Key lessons for higher education from local authority mergers

Recent news of the planned merger of the universities of Greenwich and Kent into a “super-university” provides a good opportunity to reflect on what can be learned from other “mergers” or reorganisations within the wider education and public sectors.

At Browne Jacobson, we have advised local government for many years as councils have gone through various types of reorganisation. 

There is currently wholescale reorganisation across England amid Whitehall’s devolution and local government reorganisation agenda.

Drawing on insights from areas that have already gone through such transitions, both within local authorities and regional combined authorities, we set out below several key considerations that may inform any reorganisation efforts in the higher education (HE) sector. 

Lessons learned from English local authority mergers: A legal perspective

The restructuring of local government in England, particularly the merger of district and county councils into new unitary authorities, has generated a series of important legal lessons.

These lessons stem from the statutory framework underpinning reorganisations, practical implementation of transfer schemes, subsequent governance and accountability issues. 

While universities sit under a different legislative framework, and are accountable to different bodies such as the Office for Students, many of the practical issues to be dealt with are the same. 

1. Statutory framework and legislative clarity

Local authority mergers in England have generally been enabled by orders under the Local Government and Public Involvement in Health Act 2007, or bespoke statutory instruments. 

Universities are established either as Royal Charter or higher education corporations managed through Articles and Instruments of Government (post-1992) or private companies that have been granted university title and/or degree-awarding powers by the Privy Council or the Office for Students. 

In any event, the consent of a regulator would be required to agree to universities setting up a merged entity or other material changes in how the original institutions operate.

A key lesson from the public sector is the importance of legislative clarity. Early local government mergers revealed that ambiguous drafting in reorganisation orders can create uncertainty about the legal personality of the successor authority, the continuity of contracts, and the treatment of property rights.

Clear statutory instruments or governance documents and transfer agreements are essential to provide a firm legal basis for transition, and to minimise litigation risk.

2. Continuity of functions and service delivery

One of the central legal challenges for local government has been ensuring continuity of statutory functions. When authorities merge, the successor body inherits certain duties and responsibilities. 

In a HE context, this will include awarding degrees, delivering teaching, undertaking research, providing certain levels of student support, and financial obligations. 

Lessons from Dorset, Buckinghamshire and Northamptonshire demonstrate that explicit transfer provisions in reorganisation orders are necessary to avoid gaps or duplication in service responsibilities. 

The legal mechanism of a “transfer scheme” has proven valuable in ensuring that liabilities, contracts and obligations move seamlessly to the new authority. 

Transfer schemes may not be applicable to HE, but a transfer agreement setting out clearly what is being taken on by a new institution will be vital. One key issue will be the status of the pre-merger institutions and whether there will be any legacy body left behind.

3. Employment and staffing issues

The legal implications for staff transfers have been particularly significant. The application of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) has been central to protecting employees’ rights. 

However, differences in terms and conditions across merging councils have exposed complexities, especially regarding harmonisation of pay and pensions. 

The lesson is that while TUPE ensures continuity, longer-term workforce integration requires careful legal negotiation with trade unions, backed by clear policies to mitigate the risk of employment disputes.

4. Governance and accountability

Mergers require the dissolution of existing councils and the establishment of new democratic structures. 

From a legal standpoint, transitional governance arrangements, often through shadow authorities, are crucial. Experience shows that the legal design of these shadow bodies must balance democratic accountability with efficiency.

For example, judicial review challenges have arisen in situations where consultation on governance arrangements was perceived as inadequate. Thus, the lesson is that lawful, transparent and inclusive consultation processes are not only politically desirable, but also legally necessary. 

In a HE context, this may be delivered through shadow boards or committees, which would ensure that decisions being taken now that impact the future delivery of education by the new institution are properly thought through and take the correct information into account.

5. Financial and contractual liabilities

The successor bodies of councils inherit the assets and liabilities of predecessor bodies. Legally, the distribution of debts, ongoing contracts and legal proceedings can become contentious.

Mergers in Northamptonshire highlighted the risks of unclear liability allocation when a predecessor council is in financial distress. 

The legal lesson is that reorganisation orders must include robust provisions on apportionment of debts, and treatment of ongoing litigation to prevent uncertainty and disputes after vesting day.

Particular care needs to be applied where a HE institution is in serious financial distress, given that there is no overarching insolvency legislation applicable to the HE sector. 

In a HE setting, it is also very important to consider the student contract, and that each student is still going to receive what their original university promised them, or that any changes to that contract are very clearly defined and agreed with the student.

6. Stakeholder voice

Finally, mergers have highlighted tensions between efficiency-driven restructuring and the statutory framework of localism. 

Larger unitary authorities can inadvertently distance decision-making from communities. For universities, the key stakeholders are students, staff, funders, regulators, collaborators and the business community. 

It will be absolutely crucial to consider how all these stakeholders can be encouraged to engage with, and ultimately buy into the merger. TUPE consultation will help with staff, but the statutory requirements are unlikely to be enough to give staff the information that they require. 

The Office for Students may well want to see evidence of engagement and consultation with all or some of the stakeholders mentioned here, to have comfort that the merger will be successful.

Final thoughts 

English local authority mergers underscore the importance of precision in legislation, robust transfer mechanisms, compliance with employment protections, lawful governance arrangements and careful management of liabilities. 

These lessons can be used very effectively when looking at the mergers or reorganisation of higher education institutions, in particular. While mergers can promote efficiency, their success depends on legally sound frameworks that safeguard continuity, good governance and accountability, financial strength, and stakeholder voice.

Key takeaways for higher education

Clarity is essential

Reorganisations must be precise to avoid ambiguity about legal personality, property rights and service responsibilities. 

Continuity of functions

Transfer arrangements must explicitly cover contracts, assets and liabilities to ensure seamless delivery of statutory/regulatory duties.

Employment law considerations

TUPE will apply, protecting staff rights, but differences in pay, pensions and conditions require careful legal management.

Early engagement with trade unions and clear harmonisation policies reduce the risk of disputes.

Governance arrangements

Legally robust shadow boards and committees are vital to manage the transition period.

Transparent, inclusive consultation processes are necessary to avoid legal challenges.

Financial and contractual liabilities

Successor organisations inherit debts, litigation and contracts. Clarity on apportionment is crucial, especially if a predecessor body faces serious financial difficulties. 

Stakeholder voice

Students part-way through their courses will be concerned about the impact on teaching, accommodation and support.

Prospective students will need assurance about the quality of their student experience and education both during the transition process and  at the resulting merged institution. 

Funders, collaborators, business partners and regulators will all need reassurance of the continuing nature and quality of education, and research, provided by the institutions. Chartered universities will also need to consider Privy Council approval.

Overall conclusion

Successful mergers require precise legal frameworks, effective transfer mechanisms, and protections for staff, finances, governance, and student rights.