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New universities: will the public good yield to private profit? New universities: will the public good yield to private profit?
(9 days later)
The announcement this week of 10 new universities has been spun by David Willetts, the universities minister, as the "single biggest creation of universities since 1992". Yet these small and specialist institutions, including the venerable Royal Agricultural College and Norwich University College of the Arts, already held the power to award degrees, received public funding and were "university colleges". Willetts's claim that "more people will now realise their ambition of going to a university" is therefore overblown. Life continues much as before for students and staff.The announcement this week of 10 new universities has been spun by David Willetts, the universities minister, as the "single biggest creation of universities since 1992". Yet these small and specialist institutions, including the venerable Royal Agricultural College and Norwich University College of the Arts, already held the power to award degrees, received public funding and were "university colleges". Willetts's claim that "more people will now realise their ambition of going to a university" is therefore overblown. Life continues much as before for students and staff.
The true significance of creating new universities lies elsewhere. They result from measures designed to create a level playing field for private operations delivering higher education. In June, the government lowered the number of full-time students needed to be a university from 4,000 to 1,000, which made these small institutions eligible. This change followed a recommendation by the rightwing thinktank Policy Exchange which called for a US-style market in higher education in its 2010 report, Higher Education in the Age of Austerity. It argued that private operators should get the right to call themselves universities, award degrees, get easier access to taxpayer funding and even take over failing state-run universities. The true significance of creating new universities lies elsewhere. They result from measures designed to create a level playing field for private operations delivering higher education. In June, the government lowered the number of full-time students needed to be a university from 4,000 to 1,000, which made these small institutions eligible. This change followed a recommendation by the rightwing thinktank Policy Exchange which called for a US-style market in higher education in its 2010 report, Higher Education in the Age of Austerity. It argued that private operators should get the right to call themselves universities, award degrees, get easier access to taxpayer funding and even take over failing universities.
In response, the government has removed grants for subjects where private providers are able to compete, allowed students at private colleges access to the official student loan scheme and maintenance grants, and introduced a HMRC-led consultation to exempt commercial degree providers from having to add VAT to their tuition fees.In response, the government has removed grants for subjects where private providers are able to compete, allowed students at private colleges access to the official student loan scheme and maintenance grants, and introduced a HMRC-led consultation to exempt commercial degree providers from having to add VAT to their tuition fees.
The government desires a more diverse body of institutions providing more choice for would-be students. Policy Exchange claims that there could be a 35% increase in applications to a new university following bestowal of the university title.The government desires a more diverse body of institutions providing more choice for would-be students. Policy Exchange claims that there could be a 35% increase in applications to a new university following bestowal of the university title.
Some may worry about the dilution of the meaning of "going to university", but since 2004 there has been no requirement for such institutions to offer a broad range of subjects, nor need they award higher degrees such as doctorates. Perhaps a bigger concern is the advent of a saturated market where no individual could possibly become the informed consumer crucial to the ideology of choice lying beneath the reforms.Some may worry about the dilution of the meaning of "going to university", but since 2004 there has been no requirement for such institutions to offer a broad range of subjects, nor need they award higher degrees such as doctorates. Perhaps a bigger concern is the advent of a saturated market where no individual could possibly become the informed consumer crucial to the ideology of choice lying beneath the reforms.
There are now some 100 universities in England, and 159 UK institutions with the power to award full undergraduate degrees. These include six private operations: the University of Buckingham, IFS School of Finance, Ashridge Business School, Regent's College, BPP University College and the College of Law. While the first four are charities, BBP University College is the not for profit subsidiary of BPP Holdings Ltd, in turn owned by the US-based education company Apollo Global. It will soon receive "university" status, and therefore looked likely to become the first UK university owned by a for-profit company.There are now some 100 universities in England, and 159 UK institutions with the power to award full undergraduate degrees. These include six private operations: the University of Buckingham, IFS School of Finance, Ashridge Business School, Regent's College, BPP University College and the College of Law. While the first four are charities, BBP University College is the not for profit subsidiary of BPP Holdings Ltd, in turn owned by the US-based education company Apollo Global. It will soon receive "university" status, and therefore looked likely to become the first UK university owned by a for-profit company.
But last week, in a less reported but potentially more significant story from the world of higher education, the College of Law announced its elevation to the "University of Law". This has raised eyebrows, since it is in the midst of a complicated sale of its teaching business to Montagu Private Equity. As a charity cannot be bought outright, the details are murky. The charity that was College of Law will receive £200m from the sale and change its name to Legal Education Foundation, while a new company, "College of Law Limited", will receive the teaching business and associated staff, assets and liabilities. The limited company is a wholly owned subsidiary of the private equity firm to which it will distribute profits. It is this new company that will benefit from the change in status, beating BPP to the mark.But last week, in a less reported but potentially more significant story from the world of higher education, the College of Law announced its elevation to the "University of Law". This has raised eyebrows, since it is in the midst of a complicated sale of its teaching business to Montagu Private Equity. As a charity cannot be bought outright, the details are murky. The charity that was College of Law will receive £200m from the sale and change its name to Legal Education Foundation, while a new company, "College of Law Limited", will receive the teaching business and associated staff, assets and liabilities. The limited company is a wholly owned subsidiary of the private equity firm to which it will distribute profits. It is this new company that will benefit from the change in status, beating BPP to the mark.
But does the new "University of Law Limited" even have the power to award degrees to its students? This power belonged to what is now the foundation and is not meant to be a tradable or transferable asset. To date this ban has been an impediment to private companies purchasing any charitable higher education institution.But does the new "University of Law Limited" even have the power to award degrees to its students? This power belonged to what is now the foundation and is not meant to be a tradable or transferable asset. To date this ban has been an impediment to private companies purchasing any charitable higher education institution.
The government has yet to provide a clear account of how due process has been ensured in this case, but if there is no legal challenge, such a transfer of powers could set a precedent and open the way to the purchase of established universities. So as the 10 new universities set about finalising their new names, the danger is that they and their more established competitors may soon become opportunities for investors seeking to make a profit out of what should be the public good.The government has yet to provide a clear account of how due process has been ensured in this case, but if there is no legal challenge, such a transfer of powers could set a precedent and open the way to the purchase of established universities. So as the 10 new universities set about finalising their new names, the danger is that they and their more established competitors may soon become opportunities for investors seeking to make a profit out of what should be the public good.
• This article was amended on 29 November 2012. During the editing process, the description "state-run" was attached to universities that might be taken over by private operators. There are no state-run universities in England – they are all autonomous institutions. This has now been corrected.