from preventing failure to managing it.
Earlier this month, a select committee report on higher education funding in England made a series of recommendations that have already attracted considerable commentary from across the sector. The committee proposed an early warning protocol triggered by the Office for Students, legislation to clarify whether insolvent institutions can continue to operate, strengthened student protection plans applied across all providers, a governance improvement programme and support for a bespoke insolvency regime modelled on the architecture that exists for further education. The government has two months to respond.
The recommendations themselves warrant scrutiny, and the sector will rightly debate their details. But there is a more consequential development beneath them, and it has less to do with any particular proposal than with how the policy question is now framed.
A shift in framing
For most of the past decade, the policy conversation about institutional finances in England has been organised around prevention. The Office for Students has held a registration condition on financial sustainability. Boards have reported to it. Annual financial returns have been monitored, conditions imposed and interventions sequenced. The implicit assumption has been that the proper object of regulatory and institutional attention is keeping providers in business. The recent report does not abandon that frame, but it sits another one alongside it. It asks, in effect, what ought to happen when prevention fails, and how the sector should be organised to handle that eventuality.
Bringing failure into the policy conversation as a legitimate object of design, rather than as a residual possibility to be averted, is a significant analytical move. It changes the questions that institutions are being asked to hold. Prevention and managed failure are not the same policy logic. They require different instruments, vocabularies, and accountabilities. Prevention asks whether the institution can continue. Managed failure asks how an exit might be choreographed if it cannot, and who carries the costs of that choreography. The sector is now being asked to hold both questions at once, and to do so without yet having a settled framework for the second.
What this asks of governance
For senior leadership and governing bodies, the implications may take some time to surface fully. Governing bodies have historically treated financial sustainability as a prevention question, with risk management understood as managing the conditions that might lead to failure. The prospect of a bespoke regime, alongside teach-out obligations, strengthened student protection plans and clearer thresholds for intervention, implies a wider set of accountabilities than many boards have yet organised themselves around. It is one thing to assure a regulator that the institution is financially viable on a forward look. It is another to have considered, in any structured way, how the institution might responsibly manage a transition out of its current form if circumstances ever required it.
This is not to suggest that boards should be planning for their own institutions’ demise as a routine matter. That would be neither prudent nor proportionate. But there is a difference between planning for failure and being prepared to think clearly about it. The committee’s recommendation that early warning be triggered before conditions deteriorate severely implies that the conversations between boards and regulators, and between boards themselves, should begin earlier than has perhaps been customary. Acting whilst conditions are deteriorating, rather than when they have already collapsed, requires a kind of institutional candour that compliance-oriented governance does not always cultivate. What that candour entails, in practice, depends on a relationship between the executive and the board, and between the institution and the regulator, that values clear-eyed conversation over reassurance.
The report’s parallel call for a governance improvement programme is, in this light, more than a generic intervention. It signals that the sector’s prevailing model of governance may not be sufficient to answer the questions now being asked of it. Whether that judgement is correct, and what would constitute meaningful improvement, are themselves matters for considered debate. But the question is now in the open.
The public dimension
A further dimension of the shift deserves notice. The committee’s framing of institutional failure foregrounds matters that have not always sat at the centre of regulatory thinking. Cold spots in provision, the continuity of sector-critical courses, the position of staff, the implications for research and the harm that an institutional exit might do to a local economy and community all appear in the report as matters of public concern, not only of institutional interest. That broadening of the lens warrants reflection.
It suggests that institutional sustainability is no longer considered solely a question of the provider’s own viability, but rather a question of the public value that institutions hold in trust. The protection of that public value, when an institution can no longer hold it, becomes a design question for the regulatory architecture, not only for the institution itself. The implications for how institutions articulate their public value, and how that articulation is sustained even when financial conditions are difficult, may prove substantial. Institutions that have invested in their civic role and local relationships may find that, under the conditions the report imagines, those investments matter rather more than they have sometimes been credited with mattering. The conversation about institutional value, often conducted through metrics of student outcomes and economic contribution, may benefit from being held in a register that takes the relational and locational dimensions of what institutions provide more seriously.
An open question
The committee’s report is, in the first instance, a set of recommendations to government, with a clear procedural pathway and a defined response window. But its underlying contribution may be to invite the sector into a more honest conversation about what resilience requires in conditions that have shifted considerably since the present regulatory architecture was designed. The conversation will involve regulators, ministers, providers, governing bodies and the public, and it is unlikely to be resolved quickly.
For those holding senior institutional responsibility, what may warrant consideration is whether the questions the report makes harder to avoid are also being held, in some form, around the table. Not as plans for failure, but as conditions for the kind of clear-eyed institutional thinking that the present moment seems increasingly to require. Where might a governing body usefully begin?