Category: UK Government

  • Edward Peck’s performance at the Education Committee

    Edward Peck’s performance at the Education Committee

    There’s something wonderfully postmodern about Edward Peck’s committee hearing ahead of his likely appointment as the next chair of the Office for Students.

    While the first chair of the regulator, Michael Barber, arrived with a fully documented quasi-academic theory of delivery – and while the second, James Wharton, brought a certain kind of political cunning – Edward Peck has a fully fledged multi-disciplinary research-informed theory of leadership as performance.

    How should we understand leadership as performance?

    The idea of performativity – broadly speaking that the descriptive language we use in a given situation has a direct impact on the situation itself – has informed a conceptualisation of leadership as a performance that interrelates both with the wider ideas of what it is to be a leader and the narrower immediate context as a particular leadership “act”. This shifts the focus on leadership from a kind of all-powerful “strongman” (with the consequent cod-psychological popular literature on essential attributes of successful leaders available at an airport near you) to something more subtle around relationships, language, and behavior across multiple settings as shaping experiences of leadership.

    Leaders – in other words – are sensemakers, both in terms of explaining (and thus shaping) reality for those around them, and in collaboratively situating activities carried out by an organisation within this negotiated reality. Sometimes these acts can be almost ritualistic (“is” performance) like in representing the university at a graduation ceremony where roles and norms are predetermined.

    At other points these are more spontaneous (“as” performance) a narrative (a pre-existing conceptualisation of an experience or situation) enacted to an audience in response to an everyday stimulus – something like a discussion of university finances during a spontaneous conversation with a member of staff on campus).

    Not an actual theatre

    This isn’t a literal assertion that leadership is theatre – that it is a kind of scripted reality that lacks authenticity – but the idea that the actions of leaders reiterate (and thus endorse) organisational norms and organisational cultures. So when Peck repeatedly qualified his responses to the education committee with reference to what the OfS had learned in eight years of regulatory activity, and in his need to understand the way in which the legal framework in which regulation takes place has been interpreted he is situating himself as a part of an ongoing story rather than attempting to begin telling a new one.

    This is likely to be important to those who might think a return to a HEFCE-like situation in which leaders were former vice chancellors and things were, apparently, nicer (they weren’t nicer, but this is the story some like to tell) – Peck is entering the stage in the middle of the play and is clearly looking to be an evolutionary rather than a revolutionary chair.

    What he does seem to want to do, in narrative terms, is to use more of the language that institutional leaders themselves use within regulation. In Peck’s performativity theory – these linguistic shifts are important in that they themselves have an impact on the collective understanding of what is going on.

    Usually about six

    The best example of this was, inevitably, about university finances. To Peck there are “usually about six” things that universities do to balance income with expenditure in times of financial constriction – he didn’t name the six, but the impression he was looking to give is that these are well-known and familiar interventions among those who run universities. With this frame, he was able to put the onus on universities rather than regulators to act (“a lot of institutions are still on this journey”), allowing him the appeal to accepted wisdom in being clear that it was not for the Office for Students to bail out universities, and to go further to suggest that if there was a credible route to sustainable business it would be visible to banks (and, I guess, other lenders) and it should not be for the government to create a “moral hazard” by stepping in.

    Committee member Manuela Perteghella pushed him on what he had specifically learned from what Nottingham Trent University had done to stave off financial problems (NTU ran a £9.5m surplus last year, but saw around a 10 per cent reduction in student numbers this year). The first example he reached for can again be traced back to the way he has written about leadership in the past – he made much of the need to “be clear with colleagues” about the problems that the university was facing and do so regularly and openly (there is a quarterly town hall meeting).

    As a leader you do have the chance to control the narrative – and this shapes the way problems are understood. Peck noted the problems that other providers had faced in submitting unrealistic income or recruitment projections to the Office for Students – grand (if broad) plans that made any subsequent need for economy harder to sell internally. He was able to sell a 10 per cent reduction in staff numbers at NTU on the basis of needing less staff to teach less students (based on historical precedent) – and being clear about recruitment problems early allowed him to say that all these job losses would be voluntary.

    The historical precedent – an appeal to a quantifiable and shared memory within the organisation – also made it easier to make the case for a lower staff headcount maintaining the quality of education. If, after all, we could teach this number of students at an acceptable level a few years back with this number of staff, why can’t it be done in 2025?

