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Baroness Deech: My Lords, I am pleased to have this first opportunity to express my gratitude to your Lordships for the kindness and courtesy of my reception here in my first few weeks, particularly to the Officers and Attendants of this House. This kind reception has deepened my consciousness of the privilege I have in addressing this House on higher education. I was educated in an age when the staff of universities were free to take a chance on someone whose A-levels were not so good; when they were not afraid to criticise and offer kind help, and had all the time in the world for me. I owe my position to that education—the education which I received and, in my turn, have given and administered, and now assess in my position as the first independent adjudicator for higher education. I hope that no one will say that that adds to the regulatory burden, because I have replaced the visitor.

The noble Lord, Lord Norton of Louth, has drawn attention to the impact of bureaucracy, not whether it has an impact. That is incontrovertible: it is adverse and there has been an overreaction to it. There are two
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sources for this malaise. One is the lack of trust in higher education institutions and their lecturers, and the other is the legal and regulatory regime into which the courts have been brought. Some of the laws are specific to universities; others have had an accidental impact on them. The upshot is that professors are no longer trusted to make policy. The ethos of a lifetime of immersion in the profession seems to count for very little. Some £16 billion a year is spent on universities. Of course, taxpayers, students and parents expect a check that that is well spent. Only half of it, however, is public money. The check should never be so deep that it is at the expense of the young people about whom this is the concern.

Less than half the income of some universities is actually public, but they are all held 100 per cent accountable. The noble Lord, Lord Norton, drew attention to the overlapping and parallel jurisdictions of the many quangos—and their acronyms that we have become used to—to which I might add, in recent years, the Office for Fair Access, the Adult Learning Inspectorate, the TTA, the Higher Education Statistics Agency, the research councils, and so on. The cost was indeed calculated, for HEFCE, as some £250 million in 2000. It has dropped a little, as was referred to by the noble Lord, Lord Norton of Louth. Even now, however, the cost of regulation is enough to fund at least one university and many bursaries. It will cut into that extra tuition fee income, which the universities are going to get.

The lack of trust is highly symptomatic of what is going on. In her esteemed 2002 Reith lectures, the noble Baroness, Lady O'Neill of Bengarve, drew attention to the fact that every day the public is told of examples of untrustworthiness—of politicians, in schools, in hospitals and in companies. This has called forth an ever-greater response of more accountability, more human rights, and more transparency. Yet, in the end, as the noble Baroness said, you need trust, not a culture of suspicion. Education and its qualities could be destroyed. Professors are more examined against than examining. We seek never to uproot those institutions, even when they are very new, to check that they are meeting their targets. We end up stunting their growth and diverting them from their true purpose.

The second problem is the raft of laws—some, as I said, unintended in their impact on universities. For example, there have been four major education Acts in the past few years, as well as the Freedom of Information Act, the Children Act, the Special Educational Needs and Disability Act, the Race Relations (Amendment) Act and the Higher Education Act 2004.

Your Lordships might single out the overreaction to the Data Protection Act. In my old university, each and every student is asked whether he or she will consent to having his or her name published on the list of degree results. That leads to flawed statistics because some of them refuse. That will make fraud a little easier.
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The Data Protection Act has also affected the quality of references because candidates and parents know that those references can be accessed by candidates once they are accepted. I imagine that even the most responsible of teachers and writers of references would fear the result if a parent were to see that the prediction of A-levels was anything less than perfect. Yet never more have we needed honest references in this age of proliferation of high grades at A-level.

It is taken as axiomatic that higher education has to do with higher earning power in a lifetime. I beg to differ. I am unhappy that students see themselves as consumers with rights and contracts. At the heart of regulation lies the notion that education can be delivered—a word I dislike. Education is not a neat package that is measured, delivered and quantified. It is a participatory and continuing process. It is endless with no certainty of outcome. Good teaching is essential but how far will it get without the intelligent reception, participation and contribution of the student?

