Select Committee on Education and Skills Minutes of Evidence

Examination of Witnesses (Questions 120-138)

23 JUNE 2004


  Q120 Mr Turner: Of the HEFCE board?

  Sir Howard Newby: Of HEFCE with our other partners at the time, by which I mean the other funding councils and the Standing Committee of Principals. We also consulted Universities UK on that.

  Q121 Mr Turner: There was a shadow board in December 2000 and the holding company was set up subsequently. Who appointed the shadow board?

  Sir Howard Newby: There was a series of interim arrangements put in place to get the whole thing moving and, essentially, we (HEFCE) appointed the interim management committee, but none of those who were in that group, from memory, subsequently became members of either board. Chairman, if I may, I now have the list in front of me. If you would like me to see whether my estimates of the size of these two boards was correct or not? On the holding company there were 12 members of the board, so my initial estimate was reasonably correct, and on the Opco board there were 10 members.

  Q122 Mr Turner: How often did you review the operation of the holding company board?

  Sir Howard Newby: The holding company board, as a condition of grant, was obliged to report to the HEFCE board annually, but we received reports from the holding company more frequently than that—on average they were every six months.

  Q123 Chairman: But that never included the bonus system?

  Sir Howard Newby: No. I have to say, the first I was aware of the existence of that system was when the Opco board resigned following my board's decision.

  Q124 Mr Turner: You insisted, you said, as a condition of grant (presumably, through the holding company board) that best practice be complied with.

  Sir Howard Newby: In terms of company governance, yes.

  Q125 Mr Turner: Do you think it was complied with?

  Sir Howard Newby: The governance structure I would defend. I think it was best practice because what we are talking about is the difference between the structure and the substance of decisions that were made.

  Q126 Mr Turner: Who was responsible for the remuneration of the chairman of Opco?

  Sir Howard Newby: That was the responsibility of the remuneration committee of Opco.

  Q127 Mr Turner: Who was on the remuneration committee of Opco?

  Sir Howard Newby: I think, Chairman, we would have to send you a note on that. They were, essentially, the non-executive directors, as I understand it. We can give you the information, rather than speculate.[12]

  Q128 Mr Turner: Would you have expected that the Secretary of State, on hearing the advice that you gave him in the spring of 2000, in particular, would have sought other advice from officials?

  Sir Howard Newby: I would have expected that, yes, and I am pretty sure he must have done.

  Mr Turner: You, Chairman, described the bonuses as a major scandal.

  Chairman: I said "scandalous".

  Q129 Mr Turner: Scandalous. Where do you think, Sir Howard or Mr Young, the biggest failure lies in this, either the process or the decision making associated with it?

  Sir Howard Newby: With the company or with the bonus scheme?

  Q130 Mr Turner: With the whole story, ending up with today.

  Sir Howard Newby: My personal view is that it is really a marketing failure, and that the markets were not identified and focused upon with sufficient clarity. I think, while the technology platform slipped in terms of the timetable, the slippage was not sufficient to threaten the integrity of the company. We were advised and we are advised now, that the technology platform is an advance on previous platforms but, as we know, in the end, only 900 rather than 5,000-6,000 students registered to use it and I would say that this is a failure of marketing and selling.

  Q131 Mr Turner: Mr Young is nodding.

  Mr Young: I would have started in exactly the same way and would say, finally, that the other piece of the jigsaw, which is in the event the non-availability of private sector finance, is more of what I believe is called an exogenous factor, perhaps.

  Chairman: We do have one more topic to cover, so if you could have a last bite.

  Q132 Mr Turner: My last question is do you know of any other e-learning projects—of those that were mentioned in the Greenwich speech or others that may have happened elsewhere—that have failed because of a lack of customers?

  Sir Howard Newby: Yes, a number of them.

  Q133 Mr Turner: Those are?

  Sir Howard Newby: The one that I think has probably the highest profile would be Fathom, which was the venture set up by the University of Chicago and a number of American universities with the London School of Economics. That closed down again, because of a lack of student numbers. The Western Governors' University, as it was called, in the United States, which is the consortium of public universities in the Western United States, is also no longer operating for somewhat similar reasons. And there are others. Of those that were mentioned in the Greenwich speech those two certainly have struggled because of a lack of student demand, in the end.

  Q134 Chairman: As you have put your finger on the failure to market the product or to know about the market as being central, it is quite interesting to see that Nigel Bannister was director of marketing. Did he get a bonus?

  Sir Howard Newby: I do not know. We can, again, let you have that information.[13]

  Q135 Chairman: Could you find out?

  Sir Howard Newby: I am advised, Chairman, that he did and it was 3% only.

  Chairman: I now want to switch, very briefly, to the future of e-learning because this Committee is minded to look at e-learning. As I said earlier, we would not want this experience to cast a shadow over a very important area of development in education generally.

  Q136 Jonathan Shaw: Whatever, I think, the lessons drawn from the main topic today, as the Chairman said, we want to see e-learning continue in this country. What lessons have been learned? Tell us about the future, Sir Howard.

  Sir Howard Newby: The first lesson I would learn is that the development of e-learning needs to be learner-centred rather than technology driven. We need to know a lot more about the needs of learners and, if I may get a little bit technical here, the form of pedagogy that e-learning involves, which, as we can now begin to see, is quite different to that of more conventional "chalk-and-talk". I have to say, one of the elements of value we have extracted from this unfortunate affair is the research component, which of course still survives, where we now know a lot more as a result of the investment we put in about, if you like, what students are looking for and the kind of form of teaching and learning which we need to present to them through this technology. I say that rather than starting off, if you like, with a technology driven solution, where you start off with a piece of technology and then, based on the view that we know what the student ought to want and if the student does not want it in that form that is the student's problem and not ours—I do not think we could possibly go down that route again. Secondly, I think it really follows on from that, as I said earlier, we now know—perhaps more than anybody did at the time, in fairness—that the future of e-learning lies in what is called "blended" learning; of allying e-learning materials (courseware, in the jargon) to more conventional forms of learning. As I said before, and I think I said Chairman, to this Committee before, there is more to being a student than sitting in front of a computer screen. I think that is another important lesson. So the way forward would be to encourage, facilitate and invest in universities which are developing this blend of courseware allied to their existing materials. That, therefore, puts individual universities or, if you wish, small groups of universities at the forefront of this, rather than having a single e-University attempting to develop, market and sell on behalf of all of the sector. I think that is the third lesson we would learn.

  Q137 Jonathan Shaw: A privileged view?

  Sir Howard Newby: We still would wish to see e-learning, in the form I have described it, as being part of the warp and weft of the entire university sector. In other words, we would wish to see all higher education institutions pushing forward high quality, blended forms of learning, making use of the new technology but not being dominated by the new technology.

  Q138 Jonathan Shaw: What is going to happen to the existing 900 students?

  Sir Howard Newby: Of the 900 students that were present using the platform in September, there are now, on the latest estimate we have, 145 still registered on courses which have not yet concluded. We hope that virtually all of them will have completed their courses or their courseware will be reversioned to another platform to make sure that their interests are catered for before the final wind-down of the e-University which we would anticipate being at the end of July. There may be a very small number—and I am talking of tens, no more than that—of clusters of students on particular courses at particular universities which are totally dependent on the e-University platform. Between now and then, we—and I have to pay tribute to the remaining staff at the e-University—are working very, very, hard indeed to ensure that their interests are properly protected. However, in the end, I would anticipate the number of students who are most at risk is probably no more than 20 or 30.

  Chairman: That moves us seamlessly on to the last thing we want to talk about, which is rather different, but how that links to international student demand.

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