    Independence day

    One of the stories that has become accepted fact about the Office for Students is that it is too close to the government – reverse regulatory capture, if you like. The Behan report (and to a lesser extent the House of Lords Industry and Regulators Committee report) undermined this assumption a little – there are examples of places where OfS pushed back against the department, although the very nature of the beast means that such independence is rarely visible in public.

    As chair Peck would clearly need to work with government on the underpinning policy framework – hinting at a “new” policy under development for release in the summer, most likely the much-heralded “HE reform” package – but emphasised that “operational” decisions would be independent, and that his network of contacts across the sector would help OfS build better relationships with institutions.

    Again, this isn’t new – or even particularly notable – but it’s another pointer to his explanatory mode of leadership. It suggests that the problem is one of communication, and he even suggests his own ability to communicate as the solution. Virtuoso performance as leadership. When we get to the actual structural changes there’s a sense that OfS has been on the right track recently – revamped student panels, more student surveys. The only novelty is a promised re-engagement with NUS.

    Curtain call

    There’s a lot of stuff that would remain in a Peck-led OfS: he’s keen on B3 as driving value for money, keen to get stuck in on regulating modular provision, feel like we are in the right place on freedom of speech given recent changes, pleased with TEF and access and participation plan (though he asked a fascinating question around what happens to those who register with UCAS – he is interim chair there, currently – but are not placed by the end of the cycle).

    For much of this, regulation is a matter of establishing codes of practice and ensuring that the actions of universities are within these bounds – Peck’s government work on student mental health should have provided the clue there. The codes themselves set the stage, the universities act within those boundaries. You could argue this as legalism, but it makes more sense as freedom within set parameters, something which universities (and indeed academics) will find comfortingly familiar.

    In their 2009 book, “Performing Leadership” Peck and Helen Dickinson (now a professor at the University of New South Wales) cite one compelling example (an unpublished conference paper by Druckett from 2007) of the way the performance of a particular style of management has an impact on lived experience of university staff.

    the case study… illustrates that the assertion, arguably the over-assertion, of the hierarchical and individualist ways of organising by senior management is generating negative feedback from the academics in the organisation. The consequences of not allowing the isolate and enclave approaches to contribute adequately to the organisational settlement may be having, or have in future, significant detrimental consequences for the university.

    The classic postmodernist understanding of the organisation, in contrast, is one of multiple narratives within a common framework. If you feel that OfS has been too deterministic – too rules based rather than risk based – within the first eight years, the way in which Peck (and whoever he chooses as a senior executive team) allows other voices to fill the stage will be fascinating to watch.

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  • Policy change can help manage the demand for graduate knowledge and skills

    Policy change can help manage the demand for graduate knowledge and skills

    “Our universities have a paramount place in an economy driven by knowledge and ideas.”

    These are the opening words of the 2016 white paper Success as a Knowledge Economy, which created the funding and regulatory architecture governing English higher education today. The arrangements are founded on a broad faith in the economic benefits of generating and communicating knowledge.

    This vision assumes that an increasing supply of university graduates and research, coupled with open markets that reward enterprise, leads to endogenous economic growth. That can happen anywhere because ideas are boundless and non-rivalrous, but particularly in England because our universities are among the best in the knowledge business.

    English higher education has grown by integrating the development of specific skills for the workplace alongside universally applicable knowledge. This is clear from the progress of most English universities from institutes established for professional and technical training towards university status, the absorption of training for an increasing range of professions within higher education, and the way in which universities can now articulate the workplace capabilities of all graduates, regardless of their discipline.

    Notwithstanding this, the reforms proposed in 2016 emphasised knowledge more than skills. By that time, most of the cost of teaching in English universities had been transferred to student tuition fees backed by income-contingent loans. So, the reforms mostly focused on providing confidence for the investments made by students and the risks carried by the exchequer. This would be delivered through regulation focused on issues important to students and the government, whilst positioning students as the pivotal influence on provision through competition for their choices.

