Brian Roper, the former vice-chancellor of London Metropolitan University, presided over a dictatorial management regime and must take “the major responsibility and culpability” for the fact that the university has been forced to hand back tens of millions of pounds in cash.

That is the conclusion of a review by Sir David Melville, the former vice-chancellor of the University of Kent, commissioned by London Met to investigate how the university came to massively overclaim from the Higher Education Funding Council for England after submitting inaccurate data about its students.

But despite not being fully informed of the scale of the problems, the university’s board of governors and audit committee had an oversight role, which makes them ultimately “accountable for a financial failure of this magnitude” and means that they “must take overall responsibility”, Sir David’s report says.

The review, obtained by ̽����Ƶ, which follows an earlier report into the affair commissioned by Hefce, found that Mr Roper and some members of the executive were fully aware that the university was applying its own definition of funding rules on student dropouts – rather than the funding council’s – as far back as 2003, but took no action.

̽����Ƶ

When the scale of the data problems was finally picked up, the university was forced to hand back £36.5 million overpaid to it by Hefce between 2005-06 and 2007-08.

The university’s recurrent grant has also been reduced by £15 million, leaving the university facing financial difficulties and putting hundreds of jobs at risk.

̽����Ƶ

Under the Hefce funding rule – which has since been changed – a university received funding for a student place only if the student in question sat all their exams at the first opportunity or completed their assessments for the year.

But London Met applied its own rule, based on successful progression of the student from one year of study to the next.

The discrepancy was huge. The university’s method resulted in a non-completion rate of 3 per cent compared with Hefce’s 30 per cent.

Sir David acknowledges that Hefce’s funding rule on completion was “controversial”. He says there was “widespread belief” in the sector until 2004 that the rule was impractical and not applicable in its literal sense to universities with modular degree schemes, particularly universities “with a strong widening-participation ethos”.

There was an anecdotal belief that Hefce did not apply the rule literally and that there was “leeway” in the way institutions might interpret their returns in the light of their own academic regulations on progression, he says.

However, Hefce was taking a literal approach to the rule in audits circulated in the sector from 2004, and many universities changed their regulations in response.

Sir David says it is “beyond dispute” that Mr Roper, who left London Met in March, was fully aware of the existence of the Hefce funding rule and its potential consequences from September 2003 or earlier.

There is clear email evidence that “third-tier officers” responsible for the area tried to warn the vice-chancellor and most members of the executive that, if Hefce applied its definition literally, the result would be “disastrous” for London Met. There is no record of a response to such warnings.

̽����Ƶ

Mr Roper has confirmed that he saw no reason for the university to change its practice because he firmly believed that Hefce was not applying its funding completion rule in a literal sense and that London Met’s approach was valid, Sir David’s report says.

“It appears that he took it upon himself to make this decision, and it is clear that he was not challenged in this by his executive group colleagues. In this respect, he was out of step with the actions of other vice-chancellors in the sector as they became aware of this issue in 2004… This is a clear failure of senior management in the institution,” the report states.

Meanwhile, Mr Roper, the university secretary and members of the executive group failed to present clearly the risks to the board of governors or board committees.

Although the director of finance brought up the completion rule during a presentation to the board of governors in October 2005, the issue was a single bullet point in a large presentation and was “delivered without particular emphasis”.

It was, however, clear that the more general issues of high dropout rates and poor data returns in Hefce audits were brought to the attention of the audit committee and board of governors “at an early stage” but they did not follow this up.

The audit committee “appears to have failed to consider” Hefce’s Higher Education Students Early Statistics Survey 03 and 05 audit reports, or to have given “proper attention” to the detailed conclusions of other Hefce reports, the review finds.

“It must be the case that the board of governors and the audit committee should take their share of corporate responsibility for a failure of this magnitude regardless of the detail of information provided by the executive,” Sir David concludes.

He adds: “Vice-chancellors are often charismatic leaders, and the case of LMU is no exception. While it is important that they are allowed to manage, it is incumbent upon boards of governors to provide sufficient and effective challenge. In the light of what is now known about the management of LMU during this period as well as the disregard for funding council rules, I can only conclude that this challenge and supervision by the board of governors in general was inadequate.”

̽����Ƶ

Sir David writes that he has received more than 50 submissions from staff, mainly academics, who universally expressed lack of surprise at the events that unfolded.

“They attest to problems of student-data quality for internal use over many years and provide many detailed examples of the difficulty of removing students from the record whom they know to have left or who never appeared,” he says.

“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.”

However, to see all the executive in the same light may “be unfair to particular individuals”, Sir David acknowledges.

He adds that there is “much evidence” that the prevailing style of management led to a “silo” approach that allowed little collective discussion.

“It must however be the case that they [the executive] share collective and in some cases line-management responsibility for the failings in relation to data quality,” he concludes.

Other universities have fallen foul of the funding rule, but not on the same scale.

Sir David says Hefce might have discovered the problems at London Met earlier if it had been quicker to investigate in more detail the “lack of credibility” in student data identified during Hefce audits from 2003, while the funding council’s initial lack of clarity on the rule “may have contributed to LMU’s position”.

The report adds that the university appears not to have been interrogated on how it defined funding eligibility during these audits.

“I am not aware of any other crucial funding rule that has been so difficult to apply and/or clarify and has had such a wide-ranging effect on so many institutions,” Sir David says.

“Hefce therefore bears some responsibility for this, but this does not detract from the singularity of the responsibility of LMU.”

In a statement, London Met says Sir David’s report is coupled with an independent review carried out by Deloitte into the circumstances of Hefce’s clawback of funds.

The reports were presented to the board of governors on 18 November. They are due to be published next week.

The university says the Deloitte report, which is still in the final draft stage, “is critical, and the board acknowledged those criticisms”, adding that its recommendations will be considered by the board next month when the report is finalised.

London Met says the points raised by Sir David’s report, “particularly about perceptions of the management style and the relationship between the executive and the board… provide London Met with important lessons, which will also be discussed at length by the board of governors. All the recommendations will also be the subject of full response and proposed action.”

The university adds that it wants to draw a line under the clawback issues “to allow both Hefce and London Met to proceed with their much more important tasks”.

And it says that it is confident that, following this week’s appointment of Malcolm Gillies, the former vice-chancellor of City University London, as its new vice-chancellor, it would now be able to “renew our focus on our students and their education”.

rebecca.attwood@tsleducation.com