University governance reformed: The transformation of a ‘self-governed’ to a ‘regulated’ university system

With annual tuition fees of up to £9250 for undergraduate degree-level course in England, we understandably hear a lot about financial pressures on students. But there is little discussion of the impacts this increasingly marketised system has on the institutions that provide those courses.

In this essay Michael Shattock explains how those pressures increase the business-like nature of the governing bodies of English tertiary institutions, in marked contrast to the more collegial approach still to be found in Wales, Scotland and Northern Ireland.

This essay was first published by the Higher Education Policy Institute (HEPI) in UK higher education – policy, practice and debate during HEPI’s first 20 years. Michael Shattock is Visiting Professor at the Institute of Education, University College London.

The year 2003 can be seen as starting point in a process of systemic governance change in UK higher education. Universities were emerging from two decades of government- led austerity.

The Dearing report had prompted the introduction of student tuition fees of £1,000 per annum in 1998, but by 2003 further reductions in recurrent grant had neutralised their impact on institutional budgets and a government White Paper, The Future of Higher Education, recommended an increase to a maximum tuition fee of £3,000.

The White Paper also stated that the new regime would enable ‘each institution to choose the mission and the funding streams necessary to support it’. It envisaged a market where ‘the best universities’ would charge up to the maximum but others would adapt their fee levels to their individual aspirations or their perceived market.

In 2010, following the Browne review, a full cost tuition fee replaced a government grant altogether, except for top-ups in some STEM subjects and Medicine, and the cap on institutional student number targets was later withdrawn, allowing individual institutions to expand at will. A full-blown market had thus been created.

The 2011 White Paper describing the philosophical raison d’etre of the new system emphasised the value of competition between institutions and the incentive it gave to improving quality.3 A civil servant conceded that the new funding market owed a great deal to the funding mechanisms created for regulated industries like the utilities.

Institutional governance in a marketised system

The pre-1992 universities’ response to these moves reflected a culture, and governance structures that had been formed around recurrent grants based on fixed student number targets.

Universities had always competed with one another for highly qualified staff and students, although the introduction of differentiated Quality Research (QR) funding since the mid-1980s had sharpened the outcomes of internal resource allocation considerably. Nevertheless, the internal governing arrangements had remained largely unchanged.

The Dearing report of 1997 had recommended a reduction in governing body membership to 24 and a strengthening of the governing body’s strategic role but the essential climate of university governance, particularly in the pre-1992 foundations, still lingered on the cusp of change in 2003.

The introduction of full tuition fee marketisation was to transform the context of university governance in these universities and create a new set of hierarchies and management layers which have had profound impacts on the practice of their governance. The impacts were much less in the post-1992 foundations because, in their past polytechnic history, their funding had mostly depended on open-ended access.

Marketisation brought governing bodies much more into play. The lay members of governing bodies, largely drawn from people with financial, legal or industrial backgrounds, were supposedly much more experienced in strategies applicable in markets than academic communities.

They could contribute little to discussions about research strategy or tactics for addressing research assessment, even though it was of such importance to the bottom line, but now it appeared they had a significant stake in influencing strategy. This very much accorded with pressures from government for a business model where governing bodies acted more like company boards and vice-chancellors like chief executives. (The analogy did not, of course, hold because lay members were non- executives).

In these circumstances, the former polytechnic model of a unicameral governance structure of a board of governors containing only minimal academic representation (in contrast with the pre-1992 universities where the ratio of academic to lay members was roughly one-third) and where the vice- chancellor, as a formally-defined chief executive advised the board unconstrained (legally at least) by an academic board, seemed more appropriate to the times.

This structure contrasted with the greater role of the academic community in the pre-1992 universities, where a bicameral constitution provided shared governance with an academic senate that elected the academic members onto the governing body and that could impose constraints on the actions of vice- chancellors.

Increasingly, the marketisation process has brought the day-to-day practice of institutional governance of pre- and post-1992 universities together: Governing bodies operate less as a critical friend and much more as monitors of institutional performance, occasionally crossing the line between governance and management; boards have become smaller and the proportion of lay to academic members has significantly increased; vice-chancellors are viewed less as academic leaders and more as chief executives; and senates have been overtaken by weekly meetings of vice-chancellors’ executive committees, essentially senior management teams, which report directly through the vice-chancellor to the governing body.

The growing regulatory environment

This transition has been reinforced in England by government influence through the Higher Education Funding Council for England (HEFCE) and then the Office for Students (OfS).

When constructing the regulations to define the powers of the OfS, it was not the universities that were consulted but the Competition and Markets Authority (CMA), the National Audit Office (NAO) and the Prudential Regulations Authority of the Bank of England. The OfS was, in the Minister’s words, to be ‘a classic market regulator’.

Not content with measuring institutional academic performance through the heavyweight exercises of the Research Excellence Framework (REF) and the Teaching Excellence Framework (TEF), the latter offering as competitive incentives Gold, Silver and Bronze ratings, the OfS also required an interlocking set of financial statements, a value- for-money report, an annual sustainability assessment, a Transparent Approach to Costing (TRAC) report and an updated five-year financial forecast, all of which required the active approval of the governing body.

In 2017, HEFCE added to this by demanding an Annual Quality Assessment Assurance Statement which required governing body assurance in the following terms:

The governing body has received and discussed a report and accompanying action plan relating to the continuous improvement of the student academic experience and student outcomes.

and:

That standards of awards for which we are responsible have been appropriately set and maintained.