    Universities would compete to increase and improve the supply of graduates. This would then enhance the capacity of businesses and public services to capitalise on innovation and new technologies, which would yield improved productivity and jobs requiring graduates. That is a crude characterisation, but it provides a starting point for understanding the new imperatives for higher education policy, which are influenced by challenges to this vision of nearly a decade ago.

    From market theory to experience in practice

    Despite an expansion of university graduates, the UK has had slow productivity growth since the recession of 2008–09. Rather than the economy growing alongside and absorbing a more highly educated workforce, there are declining returns for some courses compared with other options and concerns that AI technologies will replace roles previously reliant on graduates. Employers report sustained gaps and mismatches between the attributes they need and those embodied in the domestic workforce. Alongside this, ministers appear to be more concerned about people that do not go to university, who are shaping politics in the USA and Europe as well as the UK.

    These are common challenges for countries experiencing increasing higher education participation. The shift from elite to mass higher education is often associated with a “breakdown of consensus” and “permanent state of tension” because established assumptions are challenged by the scale and range of people encountering universities. This is particularly the case when governments place reliance on market forces, which leads to misalignment between the private choices made by individuals and the public expectations for which ministers are held to account. Universities are expected to embody historically elite modes of higher education reflected in media narratives and rankings, whilst also catering for the more diverse circumstances and practical skills needed by a broader population.

    In England, the government has told universities that it wants them to improve access, quality and efficiency, whilst also becoming more closely aligned with the needs of the economy and civil society in their local areas. These priorities may be associated with tensions that have arisen due to the drivers of university behaviour in a mass market.

    In a system driven by demand from young people, there has been improved but unequal access reflecting attainment gaps in schools. This might not be such a problem if increasing participation had been accompanied by a growing economy that improves opportunities for everyone. But governments have relied on market signals, rather than sustained industrial strategies, to align an increasing supply of graduates with the capabilities necessary to capitalise on them in the workplace. This has yielded anaemic growth since the 2007 banking crash, together with suggestions that higher education expansion diminishes the prospects of people and places without universities.

    In a competitive environment, universities may be perceived to focus on recruiting students, rather than providing them with adequate support, and to invest in non-academic services, rather than the quality of teaching. These conditions may also encourage universities to seek global measures of esteem recognised by league tables, rather than serving local people and communities through the civic mission for which most were established.

    Market forces were expected to increase the diversity of provision as universities compete to serve the needs of an expanding student population. But higher education does not work like other markets, even when the price is not controlled as for undergraduates in England. Competition yields convergence around established courses and modes of learning that are understood by potential students, rather than those that may be more efficient or strategically important for the nation as a whole.

    Navigating the new policy environment

    After more than a decade of reforms encouraging competition and choice, there appears to be less faith in well-regulated market forces positioning knowledgeable graduates to drive growth. Universities are now expected to become embedded within local and national growth plans and industrial strategy sectors, which prioritise skills that can be deployed in specific settings ahead of broadly applicable knowledge. This asks universities to consider the particular needs of industry, public services and communities in their local areas, rather than demand from students alone.

    Despite these different imperatives, English higher education will continue to be financed mostly by students’ tuition fees and governed by regulatory powers designed to provide confidence for their choices. We suggest four ingredients for navigating this, which are concerned with strategy, architecture, regulation and funding.

    The government has promised a single strategy for post-16 education and a new body, Skills England, to oversee it. A more unified approach across the different parts of post-compulsory education should encourage pathways between different types of learning, and a more coherent offer for both learners and employers. But it also needs to align factors that influence the demand for graduates, such as research and innovation, with decisions that influence their supply. That requires a new mindset for education policy, which has tended to prioritise national rules ahead of local responsiveness, or indeed coherence with other sectors and parts of government.

    Delivery of a unified strategy is hampered by the fragmented and complex architecture governing post-16 education. Skills England will provide underpinning evidence, both influencing and drawing on Local Skills Improvement Plans (LSIPs), but it remains uncertain how this will be translated into measures that influence provision, particularly in universities. A unified strategy demands structures for convening universities, colleges, employers and local authorities to deliver it in local areas across the country.

    That could be addressed by extending the remit of LSIPs beyond a shopping list of skills requirements and enhancing the role of universities within them. Universities have the expertise to diagnose needs and broker responses, aligning innovation that shapes products and services with the skills needed to work with them. They will, though, only engage this full capability if local structures are accompanied by national regulatory and funding incentives, so there is a unified local body responsible for skills and innovation within a national framework.

