Better cooperation still needed to get full value out of pensions implementation statements
Out-Law Analysis | 27 Mar 2020 | 5:47 pm | 8 min. read
Greater collaboration within the sector might provide a solution for both institutions and students at this time of uncertainty.
The decisions to close all schools and cancel forthcoming GCSE, A Level, BTEC, Level 3 and even International Baccalaureate examinations in England has left schools and Ofqual, the qualifications regulator, grappling with the question of how the attainment of all affected prospective examination students can be fairly assessed without results from the traditional summer examination period.
In relation to international students the issue is magnified. Many schools and universities also closed around the world and IELTS test centres and visa offices are closed. For international students from countries such as China – the biggest single group of overseas applicants to UK higher education (HE) this year – it means there is uncertainty regarding their exams as well as uncertainty about their ability to meet other requirements, such as obtaining a certificate of English language skills or travel visas, in time for entry to courses beginning in the autumn of this year.
It is likely that overseas entry will also be further impacted by international students being prevented from or reluctant to travel , particularly following recent reports that present overseas students are caught in up in the recent UK university closures. The continued impact of Brexit uncertainty on students applying from the EU is a further factor.
The knock-on effect of both exam uncertainty in the UK and international restrictions on prospective numbers of international students likely to accept offers to study in the UK creates significant headache for HE providers (HEPs) around the present 2020/21 admissions cycle.
The full implications on acceptances will not be known for months. Prospective students holding offers have been given additional time, until 19 May, to decide whether to accept. However, the actual impact on final numbers will not be known until autumn, when students will be expected to have final grades and take up their places at their chosen HEP.
In deciding on strategies for managing admissions in this difficult period it is important for HEPs to consider not only the likely regulatory risks they face, from and OfS and under consumer law, but also their underlying legal obligations to prospective students under the contract to admit
However, usual predictions and algorithms used to manage admissions are likely to be redundant in these uncertain times. In particular, we might expect that the record numbers of applications from Chinese students this year will not be seen again for the next round of admissions. Conversely, the number of prospective UK students might increase.
This could leave some HEPs with far fewer students than expected and some courses significantly under-subscribed. In the alternative, some may even have more people who have met the terms of their offers, and end up with significantly higher numbers of students eligible to enrol than they have places available.
Based on UK government reports, a small number of universities have changed a significant proportion of their offers to undergraduate students from ‘conditional’ to ‘unconditional’ in a bid to manage the uncertainty and hopefully secure their attendance for the 2020/21 academic year.
The minister for higher education in England, Michelle Donelan, has now asked providers to only make firm offers to students they can accommodate and refrain from changing their offers made to undergraduate students for the next two weeks to reduce the risk of "destabilising the admissions system, increasing financial uncertainty and volatility for all institutions at a time when universities are already facing significant pressures". She has challenged HEPs to "act responsibly to maintain the integrity of the higher education system, and avoid actions which might not be in students’ best interests, simply to maximise their intake over other universities".
In addition, Office for Students (OfS) chief executive Nicola Dandridge said the regulator "will use any powers available to us to prevent such offer making on the grounds that it is damaging to students and not in their interests".
In deciding on strategies for managing admissions in this difficult period it is important for HEPs to consider not only the likely regulatory risks they face, from and OfS and under consumer law, but also their underlying legal obligations to prospective students under the contract to admit.
Where a prospective student applies to be admitted to a HE institution (HEI) the relationship between that person and the institution is based on a legal contract. The legal relationship between the parties is often referred to as the contract to admit. It is created when the prospective student agrees to accept either an unconditional or conditional offer from the HEI, usually through the UCAS system in the case of undergraduate applications and directly where postgraduates are concerned.
In in relation to each entrant the contractual principles of "offer" and "acceptance" will apply. One area of debate has often been whether the requirement for "consideration" – in most contracts this means the exchange of monetary sums or goods or services – is met.
It has been established in the courts for over a century that as long as there is a reciprocal exchange of something nominally of value "in the eye of the law" then a contract will come into existence. In the case of a prospective student this is likely to be the loss or detriment the student may arguably suffer when he or she limits his or her options by agreeing to accept an offer at one HEP at the expense of other offers available to them. The value of the consideration on the HEP's part is the fact that it has, subject to conditions being met, the knowledge that it has filled a student place and will likely receive the benefit of future tuition fees as a result.
In the situation where graduate students are concerned it is likely that a deposit will be taken as without that there is always a risk that such an arrangement is more of a simple promise and potentially not enforceable.
