The power of HEFCE

The PAC report also deserves a post on the power of HEFCE. HEFCE has really only one power: the power to place conditions on grants. It’s clear enough that this power varies in proportion both to the size of the grants and to their relative importance to the recipients. When you hand out grants worth £7 or £8 billion, which are 30-50% of the turnover of the universities that receive them, then the power to place conditions on those grants is a Hulk-like superpower.

As an example of this, consider Equivalent Level Qualifications (ELQs). The Secretary of State is forbidden by law from setting conditions on grants relating to students’ qualifications on entry yet through ELQ policy he instructed HEFCE to do so and it did so, and institutions put up with it. It needs a very strong incentive indeed to challenge your regulator when your regulator is also your principal funder.

Similarly the cap on student numbers is nothing more nor less than a condition of HEFCE grant.

When HEFCE does decide to punish an institution for infringing a condition of grant, it can currently do so merely by adjusting future grant flows. Even when funding is reclaimed the net flow of funds is still from HEFCE to the institution. There is no need for a legal enforcement process because an immediate, painful penalty can be implemented by simple administrative action. And in better days, compliant institutions could be rewarded with Additional Student Numbers or Strategic Development Funding.

The White Paper is going to have to give HEFCE (or some other body) explicit powers to regulate institutions – both the current HEFCE-funded set and also, perhaps, the private providers in receipt of student loan support. This will seem like a large increase in HEFCE’s (or whoever else’s) powers, but in practice it is likely to involve a large decrease  both because the power of discretion will be much less and because the costs of failure to comply will be much lower. 

For professional planners this is both good and bad news. Bad, because when HEFCE becomes less powerful our detailed knowledge of how to manage its requirements will become less valuable for our institutions. Good, because when HEFCE becomes less powerful it will have to respond by taking fewer risks and doing more explicit regulation. So our jobs will be safe, even if our VCs value us less.