    Regulation remains essential for providing confidence to students and taxpayers, but there could be a re-balancing of regulatory duties, so they have regard to place and promote coherence, rather than competition for individual students alone. This could influence regulatory decisions affecting neighbouring universities and colleges, as well as the ways in which university performance is measured in relation to issues such as quality and access. A clear typology of civic impact, together with indicators for measuring it, could shift the incentives for universities, particularly if there is a joined-up approach across the funding and regulation of teaching, research and knowledge exchange.

    Regulation creates the conditions for activity, but funding shapes it. Higher education tends to be a lower priority than schools within the Department for Education, and research will now be balanced alongside digital technologies within the Department for Science, Innovation and Technology. A new Lifelong Learning Entitlement and reformed Growth and Skills Levy may provide new opportunities for some universities, but any headroom for higher education spending is likely to be tied to specific goals. This will include place and industry-oriented research and innovation programmes and single-pot allocations for some MSAs, alongside the substantial public and private income universities will continue to generate in sectors such as health and defence. In this context, aligning universities with the post-16 education strategy relies on pooling different sources of finance around common goals.

    Closer alignment of this kind should not undermine the importance of knowledge or indeed create divisions with skills that are inconsistent with the character and development of English higher education to date. The shift in emphasis from knowledge towards skills reframes how the contributions of universities are articulated and valued in policy and public debate, but it need not fundamentally change their responsibility for knowledge creation and intellectual development.

    This appears to have been recognised by ministers, given the statements they have made about the positioning of foundational knowledge within strategies for schools, research and the economy. We have, though, entered a new era, which requires greater consideration of the demand for and take-up of graduates and ideas locally and nationally, and a different approach from universities in response to this.

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  • Eight critical questions for the new chief executive of UKRI

    Eight critical questions for the new chief executive of UKRI

    The appointment of a new chief executive for UK Research and Innovation (UKRI) could not happen at a more crucial time.

    With public finances under strain, the case for public investment in R&D needs to be made cogently and needs to focus both on addressing the UK’s five government missions and on sustaining the fantastic research asset which the UK university sector represents. The list of issues for the new appointee will no doubt be lengthy, but we put forward the following as a possible shortlist of priorities.

    1. The interface (pipeline) between research councils and Innovate UK

    One of the main goals in establishing UKRI was to ensure a smooth pipeline from the research undertaken by the individual research councils to the industrial/end user base thereby bringing both economic and societal benefit. However, despite years of intent this pipeline seems as obstructed as ever. The fundamental question remains: to what extent is the role of Innovate UK to aid the transition of the outcomes resulting from research council funding versus simply supporting UK-based enterprises in their own research?

    Currently there are disconnects between the research priorities, often defined by government and implemented by the research councils, and the Innovate UK funding mechanism to ensure they are exploited. There are some exceptions here of course: the Creative Industries Clusters was a good example of a joint initiative between AHRC and Innovate UK which did integrate industry demand to local research strengths.

    A key priority for the new chief executive is to join up the pipeline more effectively across the whole range of industry sectors and ensure a very clear role for Innovate UK in partnership with the research councils and the subsequent interface to the National Wealth Fund or British Business Bank.

    2. Articulating and agreeing the balance between UKRI spend on government priorities and investment in the research base of the future

    As we have argued elsewhere on Wonkhe, the nation needs UKRI to fund both the research required by current government priorities relating to industrial strategies or societal challenges, and invest in the broader research base that, in the words of science minister Patrick Vallance, will feed the “goose that lays the golden egg” of our research base and the opportunities of tomorrow.

    Currently, this balance is, at best, hidden from view, suiting neither the needs of government nor the future aspirations of the sector. We urge UKRI to quantify this balance historically and to articulate a proposal to government for moving forward. We also require balance between the budget committed in the long-term to institutes, infrastructure, international subscriptions, and facilities vs. the shorter-term funding into the wider research and innovation community. Balancing these priorities requires a strengthening of the relationship, and open discussion, between UKRI, DSIT and wider government.

