Governors 'not accountable'

June 5, 1998

Unaccountable governors and poor financial managers are damaging the cost-effectiveness of higher education's multi-billion pound building activities, a House of Commons Public Accounts Committee report has found.

Universities spent Pounds 1.6 billion on 239 projects between 1993 and 1996, it said, yet it is a cause for "deep concern" that governors were not accountable and value-for-money could not be guaranteed.

In a report published this week, The Management of Building Projects at English Higher Education Institutions, the PAC called for "an unambiguous obligation on higher education institutions to establish high standards of governance, transparency and accountability" in estates management.

Because of the large amounts of public money involved, the committee said, "formal checks on probity are an absolute necessity", despite institutional autonomy.

Standards of university governance were particularly alarming. The report said. "The committee is deeply concerned that governance arrangements at some institutions do not comply with best practice."

It was "unacceptable" that 10 per cent of institutions do not have registers of interests, and some institutions do not have adequate arrangements for handling potential conflicts of interest. The PAC has called for mandatory registers of interests.

The planning and implementation of projects was also poor. The PAC reported cases where new building was under way before a proper appraisal of existing estates was conducted and where appraisals were "not carried out in any scientific manner". In some cases, "opportunities for savings may have been missed".

Loans for building work were often not subject to rigorous competitive tendering, procurement procedures breached European competition rules and consultants' fees were rarely fixed. There were seldom post-implementation reviews to assess value-for-money.

"Given the weaknesses in the way institutions handled their building projects, we are concerned that adequate arrangements are not in place to ensure best practice," the report said.

The Higher Education Funding Council for England was criticised for its hands-off approach. In a heated evidence session with the PAC earlier in the year, HEFCE chief executive Brian Fender said it was wrong to run things "through a system of massive rules and regulations". He also disagreed that funding sanctions would be appropriate to prevent bad practice.

But the PAC urged HEFCE to be more interventionist. "We are concerned that the funding council does not require institutions to provide an option appraisal when requesting funding for poor estates," said the report. This, it said, should be mandatory.

HEFCE, it said, must be "more active in exercising its monitoring and oversight role", and must "urgently" issue clear guidance.

More money for estates, page 4

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