Office for Students to be allowed to suspend rules while universities could face bailouts
Sweeping changes that would alter the Office for Students’ powers are being considered as the Coronavirus Bill goes through the final stages in parliament.
Clauses in the Coronavirus Bill, expected to pass through its final stages in the House of Lords by tonight (25 March), would allow the OfS to “disregard its conditions” of registration for providers and allow the government to temporarily close universities—or force them to stay open—if necessary.
In an impact assessment of the Coronavirus Bill, the government said that while the OfS currently “does have some discretion in the application of its conditions of registration”, under the Higher Education and Research Act 2017, the regulator’s ability to ignore its own conditions is “unclear and untested”.
“Hence we consider it appropriate to take specific power to enable the OfS to disregard its conditions in these circumstances,” the government wrote. At the moment, the OfS’s conditions for registration include ensuring quality for students, protecting students’ interests and proving financial sustainability. If universities are not registered with the OfS, their students cannot apply for public loans through the Student Loans Company.
The government has also admitted that universities could face the “financial detriment” from closures, such as loss of commercial income, money from student accommodation and claims for compensation or refunds from students.
However, the government says force majeure, a legal cover for unforseen circumstances, would be enough to prevent universities being sued for “reneging on their consumer protection (and/or contractual) obligations in the event of course closure”. If the government decided to prop up struggling universities, it could pay universities registered with the OfS under the “approved fee cap” category (£9,250) through existing powers. But this would not apply to institutions approved to charge a maximum of £6,000 tuition fees or any not registered with the OfS.
Smita Jamdar, partner and head of education at law firm Shakespeare Martineau, said the Bill raises “a number of issues” around institutional autonomy. “Being required to stay open despite considering it not to be advisable based on the specific circumstances of the institution could be very challenging to the whole concept of autonomy,” she said.
Jamdar also said that a university must have the right contractual provisions to ensure it “doesn’t get exposed to liability” while following government orders.
“Contracts with staff, students, suppliers and so on would need to be reviewed to ensure that a temporary closure order was a proper force majeure event,” Jamdar said. Insurance policies should be reviewed “if institutions are required to continue when they don’t consider it safe to continue”, she added.
Legislation usually takes months to pass through parliament, but the first reading of the Coronavirus Bill took place in the House of Commons on 24 March. As we go to print, the bill is at the committee stage in the House of Lords, with three stages to go until it receives royal assent and becomes law.