    3. Ensuring UKRI is relevant to the government’s regional economic development agenda

    As part of the government’s economic agenda, driving productivity growth in the tier-2 cities outside the South-East and the wealthier places in the UK is key to executing its growth mission. There is a clear tension here in UKRI acting as the key funding agency for public R&D spending driven solely by excellence, and a regional economic development mission, for which additional criteria apply. This tension must be addressed and not ignored.

    The creation of innovation accelerators in which additional funding was provided by government, but UKRI was involved in evaluating the merit of proposals, is a good example of how UKRI can drive change. As the government develops new levers to address and fund regional economic development, UKRI should play a key role in ensuring that this dovetails with the research and innovation base of the nation.

    4. Creating a highly skilled workforce

    As is becoming clear, the number of doctoral students supported by UKRI continues to fall – an issue highlighted, for example, by Cambridge vice chancellor Deborah Prentice in a recent Guardian interview. This is particularly clear in areas which have traditionally relied upon UKRI funding, such as the engineering and physical sciences. The corresponding research effort is in part bolstered by an increase in the number of fee-paying overseas students, but this does little to create the UK-based workforce industry needs.

    UKRI needs to prioritise funding and work with government to find new ways of addressing the skills the nation needs if we are to drive a productive knowledge-based economy. The skills required extend beyond doctoral degrees to include technical professionals and engineers.

    5. Sector confidence around REF as a rigorous, fair process, supportive of excellence

    The HE sector is in financial turmoil, manifested in the unprecedented number of UK higher education institutions currently implementing severance schemes. Ongoing uncertainties over the REF process, from the portability of outputs and the lack of an essential mechanism to ensure a diversity of authors (current proposals have no cap on the number of outputs that can be submitted from any one individual) to the absence of clarity on the people, culture and environment template’s support for excellence need resolution.

    This resolution is required, firstly so that research strategies institutions put in place prior to any census date have time to drive the changes required given that REF is meant to be formative as well as summative; and secondly so that institutions can efficiently deliver their REF returns to a standard and detail a government should expect to provide assurance over the future quality related (QR) spend.

    6. The importance and accountability of QR

    Virtually everyone in the sector embraces the notion that QR is central to the agility and sustainability of the UK research base. This certainty is matched with uncertainty within government as to the value for money this investment provides. If we are to maintain this level of trust in the sector’s ability to derive benefit from this investment, collectively we need to do a better job at showing how QR is central to the agility of our investment in the research outcomes of tomorrow and not simply a plugging of other, non-research related, financial holes. As both assessor and funder UKRI can lead and co-ordinate this response.

    7. Completion of the new funding service (the software needs to work!)

    The joint electronic submission system (Je-S) was outdated and potentially no longer supportable. Its back room equivalent, Siebel, even worse. Their replacement, the new funding service is an acceptable portal to applicants but seemingly still provides inadequate assurances for a system from which to make financial commitments. This shortcoming seems almost incomprehensible given it was an in-house development.

    Moving beyond the essential financial controls it seems to offer little by way of the AI assistance in the identification of reviewers that the software behind the submission systems for many of our research publications has offered for decades. Whether we lack the skills or investment to solve these issues is unclear, but the inefficiency of the current situation is wasteful of perhaps an even more precious resource, namely the time of UKRI staff to add human value to our research landscape. This seeming lack of skills and the systems we require is worrying too to the future REF exercise, even once the framework is known.

    8. Evidencing the effects of change

    Of course the world should and must move on. As a funder of research, it is appropriate that UKRI experiments with better ways of funding, becoming an expert in metascience. Changes inspired by ideology are fine, but it is essential that these changes are then assessed to see if the outcomes are those we desired.

    One example is the narrative CV, a well-meaning initiative to recognise a wider definition of excellence and an equality of opportunity. Is this what it achieved? Do we acknowledge the risks associated with AI or the unintended consequence of favouring the confident individual with English as their first language? While not advocating a return to the tradition of lists CV, we urge a formal reporting of outcomes achieved through the narrative CV using both quantitative and qualitative data and an evidenced based plan to move forward.

    Looking to the future

    We realise that criticism is easy and solutions are hard to find. So in case of doubt, we would like to finish with a call out to UKRI’s greatest resource, namely at all levels its committed and highly professional staff. We know at first hand the dedication of its workforce which is committed to fairly supporting the community, the research they do and the impact it creates.