Education—especially higher education—has often been likened to the package holiday and the prospectus. Students choose their university on the promise of a happy experience and wonderful buildings. When they get there they may find that the facilities are less than perfect and they have a grumble. That is the wrong analogy. It is more like the contract that you or I might make at the health club, if your Lordships join such things. The trainer and facilities are provided, but there is no guarantee that your Lordships will become fit and healthy, unless you go there every day making the maximum effort. In other words, education is not really quantifiable in the sense assumed by regulation.

Indeed, it goes deeper than that. There is no consensus in modern Britain about what higher education is for and what its benefits are. It is not a question of simply training students to use skills in future employment. It involves those unquantifiable things, such as induction into citizenship, leadership and employment, instilling ambition and motivation, the ability to savour work and leisure, independence of thought, intelligence and intelligibility, having a stake in the future and control over one's destiny, and an intelligent interest in politics. Those things cannot be precisely measured and regulated. They are inherently unquantifiable; they are a moving target.

British higher education has been a huge success internationally and in our economic situation. We now educate 43 per cent of school leavers compared with a few years ago. The outreach work carried out by universities is unsurpassed, as is their professional ethos. I call on Ministers to express their confidence in this magnificent story. That would do more to encourage non-traditional candidates to apply—far more than expressions of need for regulation, league tables and laws. Candidates need to hear expressed the nation's supreme confidence in its higher education institutions.
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I hope that your Lordships will express support for the continuation of a Higher Education Regulation Review Group under Dame Patricia Hodgson in the hope that it will prune back some of the laws and free up the basic principles, to ensure that honesty and fearless constructive criticism can prevail for the benefit of the students about whom this debate is taking place.

12.10 pm

Lord Howarth of Newport : My Lords, it is my privilege to welcome the noble Baroness, Lady Deech, to our debates and to congratulate her on her maiden speech. I was fortunate enough to hear her address the All-Party University Group a year or two ago, when she was elegant, funny and wise. I said to myself that if she made half as good a speech today as she did then, we were in for a treat. We have had a treat and we look forward to many more.

The vice-chancellor of Cambridge pointed out in a recent address that the influence of government stretches back to the very beginnings of that university, almost 800 years ago. In the annual commemoration of the university's benefactors, she said:

If there has been anything like a golden age of university autonomy, I suppose it was in the 1960s and 1970s, as the noble Baroness, Lady Deech, suggested, when Westminster and Whitehall were willing to fund adequate salaries, rather generous levels of student support and the expansion of the university system on a kind of welfare state model, but did not otherwise interfere or ask much, and allowed universities to be what academics still dream about: independent creators and disseminators of knowledge and ideas.

Those two decades were exceptional in the history of British universities. Why have things changed so much? Why, in particular, have universities become so beset by bureaucracy? The scale of the Government's engagement with universities has grown alongside the enormous increase in the size of the sector, and the Government's financial outlay. In 1981 there were still only 46 degree-granting institutions; today there are 132 higher education institutions funded by HEFCE and 170 further education colleges providing higher education. The Government's outlay on higher education in England is more than £7.5 billion. The Government certainly have a duty to seek value for all this money.

We happen, probably unfortunately, to live in a time when audit has become a cult. A university is audited by internal and external auditors; if it is regarded as a "low-risk" institution, it will also be audited every five years by HEFCE. This audit, it is fair to note, is the new, improved "HEFCE-lite" version—an audit of procedures only, under HEFCE's new audit code of practice. If it is an institution at financial risk, it will be audited a lot more often and more thoroughly, which must be right. Audit by HEFCE is far from being the end of the story. A university medical school can expect to be audited by the Quality Assurance Agency, the NHS and assorted royal colleges, each
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with different procedures. A university education department will be audited separately by the QAA and Ofsted. If a university offers higher education in a further education college it will be audited by the QAA, Ofsted and the Adult Learning Inspectorate. Why, I would like to ask my noble friend the Minister, could the QAA not do the lot?

