be necessary. It cannot be carried out just by the Office for Students. That section of the further education Bill concerns further education students getting into difficulty having a special education adviser. With no such equivalent person for higher education provided for in this Bill we are left with a section that is rather like “Hamlet” without the prince. No one will be appointed by the courts in this section. That is the difference between this Bill and the further education Bill.

The Minister talked about draft guidance for consultation with staff and students on when a student protection plan becomes effective, but the amendments here are not about pre-empting. We are saying something different. We are talking about a situation after the college has got into difficulties. It is about reacting to that, not anticipating it. It is important that that difference is understood.

I say to the Minister, particularly in relation to Amendment 57, on which we welcome support from the Cross Benches and the Government Benches, that we would make it easier for the Office for Students. The amendment says that,

“the OfS must, as promptly as possible, seek to make arrangements for the students of that provider to be offered places on similar courses with another higher education provider”.

We could have omitted the words “seek to”. We have been helpful to the Government by suggesting only that the OfS should seek to do that. I take the Minister’s point that some students would not like to be told by the Office for Students, “Very sorry, your university is closed. Here is where you will go as of next week”. That is not the way I would envisage it happening. It would be about choices. The Minister talked about student choices. Student choices should, as far as possible and practicable, be provided by the Office for Students, because it will have overall responsibility as the regulator. It should be able to say to students, “You are without a class at the moment. Here’s what we suggest”.

I acknowledge, as the noble Baroness, Lady Wolf, said, that there will be some cases where colleges are very local and students are unwilling to travel to the next town or, if it were London, to another part of the city to complete their studies. On that basis, they may decide that completing their studies is not possible, but they should be offered choices. That is what we are suggesting. Students are at the centre of the Bill yet the OfS is not to be allowed to provide options for them to continue studies. Again, I find that very surprising. That is a real failing of the Government’s commitment. We should ask what their real commitment is to the interests of students. That should be the test, and the test to which we should put it is that of the opinion of the House.

The Deputy Speaker decided on a show of voices that Amendment 55 was disagreed.

Amendment 56 not moved.

Amendment 57

Moved by

57: After Clause 22, insert the following new Clause—

“Duty of OfS to seek to place students whose provider ceases to offer courses

If a higher education provider ceases to be able, or eligible, to provide higher education courses for its students, the OfS must, as promptly as possible, seek to make arrangements for the students of that provider to be offered places on similar courses with another higher education provider.”

Clause 24: Assessing the quality of, and the standards applied to, higher education

Amendments 58 and 59

Moved by

58: Clause 24, page 15, line 27, at end insert—

“( ) Where there are one or more sector-recognised standards, an assessment under this section of the standards applied—(a) must relate only to the standards applied in respect of matters for which there are sector-recognised standards, and(b) must assess those standards against sector-recognised standards only.”

59: Clause 24, page 15, line 28, leave out subsection (3)

Amendments 58 and 59 agreed.

Clause 25: Quality Assessment Committee

Amendments 60 and 61 not moved.

Consideration on Report adjourned.

House adjourned at 9.48 pm.