Helping hand if you need it, not a stranglehold

Giving every institution a 'risk profile' enables Hefce to lighten the bureaucratic burden, says David Young.

The board of the Higher Education Funding Council for England is committed to reducing the burden of regulation and bureaucracy on universities and colleges in England.

A report by PA Consulting shows that the costs of accountability have fallen 25 per cent over the past four years, but we at Hefce have more to do and are planning measures to accelerate this trend.

Hefce's long-term monitoring of higher education institutions and close association with them will enable us to introduce a lighter touch in our regulation requirements. We can achieve this because we have developed a detailed picture of the position and prospects of institutions. This has led to the creation of an institutional risk framework that provides us with the evidence to assess the risk profile of every institution we fund.

We plan to share this material more formally in the interests of transparency.

Accountability for the £6 billion of taxpayers' money we allocate each year cannot be taken lightly. Our detailed knowledge of institutions, however, tells us that the great majority have an excellent record for the stewardship of public funds and adapting to changing circumstances and challenges.

Through our institutional risk framework and our increasing reliance on institutions' internal processes of accountability and control, we have already reduced the number of audits for most institutions to one every five years.

We will also rely on the widespread adoption of risk management and on the new governance code of practice drawn up by the Committee of University Chairmen. Our changing accountability regime will make any intervention proportionate to risk.

We firmly expect the great majority of institutions to thrive with a lighter touch and this will enable us to concentrate our limited resources on the small number of institutions that are judged to be at serious risk.

The time has come to share formally with institutions our risk assessments.

We are writing to a small number setting out concerns and what we feel their managements and governors should be doing.

These assessments are based on factors including student recruitment and retention, finances, audit, estates, human-resource strategies and governance issues. A letter will be sent in confidence to the head of the institution and the chair of the governing body, although we would expect them to share information with other members of the governing body.

Notification of our risk assessment will trigger actions under our support strategy. These are the range of measures we have used, or could use, to intervene when institutions are in difficulty. They will also feature in this summer's consultation on the accountability process. We might require information, strategies or audit work from institutions or consultancies, interim management measures or even appointing observers to governors'

meetings as conditions of grant.

These measures will make the role that the council has performed in supporting institutions at exceptional risk more visible and open. This has never been offered on the basis of bailing them out, but rather helping governors and managers to deal more effectively with the challenges they face - whether caused, for example, by underrecruitment of students, an ambitious estates programme or governance problems.

Some have argued that our intervention has been too effective and has disguised underfunding of higher education. Would it not be better to let one or two institutions go to the wall? But institutions in this high-risk category do change. In the past, all have eventually moved to a lower-risk category; some have merged and others have taken often painful remedial action.

To let an institution fail would harm the interests of students and the local economies and communities served by the institution. Whether we should maintain this approach is something we will discuss at this year's Hefce conference.

In this summer's consultation on the accountability process, we will propose more ways of streamlining our transactions by abolishing some requirements and moving others into a single transaction.

Our new approach of making accountability proportionate to risk will significantly benefit the whole sector. For those in difficulty, it will operate as a lever for change. But for the majority, it will strengthen their autonomy and reduce the burden of accountability.

David Young is the chairman of Hefce.