The Government want a great many different things from universities. They want universities to educate, of course, to develop the potential of individual students; to remedy the effects of class division; to socialise young people and instil civic values; to promote technology transfer, economic productivity and regional development; to produce a trained and qualified workforce, fit to compete in a global economy; and to carry out research of foreseeable social and economic utility, as well as basic research. The Prime Minister has reportedly suggested that universities will be to the 21st century what coalmines were to the 19th—and nobody now suggests that they should not have been regulated. There is also an old-fashioned view, which happily the Government do not disown, that universities should preserve, develop and transmit our culture.

Problems arise; these manifold purposes for universities are in tension. Moreover, since universities are, in principle, autonomous institutions, the state has no power to plan their activities so the state has, by fits and starts, developed a tortuous system of carrots and sticks to get the universities to do the things it wants them to do. When the Lambert Review of Business-University Collaboration was published in 2003, it reported that HEFCE was running between 40 and 50 separate funding initiatives on behalf of various government departments.

Lambert criticised the constant layering of new initiatives on top of old, often unco-ordinated across government departments and agencies. He also found that the financial margins of universities were so tight that they had no option but to chase every available pound of funding, but that with each new funding stream came new regulatory burdens.

Are universities private bodies, public bodies or put-upon hybrids? They are regulated as though they are public bodies. An instance is the application of freedom of information legislation to them, necessitating the hiring of additional archivists and administrators. FoI legislation does not apply to housing associations, which might equally be regarded as public bodies. Why, therefore, does it apply to universities? The European Union regards universities as emanations of the state, so that, for example, under the procurement directive, if a university wants to appoint internal auditors, it must advertise Europe-wide, I am told, to obtain five quotes. The cost to a British university of protecting intellectual property in Europe is four or five times that in America.

Our universities are also regulated as private bodies. New accounting standards that apply to plcs also apply to universities. Universities in Britain are batted between governmental dirigisme and market pressures. The Government impel universities towards
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a market model in some respects, but not in others. The 2003 White Paper spoke approvingly of HEFCE insisting that certain elements of annual grants should be tied to human resources strategies that reward good performance. The White Paper went on to say, somewhat brutally:

This would seem to mean more procedures to measure what academics do, leading to wider differentials in pay. Whether this will prove divisive and demoralising, or rallying and invigorating, time will tell. On the other hand, the Government have denied universities the right to test the market in fees.

It is striking that there is little evidence that the growth of public regulation has fortified the sense of public mission within universities. My noble friend Lord Giddens touched upon this. British universities seem increasingly to espouse an atomised concept of the public interest. Students are now largely perceived, both by themselves and by universities, as customers of a service industry.

It is not only the DfES and its surrogates that regulate universities; the Department of Trade and Industry, via the Office of Science and Technology and the research councils, the Department of Health, and the Office of the Deputy Prime Minister via the regional development agencies all provide funds, purchase services, regulate and otherwise make claims on universities. Consultation documents from a plethora of departments, including the Treasury, rained down on universities in 2003 and 2004. The Government do not appear yet to have procedures to regulate their own regulatory incontinence.

The problem is recognised by the DfES and HEFCE, which have committed themselves to minimising accountability burdens. The Orwellian-sounding Better Regulation Task Force made a useful study that led, among other benefits, to a less aggressive and burdensome modus operandi by the QAA. The Lambert review made sensible recommendations for differential and more proportionate regulation based upon risk assessment, so that not all institutions should be subjected to the regulatory treatment judged appropriate for the worst, and HEFCE has been pursuing this course. Following the débâcle of the last research assessment exercise, when the Government failed to fund the implications of the vast process that universities had undergone, the Roberts report put forward recommendations for a less labyrinthine and exhausting procedure in future RAEs. In recent years, letters of guidance from the Secretary of State to HEFCE have been less detailed and prescriptive. HEFCE has converted a number of bidding programmes into formula funding. Sir Martin Harris has allayed many fears and principled objections by forswearing bureaucracy in the new Office of Fair Access. HEFCE commissioned studies of the bureaucratic burden by PA Consulting in 2000 and 2004, as the noble Lord, Lord Norton, reminded us. PA Consulting found that in those four years there had been a reduction of 25 per cent in the
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overall costs of meeting accountability demands on institutions. It is fair to acknowledge that that is substantial progress.

