Scandal of the students who never sat exams

London Metropolitan was not the only university to get the wrong end of the stick about the funding rule that required all students to sit an assessment at the end of each year, according to the report from Sir David Melville into the sorry saga of London Met's financial and management crisis.

His inquiry into how it came about that the university was thrown into chaos, owing £36.5m to the Higher Education Funding Council (Hefce) for students it should not have claimed money for, says that other institutions believed the rule should not be taken too seriously as well.

"There is no doubt that the funding completion rule has been controversial since its introduction as a stratagem to reduce drop-out," says Melville former vice-chancellor of Kent and Middlesex Universities. "There was widespread belief in the sector prior to 2004 that the rule was impractical and not applicable in its literal sense to higher education institutions with modular degree schemes and, in particular, to those with a strong widening participation ethos, many of whose students progress through university at an intermittent pace."

Before 2004 other universities thought that HEFCE did not apply the rule literally and therefore that there was leeway in the way the institutions reported student numbers. HEFCE therefore updated its guidance.

This forced institutions to make changes, but some have still to come to terms with the rule, says Sir David. Despite all the attention it has received, Hefce continues to find a "disappointingly high rate of error" in the estimation and reporting of students whom universities are claiming completed their modules. He is not aware of any other crucial funding rule that has been so difficult to apply and that has had such a big effect on so many institutions. And he concludes that Hefce must bear some responsibility for this.

But the former boss, Professor Brian Roper, is the most culpable for what happened – the shambolic record-keeping and the serious financial crisis, says Melville. Roper should have listened to staff who were telling him that the university might be breaking the rules laid down by Hefce, he adds.

Roper has now resigned and redundancies have been announced, to the horror of the University and College Union, which has responded with a "greylisting" campaign – similar to blacklisting – to cut London Metropolitan off from the rest of the university world.

The two reports into what went wrong, from Sir David and from Deloitte, paint a picture of an institution with poor industrial relations, few controls and inadequate management and governance. Sir David received more than 50 submissions from staff. "They generally describe a highly centralised and dictatorial executive led by the vice-chancellor, which was incapable of listening to what was going on in the university, discouraged or ignored criticism and made decisions without consultation," says Sir David's report.

"I am satisfied that the particular management approach and its impact outlined above not only contributed to the original problems of data quality and funding completion but also failed to provide any mechanisms whereby staff could effectively provide corrections to the system. In addition, they ensured that information reaching the board of governors was selective and failed to raise issues which might prove 'uncomfortable' for the executive."

The Deloitte report shows that, as early as 2003, senior staff were aware that the definition the university was using of students who had completed a year's study did not conform to Hefce's. An email from a senior manager in May, 2004, said that if Hefce's definition of a student who had completed a year were applied literally, this would be "disastrous for the university".

Hefce will only continue funding students who sit an exam or take an assessment at the end of year; London Met allowed students to carry over their assessments to the following year and claimed that they had completed the year.

Deloitte looked at the university's data collection and found it was in a mess with students counted multiple times. There were 531 students who were aged under 16 or over 65, and 28 were found to be over 80. As many as 5,280 students were missing a date of birth.

Roper ensured that Executive Group meetings were not a forum for discussion of issues such as whether or not the university was contravening the funding rule. "This is a clear failure of senior management in the institution," says Melville.

By turning a blind eye to the scale of the problem of students non-completion, the university failed to provide much-needed support for those who were admitted with modest educational backgrounds. "Other universities with similar intake profiles have tackled these issues with some success, not accepting that such high non-completion rates are 'inevitable'," says Sir David.

"Rather, they take the view that, especially for such students, it is in their interests and that of the institution to put significant and targeted resources into encouraging and supporting them towards a successful outcome."

Sir David also blames the Executive Group, including John McParland, university secretary, Pam Nelson, the finance director, and Robert Aylett, deputy vice-chancellor (academic). Although they did not know what was going on, the governors should take responsibility because they could have followed up on the poor completion rates and challenged the vice-chancellor, he says.

Hefce is not excluded from blame. It knew that data collection at London Met was faulty and should have taken action sooner, says Sir David. Moreover it must take some responsibility for the fact that there was such confusion about the funding rule.

The university has now appointed a new vice-chancellor, Malcolm Gillies, former boss at City University, who will have his work cut out. Currently professor of music at City, he resigned as vice-chancellor of that university in July over a reported disagreement with City's governors. "We look forward to working with him to resolve the shambles at London Met," said Sally Hunt, general secretary of University and College Union.