The Universities: Innovation, Autonomy, Fees and Institutional Design

There has been much discussion in the press over the last few days over two issues affecting the universities: the issuing of an Employment Control Framework by the Higher Education Authority and the delivery of a report to the Minister for Education on the reintroduction of fees for undergraduate education. The two are linked because each has the potential to affect the autonomy of the universities in important ways. More broadly they raise questions of institutional design that apply also to other significant aspects of the machinery for governing the economy concerning the relative autonomy from government ministers of both state-owned enterprises and regulatory bodies. The current fiscal and financial crises are likely to put all of these relationships under pressure and beg the question whether exploiting the capacity for government to exert greater centralized control is simply opportunistic or offers a principled basis for addressing weaknesses. Let me declare at the outset that I am parti pris since, like many contributors to this blog,  I hold an academic appointment in a University.

Turning specifically to the universities the Employment Control Framework is reported by the Irish Times to impose restrictions on recruitment of new staff, promotion of existing staff and retention of temporary staff with a linkage between compliance and continuation of state funding. Although issued by the Higher Education Authority it is apparent that the Department of Education and the Department of Finance each had a significant role in shaping the document. The Framework has been widely interpreted as an attack on the autonomy of the Universities and in breach of the provisions of the Universities Act 1997. My learned friend  Steve Hedley offers his interpretation of the legal provisions here. There is discussion in the Sunday Tribune of the Irish Federation of University Teachers challenging the Framework in litigation, but in the medium term the legislation may not be important  since the government’s effective control of the Oireachtas means that legislation can be changed to give effect to the Government’s favoured position if a court rules against  it in judicial review proceedings. The more important question is the normative one whether it is advantageous to the capacities of the nation for ministers to assert more direct control over the universities through control over key staffing issues. Insofar as the position of the university heads may be ascertained it appears to be that such restrictions appear to undermine  their flexibility to determine the deployment of their resources to prioritise particular areas of research, to innovate and  to match teaching capacity to needs. Under the terms of the legislation the allocation of resources is the responsibility of the HEA, whilst prioritization is a matter for the Universities themselves. This principled separation of responsibilities has been considerably eroded in fact (but not in law) by the shift of resources away from formulaic block grant (based largely on student numbers) towards competitive awards of grants under such schemes as PRTLI, SIF and the programmes of Science Foundation Ireland and the Research Councils. Universities have been incentivised  by such competitions to shift resources into areas favoured by the government. Competition is not the only mechanism at play, since most schemes have a significant element of peer review and government deploys its hierarchical capacity to steer and approve decisions (with the potential for importing political priorities) within many of the schemes.

The discussion around the reintroduction of fees linked to a student loans scheme has the potential to affect the autonomy of the universities in the other direction, to the extent that the scheme permits the universities to grow their revenues directly through undergraduate student recruitment. The government has not yet committed to any of the variety of mechanisms which have been proposed (discussed in yesterday’s Sunday Business Post), suffice it to say that the separation of upfront fees from a loans scheme is likely to give the universities greater autonomy, whereas the linkage of additional revenue to a graduate tax is liable to give the government greater control.

The relationship between the two issues lies in the issue of funding dependence. Permitting universities to charge undergraduate fees, separate from a related loans scheme, reduces the capacity of the government to threaten funding sanctions to universities which breach government requirement s such as those set down in the Framework.

How does this all link to the Irish economy? It is widely held that the role of the universities in providing research, stimulating innovation (not only in science and technology, but also through translation of research into policy and creative domains) and in education at both undergraduate and graduate levels is relevant to Ireland’s future economic capacity (although there is disagreement on the extent of the universities’ significance). Comparative analysis demonstrates that there is no single model of university-government relations within the other OECD member states. The French government retains a high degree of central control over key aspects educational provision and academic appointments, whilst a mixed economy of public and private provision in the United States gives substantial autonomy to many higher education institutions. The UK balances substantial autonomy for the universities with a form of hyper-regulation over teaching and research quality which has never been seen in Ireland. The Irish regime under which universities are required to self-regulate explicitly (teaching) or implicitly (research) is a style which I refer to as meta-regulation. There is already a meta-regulatory alternative to the Employment Control Framework in the form of an Irish Universities Association document which caps employment numbers, but under which the control is exercised by the universities themselves.

