On 1 June 2010 HEFCE became the principal regulator of those higher education institutions (HEIs) in England that are exempt charities. All but 19 HEIs fall into this category. This is a new legal obligation, and our existing functions as the HEIs' main funder of higher education in England are not affected. This new responsibility results from the Charities Act 2006, which implements a government decision that all charities should be subject to regulation. Although they were expected to comply with charity law, exempt charities were outside the scope of the Charity Commission's regulatory powers. From 1 June 2010, the exempt charity regulation provisions of the 2006 Act came into effect for HEIs, and they are now subject to the Charity Commission's powers.
HEFCE is one of several principal regulators, some yet to be appointed. All principal regulators have the duty, as far as they reasonably can, to promote compliance with charity law by the exempt charities for which they are responsible. This will require regular monitoring and occasional more detailed work, including liaison with the Charity Commission on complex issues that might need the use of its powers.
HEFCE has agreed a memorandum of understanding with the Charity Commission. Its main purpose is to describe how the two organisations will work together. It includes a table setting out the Charity Commission's protection and support powers, and lists all of the exempt charity HEIs which fall within HEFCE's role as principal regulator. To prevent confusion the memorandum also lists the HEIs that are registered charities and that will continue to be regulated by the Charity Commission.
HEFCE's new statutory duty requires it to do all it reasonably can to promote compliance by HEIs' trustees with their obligations under charity law. It will discharge this duty by publishing guidance, extending existing monitoring arrangements, investigating complaints about HEIs as charities, and working with other charity regulators to develop policy. HEFCE is conscious of the need to avoid over-regulating HEIs that we already believe to have sound governance arrangements in place.
We have incorporated our decisions about information required from the HEIs that are exempt charities into the 2010 version of the Financial Memorandum between HEFCE and the institutions it funds, which will be published on 1 July 2010. Most of the new requirements will apply to 2009-10 reporting, so before the end of June 2010 we will also issue a revised Accounts Direction for that year. Over the coming weeks we will be publishing additional guidance on this website, along with answers to frequently asked questions. We have incorporated most of the new information-gathering and review into our existing processes; we do not expect the new regulatory regime to be onerous for HEIs.
The statutory commencement order makes it clear that the new duties of both HEFCE and the Charity Commission will be forward looking. But we will respond to issues that have occurred in the whole of the 2009-10 financial year providing that neither we nor the Commission were aware of them before 1 June 2010. HEFCE may act as principal regulator only in respect of anything about an HEI's charity law compliance that it becomes aware of on or after 1 June 2010. This will include a cause for concern that had arisen or was continuing on or after 1 August 2009 (the start of the financial year current for all HEIs when the regulations came into force) and was continuing on 1 June 2010.
We now have the express power to request any necessary information from HEIs that helps us meet our objectives. But the law limits the extent to which ministers may request information obtained by us as principal regulator. These limits mirror the fact that the Charity Commission is not subject to ministerial oversight as regulator of registered charities.
Under other provisions of the Charities Act 2006 the autonomous colleges of the Universities of Cambridge, Durham and Oxford and most student unions today (1 June 2010) become 'excepted' charities, and will be expected to register with the Charity Commission. Changes to the charitable status and regulation of HEIs in Wales also come into effect on 1 June 2010.
In terms of their general operations as charities, there is no material difference between exempt and registered charities. Exempt charities must have charitable purposes and apply them for the public benefit. They must comply with the general law of charity. They have trustees (in the higher education sector the trustees are usually the members of the governing body) who are responsible for the control and management of the administration of their charities. They benefit from the same tax advantages as all charities, and have the same obligations to comply with tax law. From 1 June 2010, exempt charities will be monitored as charities by a principal regulator. They are also now subject to the investigation and enforcement powers of the Charity Commission, although the Commission may only exercise those powers following consultation with the principal regulator. For HEIs that are exempt charities the principal regulator is HEFCE.
Further information is also available from Andrew Malin, e-mail charityreg@hefce.ac.uk, tel 0117 931 7332.
With the Oxbridge universities now subject to regulation by HEFCE, their administrators presumably also become subject to the guidelines on litigation issued by the Association of University Administrators (AHUA). If OUP had been subject to these guidelines (or to HEFCE supervision) in 1986 and 1998, I imagine that Oxford would never have been able (a) to spend over £500,000 abortively defending my High Court claim over a £5,000 book or (b) to axe its modern poetry list to save, in the worst analysis, just £20,000 a year. The corollary of this suggests that those two massive OUP blunders may well have played a part in bringing about this new Oxbridge accountability to HEFCE.
The above HEFCE announcements make interesting reading when set against two letters from the Public Administration Select Committee (PASC) sent to me on 30th April 2009 and 3rd February 2011.