In practical terms the legal risk falls entirely on the HEP. Although in theory a HEP could sue an applicant who has failed to honour their acceptance of a place for lost tuition fees, this never happens in practice. The UCAS system now allows prospective students to self release. Last year over 30,000 students holding unconditional offers used this mechanism to enter clearing.
In the event that a university is unable to admit a prospective student who has met the terms of their offer, the ability of the dissatisfied applicant to sue for breach is well-established. The requirement that the HEI compensate that student under contract was established by the Court of Appeal as far back as 1993. That case, of Moran v University College Salford (No.2), saw rejected an argument by the College that an offer through was a mere invitation to treat rather than an offer.
However, as the case confirmed, the remedy of any aggrieved applicant will be in damages as the court in that case was unwilling to grant an order, often called an order for specific performance, requiring the College to honour its offer and admit Moran.
The potential implications are likely to be different depending on the type of HEP and demographic of entry. However, in all cases there are likely to be issues which may result in difficult decisions taken regarding prospective students.
HEPs must ask themselves whether the failure to be able to offer a place to a student is the result of government action or pandemic or actually a consequence of its approach to making offers or indeed the fact that circumstances have made delivery on some courses not commercially viable
In some cases, as we have seen in some previous years, some HEPs will benefit and find a spike in students who have met the conditions of their offers. Whilst we would hope that in the majority these students will be able to enrol without issue, there may be situations where the HEP finds itself oversubscribed and cannot – even with some significant logistical changes – accommodate that increase either due to number restrictions, or the physical limitations of staff, teaching space and campus facilities – including well-being and pastoral services.
In those situations HEPs are going to have to manage expectations and from a contractual perspective manage potential legal and reputational risks of claims from disappointed prospective students who cannot gain entry on to their chosen course in 2020/21.
Conversely, there will be many HEPs that find that their actual numbers fall significantly below expectations. They will have to take hard decisions regarding course provision in 2020/21 and may need to consider whether provision will be viable if intakes are below minimum "break even" levels. Again, HEPs are going to have to manage expectations and from a contractual perspective manage potential legal and reputational risks of claims from disappointed prospective students if the HEP cannot run their chosen course in 2020/21.
In these circumstances a HEP will need to look to its admissions terms, the common law and practical solutions to mitigate that risk. This should involve, in particular, considering whether the present disruptions and their impact on admissions could qualify as a 'force majeure event' in contract – this being a provision within that contract that excuses performance following events beyond a party's reasonable control, such as act of God, industrial action, pandemic or government action. Failing that, consideration should be given as to whether, from a common law perspective, an outside event has frustrated the performance of the contract to admit to such an extent that the courts would regard it is "killed" by that event, and no further obligations due.
Clearly, it is unattractive to a HEP to have to have to cancel offers or refuse to admit students who are eligible for a place on their chosen course. This creates legal and reputational risks, but is also likely to result in some regulatory intervention given the warnings from both the minister for higher education in England and the OfS. In addition, any reliance on the principles of frustration and force majeure is likely to require some careful analysis and risks challenges in the courts, or indeed by the Competition and Markets Authority (CMA).
The other difficulty with relying on these principles is firstly a question as to whether it can truly be argued that an event of force majeure or frustration has occurred. HEPs must ask themselves whether the failure to be able to offer a place to a student is the result of government action or pandemic or actually a consequence of its approach to making offers or indeed the fact that circumstances have made delivery on some courses not commercially viable.
In such cases there is also the question of how a HEP should decide who to admit, and who to refuse. If frustration or force majeure events occur, those principles have to be applied across the board, and so adopting a first-come-first-served approach may undermine these arguments. Similarly, other factors such as vulnerability and widening participation issues made need to be factored into any decisions.
All of this means that HEPs might need to consider a number of strategies. These might include offers of incentives to defer entry, change courses or even encouraging students to give up their place. In these situations it may also be beneficial for HEPs to work together and with UCAS to try and give students who are unable to take up a place on their chosen course at one institution the best possible choice of alternative but similar courses – similar to the usual clearing process – but where those who have lost places are given preferential access to those who have decided to access clearing of their own volition or have not met their grades.
In any event this will all depend on the landscape facing HEPs post the 19 May date for acceptance of UCAS offers. At that point HEPs will see the impact of coronavirus, officially Covid-19, on potential numbers and the likely issues that need to be managed between then and prospective students receiving their final grades.
In addition there will need to be clearer leadership, and guidance from government, OfS and Universities UK (UUK) on how the issue should be managed across the sector to give everyone affected, and most importantly, prospective students, greater certainty and comfort at this extremely difficult time.
26 Mar 2020
Better cooperation still needed to get full value out of pensions implementation statements