Governing the governors

November 24, 1995

The Nolan committee is investigating standards in various publicly-funded bodies, including universities. One key issue being examined is the appointment and accountability of university governors.

This follows a number of controversial incidents including the severance package of more than Pounds 400,000 agreed by the governors for the vice chancellor of Huddersfield University and which was withdrawn and renegotiated following intervention by the Higher Education Funding Council for England. The fact that the governing body had used its discretionary power to remove staff, student and local authority representation attracted additional criticism.

It was alleged that the system of governance in the former polytechnics was seriously flawed.

Most of the older universities have rather old-fashioned constitutions with several layers of government. The executive and governing body of the university, normally called the council, typically has as many as 40 to 60 members, although the quorum for the conduct of business is relatively small. The council almost always has a majority of independent members who are neither students nor employees of the university but invariably includes substantial representation from within the university.

The majority of the new universities are now statutory higher education corporations governed by a board of governors with between 12 and 25 members. At least half are independent, chosen for their experience in industrial, commercial or employment matters or in the practice of a profession. Further members are co-opted and others may be nominated by the students and the academic staff. None need have any educational experience. Within overall limits the board itself determines how many members there are in each category and may exclude all staff and student representation, although the principal (or vice chancellor) is always a member unless he elects not to be. Little wonder that such boards have been criticised as self-perpetuating and unrepresentative.

A minority of the new universities are companies limited by guarantee. Typically they have a court of governors of about 25 members, a majority of whom are independent, but including staff, student and local authority representation.

A board of governors is not entirely unaccountable. Every university's governing body is accountable for its use of public funds to the funding council. A designated officer may be called to appear before the Public Accounts Committee. Although the HEFCE has no express power of intervention it is clear, as demonstrated at Huddersfield, that it can exert considerable pressure on governors who it believes are failing in their financial responsibilities. However, this accountability operates collectively rather than individually. There is no direct or formal accountability to staff, students or the wider community.

The board is responsible for overseeing the university's affairs and for its overall strategy, including its educational character and mission, and is required to safeguard its solvency and assets, ensure efficient use of resources and to appoint the principal and other senior staff. The principal as the chief executive is responsible for the organisation, direction and management of the university.

The governors are not expected to conduct the day-to-day running but are there to oversee and direct. The independent members can check the powers of the management and contribute critical detachment.

The business experience of independent governors can undoubtedly be invaluable. However, it seems obvious that a body charged with responsibility for the strategy, educational character and mission of a university needs to be able to draw on extensive experience of higher education. We can surely expect that Nolan will comment adversely on a system of governance which enables a university to be directed entirely by governors without such knowledge or experience.

Questions about the appointment and accountability of independent members are common to both old and new universities. It is now widely accepted that there should be formal selection procedures for directors or governors of any organisation which is publicly accountable. The 1992 report of the Cadbury committee into governance in public companies made such recommendations in respect of non-executive directors. A report on governance in housing associations (also being investigated by Nolan), recommended that there should be formal, published and open selection procedures, comprehensive induction arrangements and regular assessment for all committee members.

If Nolan makes similar recommendations for university governors there may be protests that the autonomy and academic freedom of universities are under further threat. However, if objective standards and greater openness were to be introduced into the appointment of governors then their decisions might be less vulnerable to outside challenge.

Sarah Gooden is a solicitor at law firm Trowers and Hamlins. The THES and The Independent are sponsoring a conference on accountability, Athenaeum to Antithesis, on November 30.

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