Office of Students fails reassure over UK University/HE sector finances & corporate governance

SINCE its relatively recent foundation, the UK Higher Education regulator the Office of Students (OfS) - and its eponymous Chair Sir Michael Barber - have made and given good headlines about the Higher Education sector in Britain. There is a wide choice of governance problems to address from strategic decision-making to Vice-Chancellor pay and remuneration packages via degree grade inflation as well as the traditional ineffectiveness of University Councils. Arguably, to date the OfS tyre has most notably hit the road - in a time of institutional financial precarity and increasingly cut-throat competition for the currently diminishing cohort of degree level students amongst UK educational suppliers - with its register of approved educational providers. Those OfS approved institutions now number an impressive 387. This OfS register is a development that simultaneously gets billed as fostering competition while providing greater surety (about both the robustness of institutional governance and current comparative financial positions) through the transparency it offers.


Despite this progress and the existence of the OfS register, I continue to have anxieties about the state of British University corporate governance. But also about apparent Office of Students mission creep as suggested by recent reports of OfS proposals that threaten to lower the fees of approved providers and also to levy higher fines (up to £500,000) upon education providers who fail to widen participation to poorer students.


While few doubt either the ambition or the need for wider access and greater student diversity, this OfS carrot and stick approach appears to be another classic example of government and regulators seeking to attack symptoms rather than the root cause of the issue: which is – and remains - the governance of universities and the unwieldy size and ineffectual inadequacy of the University Councils. Worse still, though a small number of for profit suppliers have publicly failed to gain acceptance onto the OfS register, laudable reminders about the need for wider access isn’t going to get anywhere while financial precariousness and – putting it politely - ineffective university council strategic/operational decision-making continues to hampers the higher education sector generally.


Sadly, there is even methodological inconsistency at the heart of OfS registrations. Although the mood music conducted by Sir Michael Barber has loudly crescendoed in the fanfare of statements about NOT bailing out financially failing educational institutions, the brute fact that many university balance sheets and revenues streams still teeter on the brink of disaster surely somewhat calls into some question the surety of the kitemark offered by the current OfS register? Especially in an environment where so many approved educational providers still remain a financial risk as well as continue to struggle with their institutional governance and decision-making in the context of this instability in their financial positions. In its present form, the OfS register appears merely to give us a snapshot of educational institutions with finances about to possibly crash rather than offering any safety net or prompting change in their approach to corporate governance.


Though always open to credible thought leadership balloons floating free of the launch pad, I suggest that a healthy dose of independence amongst non-executive directors serving upon University Councils could quickly help ameliorate the wide variety of poor governance matters afflicting the UK Higher Education sector, enable better decision-making and also accomplish more far quicker than greater OfS supervision, headline seeking interventions and accompanying government regulation. Currently ineffective University Councils - according to the methodology outlined in my book The Independent Director - could move forwards immediately by addressing various obvious but necessary corporate governance best practice standard metrics including:


  • Board size, composition and diversity
  • The amount of time directors commit to their role
  • Recruitment, selection, induction, remuneration and evaluation of directors
  • Board and director behaviour



Though five education providers have been refused OfS registration - ABI College Limited, Newham College, Spurgeon’s College, The Bloomsbury Institute Limited, and Waltham Forest College – the OfS kitemark of accreditation currently given to the other 387 is no guarantee of their financial survival or probity of their corporate good governance.


Image credit: ucas