The recently established Higher Education Regulation Review Group (HERRG) has given added momentum to the drive to reduce bureaucracy. But bureaucracy fights back hydra-headed. The cost of accountability was found by PA Consulting in 2004, as the noble Lord reminded us, still to be £211 million, equivalent to the cost of running two large universities. Just as HEFCE has agreed to five-year audits and is consolidating its dialogue with institutions into a single annual, regulatory conversation, the OST demands that institutions produce 10-year plans on finance, capital, human resources and maintenance of estates. The new Higher Education Innovation Fund is to be allocated not on a formula but, at the OST's insistence, on a competitive bidding basis which PA Consulting finds entails costs that are two and a half times higher than other competitive funding schemes.

What is to be done about the Higher Education Statistics Agency (HESA)? I declare an interest, or at least I ask for a previous offence to be taken into account, having had responsibility for the 1991 White Paper which proposed that arrangements should be made to generate a greater coherence in statistics. We thought that was an innocent ambition. We now have every university putting in data returns for every member of staff once a year. That does not have to be done by schools, the NHS, the Civil Service or the armed services. HESA's Destination of Leavers from Higher Education Survey surveys every full-time leaving student and every part-time leaving student. Can one not get perfectly acceptable data by surveying, say, one in 10? Departments and agencies seemed to requisition statistics through HESA at whim. The Information Management Task Group for higher education has a lot more work to do. No one appears to be in charge of HESA. I think it is owned formally by Universities UK, but why do the vice-chancellors, through Universities UK, not insist on restraint and good sense?

It is not only the regulators who are at fault; many of the bureaucratic torments of academia are self-inflicted. The recodified statutes and congregation regulations of the University of Oxford add up to 175 pages in the Oxford University Gazette, two and a half of which recite the vice-chancellor's regulations on academic dress. The rearguard action continues against the new vice-chancellor's proposals to bring the governance of Oxford University into line with good practice across the globe. The RAE causes little to change, but the system, which costs £7.75 million annualised over six years, continues because academics, and not just those in the universities that always win, want it to continue.

Universities cope with regulation and as the noble Lord, Lord Giddens, suggested, some regulation has improved some performance. Many academics are bureaucratic adepts. I once attended a local branch meeting of the National Federation of Self-Employed and a man explained to me that his way of dealing with the Government was to stamp each form that arrived
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"not understood" and "return to sender". That alibi is not available to academics who are, by definition, clever people.

Vice-chancellors, pro-vice-chancellors, registrars and human resources directors can handle the paperwork, but at a cost. Expensive new posts are created in institutions that are under-funded to respond to external accountability demands. Where, as all too often, academics are not sheltered from those pressures, a toll must be taken of the quality of teaching and research and the academic profession becomes less attractive to the recruits that it needs. We still have wonderful universities, but they are defying gravity.

How can we go further in remedying the problem of bureaucracy? I suggest universities need to demonstrate that their corporate governance and their information and financial control systems really are good to remove the excuse for stifling oversight. Universities should not protest indiscriminately, for example about strengthening procedures for risk management which should lead to a lightening of overall regulation, or about the move to full economic costing, which should result in their being paid something more like the true costs of research commissioned from them.

As the noble Baroness, Lady Deech, said, government needs to be more willing to trust the universities. In his retiring oration as vice-chancellor of Oxford University in 2004, Sir Colin Lucas remarked, sadly, that government regulation has been articulated so visibly in a spirit of distrust of the universities. The Government must find ways to rationalise, co-ordinate and moderate their impositions on universities. There should be impact assessments of all proposed new regulations—individually and in combination. Their authors should be identified and rogue departments should be corralled. Somewhere in government there should be a power to stop new regulations in their tracks. The HERRG or some such body should be maintained on a permanent basis—there is some doubt about whether that is to be so—to carry out sceptical invigilation of regulation.

Bureaucracy will always be with us, but the Government should make the price that it levies more worth paying by making policy and regulation more stable, funding universities more generously and allowing them more freedom.

12.25 pm

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