    The role of chief executive of UKRI provides vital leadership not just to UKRI but to the sector as a whole, and the sector must unite to stand behind the new incumbent in solving the challenges that lie ahead.

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  • New UK government video targets international students

    New UK government video targets international students

    Secretary of state for education, Bridget Phillipson, addressed students considering studying abroad, highlighting the benefits of a UK education and promoting the country’s post-study work opportunities.

    “In the new academic year, we will welcome thousands of international students who will be starting courses in our universities and I hope to see many more in the future,” Phillipson said in the video shared by the UK Council for International Student Affairs (UKCISA).

    “The UK is a wonderful and safe place to study. Our country is home to some of the very best universities in the world – four of the world’s top 10 can be found right here in the UK.

    “An education from a British university has been the springboard for success for so many global trailblazers, from politics to business, from the arts to the sciences, in fact dozens of current and recent world leaders studied here in the UK and our universities have driven some of the most exciting and valuable research anywhere in the world.

    “You could be part of the next groundbreaking wave of research and join a new generation of inspiring leaders,” she told prospective students.

    Phillipson went on to describe some of the ways in which UK universities support their international students through pastoral support, work experience, scholarships and bursaries.

    “You’ll also get have the chance to join Alumni UK – a global group of people from around the world who have studied here. It’s a fantastic professional network that you can tap into to get great advice and guidance.”

    Phillipson went on to promote the UK’s Graduate Route, describing the opportunity which lets graduates “work, live and contribute” in the UK.

    International students forge international friendships so by studying abroad, you can help build bridges between our countries, and these connections help make the world a better, brighter place.

    Bridget Phillipson, UK secretary of state for education

    “Studying in the UK sets you up for success in your career, but it’s more than that. International students forge international friendships so by studying abroad, you can help build bridges between our countries, and these connections help make the world a better, brighter place.”

    Phillipson previously addressed international students in a video not long after stepping into the role in July 2024.

    On the release of the latest video, Anne Marie Graham, UKCISA chief executive, said she was “encouraged” to see the continuing messages of welcome and support from the UK’s education secretary.

    “Current and prospective students will also welcome the secretary of state’s ongoing support for the graduate visa and her reflections on the mutual benefits of a UK education – not just the contributions that international students make to the UK, but the positive impact on their own careers and ambitions,” she told The PIE.

    “We look forward to continuing to work with the UK government to ensure international students are welcomed and supported, from pre-arrival visas to post-graduation work opportunities, so that all international students have a positive experience studying here.”

    Pedram Bani Asadi, chair of the UKCISA’s Student Advisory Group commented: “I welcome the support from this government for international students’ hopes and dreams, and recognition of all the contributions we make to both UK culture and the economy.

    “Having access to the Graduate Route has been absolutely essential for me to be able to reinforce the skills I learnt in my studies and contribute to the UK. I appreciate all the friends and experiences I’ve had here and look forward to continuing my role as a #WeAreInternational student ambassador, and working with the UK government to support my fellow international students to have a positive experience.”

    Since Labour took came into power, sector stakeholders have noted the government’s more welcoming tone toward international students, a marked contrast to the rhetoric of the previous Conservative government.

    Despite a change in rhetoric, the Labour government has shown no intention of reversing the Conservative’s decision to ban international students on UK taught master’s courses from bringing dependants with them to the UK.

    “While the new government has said many positive things about international students, the focus on immigration remains acute,” said Jamie Arrowsmith, director of Universities UK International in an update to sector earlier this month.

    The UK’s international educations strategy is currently under review, and the rollout of the new approach is set for April.

    Sector leaders gathered at the QS Reimagine Education summit in London late last year to discuss priorities for the UK’s international education sector going forward, giving suggestions for a refreshed strategy, which included improved post-study work rights.

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  • Higher education in England needs a special administration regime

    Higher education in England needs a special administration regime

    Extra government funding for the higher education sector in England means the debate about the prospect of an HE provider facing insolvency and a special administration regime has gone away, right?

    Unfortunately not. There is no additional government funding; in fact the additional financial support facilitated by the new Labour government so far is an increase to tuition fees for the next academic year for those students that universities can apply this to. It is estimated that the tuition cost per student is in excess of £14K per year, so the funding gap has not been closed. Add in increased National Insurance contributions and many HE providers will find themselves back where they are right now.