A tangential issue arising from the Employment Control Framework is whether there is a continuing role for the Higher Education Authority if, in fact, ministers are determining conditions of grant for universities. A key aspect of the UK regime is the role of buffer organisations (such as the Higher Education Funding Council for England) which both funds and holds higher education institutions to account for their expenditure.  In a fairly similar regime of universities governance to that of the UK the Australian government abolished the buffer institution, the Australian Universities Commission, in 1976 and took its functions in funding and oversight into the education ministry. Given current strictures on public finances and controversies about the added value of quasi-autonomous non-governmental organisations (quangos) an agency that cannot demonstrate its distinctive role may be under threat.

Whilst these issues of institutional design can hardly be neutral in their effects in terms of the role of universities (and others such as state-owned enterprises and regulators) in sustaining and developing the Irish economy, we appear to have more questions than answers in the search for defensible (I would not dare suggest optimal) solutions.

Author: Colin Scott

Colin Scott is Principal, UCD College of Social Sciences and Law and Professor of EU Regulation and Governance at UCD. He is a Co-Editor of Legal Studies (Wiley-Blackwell).

11 thoughts on “The Universities: Innovation, Autonomy, Fees and Institutional Design”

  1. I think before spending too much time worrying about the impact of the financial crisis on universities’ independence, some examination of the role of universities during the boom might be in order…

    Is this independence worth preserving, has it served society well in the past?

    We are now at the stage where ‘everyone knows’ what went on was not sustainable, was foolish and we in Ireland are the authors of most of our own misfortune.

    David McWilliams was one of the few voices who consistently warned it would all end in tears. By and large my memory is the universities were silent on the matter.

    I don’t recall any warnings from academia from the early years of this decade. There probably were some, but they didn’t get my attention. I’m a layman and don’t move in academic circles, though I follow current events closely.

  2. Irish universities (and Institutes of Technology) are not ‘independent and are never likely to be so as long as they behave like Oliver Twist – “Please Sir, may (we) have some more?”. Since the amount of ‘more’ is declining, the request may be moot.

    The coming debate will have to be about the role of third-level education for an economy in declension. Growth as we know it is over and we are headed back to the 1930s. Will take some time mind you, but it will eventuate.

    So, what sort of graduates will we (really) need? That, as the man said, is the question.

    The question of fees is a most dangerous issue. Fee (full) paying undergrads are likely to be very tetchy customers indeed. Pity the unfortunate faculty who have to actually teach them. As for undergraduate loans – who in their right mind would incur a debt, when the job prospects will be very difficult?

    Brian P

  3. Brian

    I hope that you are not a product of one of our illustrious Universities. I have never heard of “declension” and “eventuate” or maybe that is textspeak which our students now learn at University. Were you around for the 1930s ? I doubt it and unless you are a student/scholar of that period I do not think that you are in a position to predict that we are headed back there. Universities have to be relevant to the society they live in and that is what is important for the future.

  4. There is very little wrong with our universities at undergrad level, and if questioning whether to bring fees back in is our main problem then it’s a minor one.

    Its at the post grad/research level where we are failing and if fees can solve this problem then it need to be seriously considered, at a feasible level.

    I dont think its a structural problem, were touching more on policy and admin decisions.

    We lack a corporate input into universities this is precisely where North America flourishes. Companies invest millions in R&D through research and it paid off at a colossal rate, as was said before many times on this site, just look at the locations of the universities in the US and its technology clusters.