These requirements, in addition to creating bureaucratic overload, extended the role of governing bodies – particularly in the latter instance – where they clearly threatened to cross the line separating lay governance from professional academic responsibilities.

In some universities, this prompted governing body members to seek attendance at academic boards to satisfy themselves about the exercise of quality assurance procedures. The burdens on lay governors raised questions as to whether they should be paid honoraria for their services and the combined impact of these changes has led to concern over the ‘laicisation’ of university.

The impact on internal self-governance

Changes at the top of universities’ governance structures are paralleled below. The sheer size and complexity of running the modern university has led to the growth of powerful vice-chancellors’ executive committees at the expense of the powers of the larger and less business-like senates.

This has had an important impact in reducing the participation of the academic community in the formulation of policy and in decision-taking: academic policy becomes more clearly separate from financial and managerial decision-making.

The days when a university senate, as at the University of Warwick, would vote down a plan to open an overseas campus already approved by its governing body are almost certainly long gone.10 This is reinforced by the almost universal practice of appointing academic officers – provosts, pro-vice-chancellors and deans – from outside the institution instead of either by internal consultation or by election from within.

These external appointees, usually given defined briefs, are answerable to the vice-chancellor who appointed them rather than to organs of the academic community and become key members of the vice-chancellors’ executive committees. They generally do not engage, or at least not very much, in teaching and their roles are interpreted by academics as managerial.

Decision-making becomes more top down, organisational culture becomes more explicitly managerial, internal academic reorganisations become more arbitrary, senior academics become increasingly reluctant to take on departmental headships, student recruitment markets determine academic policy and marketing departments come to play a role in curricula and student selection.

During this time, one of the most obvious signs of success for the university system has been the growth of the international student body. Here the concept of a market was created unwittingly by the decision of the government in 1980 to abandon the provision of subsidised tuition to international students.

Universities that were later critical of the impact of marketisation on the home student market showed no compunction in entering a high-fee international student market. By 2003, the supporting operations had been professionalised, contracts with overseas marketing and recruitment companies signed and the income generated had produced welcome surpluses.

But the downside was the danger, especially in the greatly expanded institutions of the 2020s, that students – both home and international – became viewed as commodities and that consumerism became endemic in relations between the student body and the institutions.

In terms of governance, this has not emerged and relations between student representative bodies and universities – with regular meetings with senior university officers and membership of governing bodies, senates / academic boards, faculties and department / school meetings – have remained stable.

Nevertheless, the instability inherent in a tuition fee driven university budget has put an increased emphasis on finance at all levels: critics argue that the ‘financialisation’ of university decision-making is dominating consideration of academic priorities in teaching and research.

The effect of these changes has been to weaken the cohesiveness of institutions: relations between vice- chancellors and their governing bodies have become less comfortable, as have their relations with university staff in the light of their revealed salary levels. Questions have been asked about the role of governing bodies in this.

Tensions exist over both operational and strategic issues between unelected executive committees and senates / academic boards while at faculty levels externally appointed pro-vice-chancellors and unelected deans hand down decisions from above. A feeling of alienation can be found among academic staff and a loss of a sense of belonging: universities have become managed bureaucracies, not primarily places of teaching and learning.

In particular the emphasis on bureaucratically-applied accountability at all levels, both academic and financial, throughout the system discourages creativity at academic and institutional levels and a reluctance to innovate, unless toward income generation.

Institutional governance across devolved systems

A prime contributor to this regime in England is the added bureaucracy associated with the Office for Students, stimulated in great part by pressures from government itself. Conceived ideologically as a regulator of a marketised higher education system, it has proved invasive and egregiously bureaucratic in its demands on institutions.

Heavily regulated itself, largely to accommodate an ideological push towards an extensive expansion of private provision, which has not in fact taken place, its tone was set by its first chair who announced that the Office would not intervene to ‘prop up’ institutions subject to market failure. It has not yet had to implement this approach but its overload of interventions and data requirements have done much to alter the climate in which institutional governance is carried out.

The OfS, however, is an English device and its remit, though influential, does not extend to the 29 of the 163 UK universities located in the devolved nations. More user-friendly 1992-style Funding Councils were initially retained both in Wales and in Scotland, with Wales deciding latterly to convert to a Tertiary Education Commission.

In both nations the smaller size of the university systems encourages much more intimate and, in the case of Wales, more consensual governance relations with their countries’ governments.

In Scotland, which in 2000 refused to join with the rest of the UK in charging tuition fees, relations have been more robust between Universities Scotland and the SNP Government, including the imposition of legislation to make the chairs of university governing bodies elective positions and to add trades unions and further student representation to the membership – provisions that ran entirely counter to the underlying instincts of government in England.

In Northern Ireland, the lack of a power-sharing administration has frozen political advance and left open the decision on the 2010 tuition fee levels introduced in England and substantively in Wales.

Nevertheless, evidence suggests that in Northern Ireland, as in Wales and Scotland, institutional governance is conducted on a more collegial basis than in England and universities may be more agreeable places in which to work and study.

In England, an increasingly entrenched system of control is at variance with calls for innovation in teaching and research, the core business of the institutions.

By Michael Shattock