Higher Education and Research Act 2017 (Further Implementation etc.) Regulations 2019

Motion to Approve

Moved by

That the draft Regulations laid before the House on 29 April be approved.

My Lords, it is a pleasure to speak to these regulations. I welcome the opportunity to debate them; they are the final major set related to the implementation of the higher education elements of the Higher Education and Research Act 2017, otherwise known as HERA.

The main purpose of the regulations is to make consequential amendments to existing legislation, a standard procedure after any primary legislation has passed. The majority of these amendments replace references to now defunct bodies or repealed legislation. They also reflect the diversification of higher education providers and the wide range of providers registered with and regulated by the OfS.

Further, they reflect the movement from a funding-based system with quasi-regulatory elements to a formal regulatory system based on registration. Some of the cross-references in other enactments relate to the quasi-regulation of higher education institutions by HEFCE, and others to the receipt of or eligibility for funding; the amendments reflect this nuance to preserve the original intention of such provisions.

Let me take a step back. As I mentioned during the debate on 20 May on the Higher Education (Monetary Penalties and Refusal to Renew an Access and Participation Plan) (England) Regulations 2019, we have made great progress since HERA came into law. Noble Lords may recall that HERA abolished the Higher Education Funding Council for England, otherwise known as HEFCE, and the director of the Office for Fair Access, more commonly known as OFFA. As mentioned earlier, a new regulator—the Office for Students, or the OfS—was created to oversee and monitor activities, including in relation to fair access and the participation of English HE providers registered with it.

The OfS currently regulates registered higher education providers under transitional arrangements; the new regulatory regime will be fully operational from August this year. In addition to retaining existing HEFCE and OFFA functions for the transitional period, the OfS has gradually begun to exercise its functions under HERA, and so has greater responsibility for a wide scope of higher education providers—not just universities, but some further education colleges, sixth-form colleges and alternative providers.

I turn now to some of the more detailed provisions under these regulations, the first of which is university title. The OfS assumed responsibility for determining applications for university title on 1 April this year. Before that date, applications were determined by the Privy Council. Transitional regulations were made in November last year to allow applications made before 31 March to be dealt with under the old system. Further provision has been made in relation to university title in the regulations debated today to ensure that the consequential amendments they contain do not disturb applications already in process under the old regime.

These regulations also enable registered HE providers that are charities to become exempt from registration with and direct regulation by the Charity Commission. If a provider chooses to take advantage of this opportunity, the OfS will act as principal regulator for that provider, enabling it to avoid duplicative regulatory returns to both the Charity Commission and the OfS. Formerly, HEFCE was principal regulator for the higher education institutions it funded. A registered charity that does not wish to become exempt will not become exempt against its will; a provider must take action to obtain the exemption. This amendment is intended to create greater flexibility and choice for charitable bodies that are registered higher education providers.

I am sure your Lordships will be pleased to hear that these regulations make the Regulators’ Code applicable to all the OfS’s regulatory functions under Section 24 of the Legislative and Regulatory Reform Act 2006, fulfilling the commitment made during the passage of HERA.

I want briefly to address a matter on which we have offered reassurances to the Secondary Legislation Scrutiny Committee, and that I know is of interest to your Lordships: data or information sharing. These regulations assist the OfS in its access and participation activities by enabling schools, bodies that offer alternative provision and the Secretary of State to share relevant key information with the OfS and registered higher education providers. However, let me reassure your Lordships that these regulations do not open up additional access to data. The information being shared—which is necessary to support OfS functions—has not changed, only the bodies between which that data might be shared. That is to say that HEFCE, a body which no longer exists, is replaced by the OfS, and HEFCE-funded providers are replaced by OfS-registered providers.

Let me now turn to why these regulations are so important. In summary, they create the opportunity for more charitable bodies to become exempt from direct regulation by the Charity Commission; ensure that key enactments continue to work in the real world, thereby minimising the risk of disruption; and put OfS compliance with the Regulators’ Code on a statutory footing.

I have already highlighted the wide-ranging nature of the legislation affected by these amendments. If they are not approved, it could have serious negative consequences on both students and the sector. Among other things, it could result in the loss of automatic pension eligibility for the teachers’ pension scheme for new teachers at certain higher education institutions; confusion over whether certain providers have to charge VAT on student fees, and consequential budgetary implications; the Office for Students not being subject to the public sector equality duty, as laid out in the Equalities Act 2010; certain charities being unexpectedly faced with a change to their accounting rules, resulting in confusion and more paperwork, which again will potentially affect students and their overall experience; and, finally, students being denied their full entitlement to state benefits because of outdated references to defunct legislation.