  5. The HEA is another case of regulatory failure: it has failed to control the financial excess in some universities in recent years. Neither is it a buffer, protecting Universities from undue Government interference. It has allowed itself to be captured, not by the regulated institutions, but by the executive. One hopes that Bord Snip has seen this and makes the appropriate recommendation.

    There is a fixation with Strategic Planning in Irish public administration, which has found legal expression in the case of higher education. This seems to have lead to University administrators and HEA bureaucrats neglecting the vital and mundane tasks of good operational management. As a member of the HEA 20 years ago, I can say that when cuts had to be made, there was greater focus on overall financial discipline, so we in a position whereby institutions were never allowed to run up unsustainable deficits, largely in pursuit of over-ambitious “strategic” goals.

    The inability of the Civil Service to respect the autonomy of Universities (or other institutions) is carried to extremes in Ireland: we seem to think that bureaucrats are endowed with some sort of superior insight or have better information and are thus equipped to dictate policies for others. As economists, I think we are aware of the folly of bureaucrats “picking winners” when it comes to industrial policy. But we seem to accept it when it comes to research policy, where despite the existence of peer-review, decisions are heavily influenced by idea that “picking winners” can be applied to research.

    Abolishing university undergraduate tuition fees was a disaster, but we should be careful about what we do when reversing it. First, we need tuition fees on a consistent basis, right across the sector, and that includes the Institutes of Technology, which have never had significant levels of fees. Second, going for fees at 100% of estimated course costs may be overkill: tuition fees prior to 1995 were about 30% of University income (and were as low as 10% of income at the end of the 1970s). Finally, while the general principle of loans to finance the payment of tuition fees is welcome, we should not expect too much: the general experience is that even with 100% compliance, loan repayments do not cover the full cost of capital, and in practice the situation usually falls short of full compliance. So be prepared for some more bad loans!

  6. There is very little wrong with our universities at undergrad level, and if questioning whether to bring fees back in is our main problem then it’s a minor one.

    Its at the post grad/research level where we are failing and if fees can solve this problem then it need to be seriously considered, at a feasible level.

    I dont think its a structural problem, were touching more on policy and admin decisions.

    We lack a corporate input into universities this is precisely where North America flourishes. Companies invest millions in R&D through research and it paid off at a colossal rate, as was said before many times on this site, just look at the locations of the universities in the US and its technology clusters.
    Sorry… forgot to say great post – can’t wait to read your next one!

  7. I agree with Ray that is important for universities to demonstrate their relevance to society.
    @Garry
    The main purposes of universities are generally agreed to be the provision of high quality undergraduate education and the undertaking of high quality research. The research dimension involves advancing the field through publication in peer reviewed journals and other outlets. Both these aspects of the University role equip universities to make a broader contribution to social and economic life. Clearly the training of people who will directly inform public policy choices in the media (where did McWilliams, Lee et al learn their economics?), think-tanks and above all within government are an aspect of this role and earlier discussions on this blog lament the shortage of hiqhly qualified economists within the civil service. Furthermore high quality research in some fields is likely to be capable of translation into public policy domains – my understanding is that one motivation behind the establishment of this blog is that there have been weaknesses in translation. The UCD-TCD Innovation Alliance is also oriented towards enhancing the impact of university research on commercial, policy and creative domains. Ireland is not alone in recognising weaknesses in this aspect of the University’s role. The UK is currently considering giving evaluation of impact a more central role in periodic evaluations of research quality.
    It may or may not be accepted that universities have done a lot with comparatively (in international terms) limited resources – the impact of universities generally is difficult to measure – but there is no question that there is now an expectation that they will do more with less.

