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6.25 pm
The Parliamentary Under-Secretary of State for Education and Employment (Dr. Kim Howells): I thank my hon. Friend the Member for Southampton,
Test (Dr. Whitehead) for selecting this important matter as the subject for his first Adjournment debate. I welcome the opportunity to discuss the governance of higher education institutions.
My hon. Friend described well some of the problems that can affect higher education institutions. He gave examples of mismanagement, institutions divided by poor staff-management relations, ill-considered financial ventures and issues of accountability.
Of course, I was aware of my hon. Friend's close personal interest in the subject, having read his article in The Times Higher Education Supplement at the beginning of July. In that article, he made a number of pertinent comments about accountability based on his own experience and knowledge.
Before I respond to some of the specific points made by my hon. Friend, it may be helpful if I set out the current position and the new Government's view of those arrangements, and suggest how some of those issues may be developed over the coming months.
The House is well aware of the Government's commitment to ensuring openness and accountability in public life. With considerable sums of taxpayers' money invested in higher education, we need to ensure the highest standards of conduct in those who run higher education institutions, be they universities or colleges.
The effectiveness of any organisation depends on the effectiveness of its management and governance arrangements. My hon. Friend made that clear, and it is imperative that those arrangements are sound and are seen to be working.
The second report of the Committee on Standards in Public Life--the Nolan committee--which was published in May 1995 looked closely at various types of public spending institutions. It devoted considerable attention to higher and further education. The committee found that
However, my hon. Friend highlighted a few recent instances in higher education institutions where serious problems have arisen. Those have been investigated by the National Audit Office whose reports have made a number of useful recommendations which my Department and the Higher Education Funding Councils have noted.
It may help the House if I set out the background to what Ministers can and cannot do with respect to higher education institutions and the type of problems that my hon. Friend has outlined.
Higher education institutions are autonomous, self- governing, private corporate bodies. They are not controlled by the Government and they are not subject to ministerial direction. That position is clearly established in law by the Education Reform Act 1988 and the Further and Higher Education Act 1992. So Ministers cannot intervene in their internal affairs. That proscription extends to issues of governance as well as to course content, research programmes and the criteria for the
selection and appointment of academic staff and for admissions policy. That position arose from a real concern in the House that academic freedom and autonomy should be preserved and safeguarded.
The non-centralised system means that there is no common system of governance in higher education institutions, which reflects the diversity of the sector and the origins of individual universities. I should perhaps explain that governance terminology differs in different parts of the UK, so for convenience I shall use English terminology, despite being a Welshman.
The council or board of governors of the institution is the executive governing body and has ultimate responsibility for all the affairs and activities of the institution. Its task is to set the strategic direction of the institution and to ensure that it achieves its primary objectives in teaching, scholarship and research.
There are broadly two types of institution in the higher education sector--old universities, which are those established before 1992 and whose constitution and powers are set out in charters or statutes, and post-1992 universities, colleges and institutes, whose governing bodies' powers and constitutions are set out in various Education Acts together with institutions' own instruments and articles of government. It is the latter type of institution that my hon. Friend is most concerned with and where he sees a general failure of their governance arrangements. I can understand his concern to promote the cause of good governance in all higher education institutions, but I cannot accept his contention that all governing bodies are necessarily flawed or bad.
Governing bodies are entrusted with public funds and, therefore, have a particular duty to observe the highest standards of corporate governance. In carrying out that duty, governors need to ensure that, at all times, they have due regard for the proper conduct of public business. The guiding principles are integrity and objectivity; openness and transparency; and accountability for the activities of the institution and for the stewardship of public funds. I am sure that my hon. Friend will accept that those principles are widely followed in the sector.
The accountability framework ensures that there are a number of checks in the system to ensure that the taxpayers' money voted by the House for use by the sector is properly accounted for. Universities and colleges are accountable in a number of ways. The funding bodies, such as the Higher Education Funding Councils for England and Wales, require, as a condition of grant, that all institutions put in place sound financial management and control systems.
The funding councils' audit service has a right of inspection in all universities and higher education colleges to check on their stewardship of public funds. It also
reviews governance arrangements to ensure that the financial control systems in place are properly used and work. If necessary, the funding councils have the power to suspend payment of grant, in whole or in part, to safeguard public funds. The National Audit Office is also able to go into institutions to carry out inspections. As the House well knows, that can result in the Public Accounts Committee holding hearings if necessary.
Another important strand is the work of the newly established Quality Assurance Agency. The agency will take over work previously carried out by the Higher Education Funding Councils' quality assessment divisions and by the Higher Education Quality Council. The QAA will look at institutions' internal mechanisms and structures for assuring their academic quality and standards. It will, as now, continue to produce public information on their quality audits and subject assessments at institutions.
My hon. Friend made it clear that governance is not just about financial management and accountability for public funds, but I hope that he will realise that, under current arrangements, Ministers are unable to intervene directly. We are, however, conscious of the need to ensure that current arrangements are reviewed to see whether they are the best that can be achieved. We have much to learn on that subject and my hon. Friend's contribution is much appreciated.
It is clear that, despite ongoing problems, governance in higher education is generally good, although a few unfortunate instances have pointed up weaknesses in internal arrangements at particular institutions. Those who run institutions must learn from those lessons and avoid anything similar happening in future.
I can reassure my hon. Friend that the Government see the need for revised guidance to be issued to the sector, building on lessons learned and good practice. My officials have been helping the Committee of University Chairmen in developing a revised version of its guide for members, and the Higher Education Funding Council is in the process of drawing up a revised code of audit practice. We will monitor compliance with those guides.
I also await with interest the Dearing inquiry recommendations on governance issues. The Government will, of course, want to consider what the committee recommends very carefully. Where the case for action is made, we will take it. I assure the House that my right hon. Friend the Secretary of State for Education and Employment and I intend to take these issues forward vigorously. Suggestions from my hon. Friend will be welcome. I am grateful to him for raising the issue and I wish only that the House had been fuller to hear his important contribution.
Question put and agreed to.
"the firm view of our witnesses and those who wrote to us was that the standards of conduct in higher and further education were generally very good".
I know from my hon. Friend's article and speech that he has some doubts about the committee's findings, which he described as an aggregate of the evidence that was presented, but I am sure that he will not want to dissent from the view of the committee--which I share--that standards of conduct are very good.
21 Jul 1997 : Column 737Adjourned accordingly at twenty-four minutes to Seven o'clock.
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