Dr John Hood
Vice-Chancellor
University of Oxford
Wellington Square
Oxford
OX1 2JD
Dear John
University Governance
I am writing following the decision of the University Congregation, announced on 19 December, to reject the amended Legislative Proposal on University governance, and in particular to reject the proposed changes to the membership of Council. From HEFCE's point of view, this proposal would have represented a significant evolution (sic) in the governance of the University, and an important milestone in the continuing process of governance modernisation at Oxford.
Much has been achieved over the past decade, and I suspect most well-disposed and impartial observers would conclude that the University is stronger and better placed to continue to excel as a result. The difficult process of transforming a fine and complex institution, and of putting in place structures that deliver wide accountability, should not stall simply because a particular proposal did not find favour. I would now like to ask, therefore, how you expect the process of governance reform to move forward.
As you know, HEFCE is the single biggest investor in the University and we assume the lead regulatory role on behalf of all your public sector funders. We set the accountability framework for the HE sector, and within that framework, it is a condition of grant that the University has a sound system of governance. We look to the University, its Council, and its Audit and Scrutiny Committee to provide assurance about the system of governance. Under the recently-rejected proposal the membership of Council would have fallen from 25 to 15 with seven internal members and seven lay, plus a lay chair. The adoption of this arrangement would have given the Council a lay majority for the first time. There is, we believe, a broad consensus across all sectors that corporate governance is enhanced by the external membership and, more particularly, by the discipline, and advocacy that non-executives and externals bring to the corporate life and governance of a university.
This has been reflected in reports over the years, including those of Dearing in HE and Turnbull in the private sector. The sentiment is embedded in the Lambert Report and embodied in the good practice guidance to universities published by the Committee of University Chairmen.
The University has accepted that its Council is its single governing body responsible for academic and strategic matters (albeit that Congregation remains the supreme legislative assembly) but has rejected a particular proposal that would have delivered a lay majority. HEFCE takes the view that its investment of public funds must be subject to effective governance oversight, and that this oversight needs to be largely external and demonstrably free from potential conflicts of interest.
I, of course, recognise the academic excellence of Oxford and the effectiveness of many of its operations. I also understand that opponents of reform associate success with the University's governance tradition and consider that fundamental governance changes would undermine continuing success. I consider that argument unproven, and note the performance and progress of some of your competitors who have more modern governance arrangements. I would also remind you the University's accountability failed as recently as 2003-04 when the accounts were audited and finalised many months after the deadline.
In March of 2006 the HEFCE Assurance Service issued its report on risk management, control and governance at the University. We will be following up this report by April 1 and will be seeking assurance about governance arrangements. It would be helpful if you could give this letter your attention before that time.
Yours sincerely,
David Eastwood
Professor David Eastwood
Chief Executive