    @Brian – I do not think the universities share your fears about fees. My experience of students who make a financial contribution (and I have worked in the UK, Australia and Belgium) is generally rewarding – good academics like engaged students seeking value for their money. There is no proposal for home and EU students to pay the full cost of their education – most of the cost of Universities will continue to come from exchequer funding, though with an ambition to increase numbers of non-EU students who pay a fee closer to full cost (but are generally recruited on quality grounds).
    Most of the research suggests that university-level qualifications enhance both employability and earning-power. A letter from an Australian correspondent in today’s Irish Times – http://www.irishtimes.com/newspaper/letters/2009/0714/1224250637849.html – addresses the issues succinctly. University applications have increased so markedly in the UK (where students pay upfront fees and are eligible for loans) the universities are struggling to cope with the demand – http://www.guardian.co.uk/education/2009/jul/09/university-places-shortage-recession.

  8. @Colin… Good points. I commend the people behind this blog and also the public stance university economists have taken on proposals for NAMA.

    This is precisely the type of independent thought we need during these difficult times. Critical yet fair.. (at least in my biased opinion 🙂 )

    We need more of it and in more disciplines in Ireland.

  9. @ John Sheehan
    You can add the inability of central government to micro-manage even things they take on themselves to your “The inability of the Civil Service to respect the autonomy of Universities (or other institutions) is carried to extremes in Ireland: we seem to think that bureaucrats are endowed with some sort of superior insight or have better information and are thus equipped to dictate policies for others.”
    There has been a consistent drive to reduce autonomy in bodies that either had it or were explicitly set up to be autonomous – with clear objectives, freedom of action and full accountability.

    Local government has atrophied since rates on domestic residences and agricultural land was removed. The recent EPA report on the very servious deficiencies in waste water treatment is a strong statement on deficiencies on something essential.
    http://www.epa.ie/news/pr/2009/name,26393,en.html

    It would be very interesting to do a more detailed analysis of the extent to which this situation has arisen from staffing constraints imposed from central government and/or lack of budgetary freedom for the local authorities. Doing that in a systematic and thorough way would show who is responsible for what and how seriously they took these responsibilities.

    It is a cast of mind that does not understand
    1) that when you free up organisations, performance improves
    2) how to manage, without whimsical and arbitary interference, the freed up organisations
    3) how to regulate, by law, instead of endless meddling.
    We need to learn this, very quickly!

  10. “how to regulate, by law, instead of endless meddling.”

    Worthy of an article in itself and not just for the unis….. Regulation here is endless meddling, endlessly adding cost and complexity without actually achieving a whole lot. A whole lot of heat and very little light.

    Despite all that we have the bank chairmen doing insider deals and dodgy loans engaging in activities which would result in fraud charges elsewhere…. Seemingly with impunity here…

    The reaction… Calls for “more and better” regulation whereas a better reaction would be to tighten the laws.

  11. @John Sheehan @Donal O’Brolchain and others
    It’s great to see some thoughtful discussion here on Irish higher education. I particularly benefitted from the contributions of @John Sheehan and @Donal O’Brolchain.

    I think John Sheehan is right that we need to consider fees issue across the third level system i.e including the IOTs. In fact the dualistic conception of the third level system leads I think to poor decisions and special pleading on all sides. There was a time when the dual system made a sort of sense in that IOTs could produced 2.5 level graduates that, in wages and education levels were internationally competitive. Wages level in Ireland are unlikely to go so low again, technological changes have wiped out much demand for such workers and the children of people educated in the IOTs in 1980s now aspire to degree level education and beyond. The IOTs have with varying success responded to those aspirations.

    My guess is that some IOTs should become universities, more should close and merge, a limited number should refocus on the now smaller market for what they once did very well. Perhaps some will do a mixture of all of the above.

    What is clear is that there needs to be some mechanism for sorting the wheat from the chaff across Irish higher education, and allowing a disciplined evolution. This mechanism needs to be free from political easy-targeting (witness the McCarthy’s report silence on most of more politically sensitive IOTs outside Dublin – the Tippeary Institute I think was the sole exception). What is need is some a mechanism with some autonomy as O’Brolchain put it above “with clear objectives, freedom of action and full accountability.”

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