    It is a problem that there is no viable insolvency process for universities. But a special administration regime is not solely about “universities going bust.” In fact, such a regime, based on the existing FE special administration legislation, is much more about providing legal clarity for providers, stakeholders and students, than it is about an insolvency process for universities.

    Managing insolvency and market exit

    The vast majority of HE providers are not companies. This means that there is a lack of clarity as to whether current Companies and Insolvency legislation applies to those providers. For providers, that means that they cannot avail themselves of many insolvency processes that companies can, namely administration, company voluntary arrangements and voluntary liquidation. It is debatable whether they can propose a restructuring plan or be wound up by the court, but a fixed charge holder can appoint receivers over assets.

    Of these processes, the one most likely to assist a provider is administration, as it allows insolvency practitioners to trade an entity to maximise recoveries from creditors, usually through a business and asset sale.

    At best therefore, an HE provider might be able to be wound up by the court or have receivers appointed over its buildings. Neither of these two processes allows continued trading. Unlike administration, neither of these processes provides moratorium protection against creditor enforcement either. They are not therefore conducive to a distressed merger, teach out or transfer of students on an orderly basis.

    Whilst it is unlikely that special administration would enable survival of an institution, due to adverse PR in the market, it would provide a structure for a more orderly market exit, that does not currently exist for most providers.

    Protections for lenders

    In addition to there being no viable insolvency process for the majority of HE providers, there is also no viable enforcement route for secured lenders. That is a bad thing because if secured lenders have no route to recovering their money, then they are not going to be incentivised to lend more into the sector.

    If government funding is insufficient to plug funding gaps, providers will need alternative sources of finance. The most logical starting point is to ask their existing lenders. Yes, giving lenders more enforcement rights could lead to more enforcements, but those high street lenders in the sector are broadly supportive of the sector, and giving lenders the right to do something is empowering and does not necessarily mean that they will action this right.

    Lenders are not courting the negative press that would be generated by enforcing against a provider and most probably forcing a disorderly market exit. They are however looking for a clearer line to recovery, which, in turn, will hopefully result in a clearer line to funding for providers.

    Protections for students

    Students are obviously what HE providers are all about, but, if you are short of sleep and scour the Companies and Insolvency legislation, you will find no mention of them. If an HE provider gets into financial distress, then our advice is that the trustees should act in the best interest of all creditors. Students may well be creditors in respect of claims relating to potential termination of courses and/or having to move to another provider, potentially missing a year and waiting longer to enter the job market.

    However, the duty is to all creditors, not just some, and under the insolvency legislation, students have no better protection than any other creditor. Special administration would change that. The regime in the FE sector specifically provides for a predominant duty to act in the best interest of students and would enable the trustees to put students at the forefront of their minds in a time of financial distress.

    A special administration regime would therefore help trustees focus on the interest of students in a financially distressed situation, aligning them with the purposes of the OfS and charitable objects, where relevant.

    Protections for trustees

    Lastly, and probably most forcefully, a special administration regime would assist trustees of an HE provider in navigating a path for their institution in financial distress. As touched on above, it is not clear, for the vast majority of HE providers, whether the Companies and Insolvency legislation applies.

    It is possible that a university could be wound up by the court as an unregistered company. If it were, then the Companies and Insolvency legislation would apply. In those circumstances, the trustees could be personally liable if they fail to act in the best interest of creditors and/or do not have a reasonable belief that the HE provider could avoid an insolvency process.

    Joining a meeting of trustees to tell them that they could be personally liable, but it is not legally clear, is a very unsatisfactory experience; trust me, this is not a message they want to hear from their advisors.

    A special administration regime, applying the Companies and Insolvency legislation to all HE providers, regardless of their constitution or whether they are incorporated, would allow trustees to have a much clearer idea of the risks that they are taking and the approach that they should follow to protect stakeholders.

    In the event a special administration was to be brought in, we would hope it would not need to be applied to a market exit situation. Its real value, however, is in bringing greater legal clarity for lenders and trustees and more protection for students, in the current financial circumstances that HE providers find themselves in.

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