This Government firmly believe that the higher education regulatory system must be one that can protect effectively the interests of students in the short, medium and long term. That is why I hope your Lordships agree that these regulations are important to students and the sector, and I hope noble Lords will support them. I beg to move.

My Lords, this is a relatively uncontroversial SI that goes through the entire statute book, as the Minister set out, working out what consequential amendments need to be made as a result of the Higher Education Act 2017.

We have no issue with the changes that cross out references to HEFCE, individual research councils and definitions of a university in previous legislation, replacing them with references to the OfS, UKRI and the definitions set out in the 2017 Act, nor indeed with those that make the OfS an official government regulator, subject to the Regulators’ Code or those that allow a university’s charitable status to be regulated by the OfS rather than by the Charity Commission.

The Minister talked about data sharing and I have a question about that which has caused some concern. There has been confirmation from the HESA that it distributes information on sexual orientation and religion, on a named basis, to the OfS and the Department for Education. This information has been provided by students as part of equality monitoring, but surely such a named database of religion or sexual orientation should not sit anywhere at state level. What plans are there to change this and for how many individuals does the department hold that information?

Parts on the pension scheme have also raised concerns. They ensure that university staff, mainly from post-1992 universities, remain eligible for the teachers’ pension scheme and the local government pension scheme. In September 2018, the Treasury recommended that employer contributions to the teachers’ pension scheme needed to increase from 16.48% to 23.6% of an individual’s salary to meet the expected future costs of paying pensions. The Government have recommended that the Treasury should pay an extra £830 million to schools to cover their additional pension contributions, and £80 million for colleges and other publicly funded training organisations.

My Lords, many noble Lords will remember that, as the Minister reminded us, the Higher Education and Research Act 2017 established a regulator with unparalleled and unprecedented powers. One of those powers is effectively to set its own budget by deciding what to charge universities for its services and activities. During the debates in this House, noble Lords pressed very hard for the Government to ensure that the Office for Students was subject to the Regulators’ Code, so I am delighted to see that it is being placed on a statutory basis. How, though, is the Office for Students expected to demonstrate that it is behaving in accordance with the Regulators’ Code? What sort of information does it provide to the Government on that basis and what sort of information does it provide to the public on that basis?

My Lords, I guess the Minister is really asking the House to accept that these regulations are tidying-up amendments. I am grateful to him for his explanation of this statutory instrument, which, as he said, is a consequence of HERA 2017. The majority of the amendments are consequential and replace references to now-defunct bodies or repealed legislation. They include HEFCE and the Office for Fair Access, or OFFA.

Looking at registration under these regulations, under the Act a new regulator was created, the Office for Students, to oversee and monitor the activities, including in relation to fair access and participation, of English higher education providers that register with it. The OfS currently regulates registered HE providers under transitional arrangements which were due to end on 31 July. Will the Minister advise the House whether the new regulatory regime is on schedule to be fully operational by then? In addition to retaining existing HEFCE and OFFA functions for the transitional period, the OfS has gradually begun to exercise its functions under the Act, including the power to create a new single register of higher education providers. OfS registration affects the HE provision that institutions can provide, specifically access to public grant funding, the fee levels they can charge and the levels of support students can receive. Indeed, institutions that are not registered cannot access OfS or UK Research and Innovation public grant funding or charge above the basic fee amount.

I understand that since January 2018 the OfS has registered more than 300 higher education providers. However, last month, it was reported that 19 colleges offering higher education courses were still waiting to be registered with the OfS, only months from a new term when student recruitment should be well under way. Against this backdrop, Student Finance England was advising that to ensure funding is received in time for courses commencing in autumn 2019, new students should complete and submit their applications by 24 May. That seems a rather strange process and period of delay for making the system work. Does the Minister agree that the fact that it has taken almost a year to complete this process suggests that there might be room for some improvement?

The Minister described the changes to the way in which university title would be settled and explained that the OfS assumed responsibility for this from 1 April. I thought I heard him confirm, essentially, that the consequential amendments in this instrument do not affect applications already in process under the old regime—that is, until 31 March. When he comes to reply, perhaps he could clarify that.

The regulations also make the Regulators’ Code applicable to all the regulatory functions of the OfS. That is most welcome and something that Opposition Front-Benchers and stakeholders across the House asked for during the passage of the Higher Education and Research Bill in 2017.

Turning to the Charities Act implications, we think that the regulations, quite properly, enable registered HE providers that are charities to become exempt from registration with, and direct regulation by, the Charity Commission. This should enable relevant HE providers to avoid duplicative regulatory returns to both the Charity Commission and the OfS. However, can the Minister advise how this policy will be communicated to HE providers that are charities to ensure that they are aware that they have a choice? That seems to be the implication of the regulations and we would like clarification on that important point.