Commentary: for-profit companies will ruin UK’s universities

University vice-chancellors must fight ‘privatisation’, urges leader of academics’ union

By Sally Hunt | 23 October 2012

“For-profit higher education in the UK would bring educational failure and profiteering on a grand scale”

Higher education in the UK is still reeling from the UK Border Agency’s dramatic intervention at London Metropolitan university.

Accused of “large systemic failures” and stripped of its “highly-trusted status” two months ago, rendering it unable to sponsor visas for students from outside the European Union, the university is taking legal action to contest the agency’s decision.

But another part of the story has received less attention: the failure of university vice-chancellors to defend public education.

Vice-chancellors have, with a few honourable exceptions, largely preferred a strategy of accommodation with a succession of governments that encouraged them to lessen their dependence on the state and work with private partners.

For around 10 years, universities have run into the arms of partnerships with private providers that recruit international students. But the risks in relying on the private sector are becoming apparent.

Universities are also increasingly turning to outsourcing in an attempt to appear leaner and more efficient. In August, Exaro disclosed that London Met was set to become the first UK university to have its operations, other than teaching and the vice-chancellor’s office, run by a private for-profit company.

We learnt from Exaro last week that the row over London Met’s student visas has, ironically, led the university to scrap the tendering process to run nearly all its services.

The University and College Union has warned, and continues to warn, about the dangers to quality and standards posed by the imperative to generate profits. But we also warned that this was a fickle and sensitive market, especially vulnerable to political interference.

The heavy-handed intervention over student visas threatens permanent damage to the UK brand abroad. Many institutions are heavily invested in this market. It was easier, they presumed, than making the case for decent funding from government.

Outsourcing in the public sector, too, has seen catastrophes. So embarrassing are these failures becoming that even free-market ideologues in government are forced to soft-pedal publicly on the issue in favour of indistinct mumblings about “partnership”.

Yet none of this stops universities such as London Met. Even the Higher Education Funding Council for England, which distributes public money in the sector, is – with a straight face — promoting outsourcing as an efficient panacea for the cash-strapped university.

Others have turned to the bond markets. De Montfort university in Leicester raised private finance for building projects by issuing a £110 million bond. Cambridge university issued a £350 million bond to finance capital projects.

The risk is that such universities become slaves to the credit-ratings agencies.

Initial ratings have been based on the assumption that the government would bail the universities out in the event of financial troubles. Moody’s granted De Montfort a high AA1 credit rating. It gave Cambridge the highest rating of AAA.

The only people who stand to gain from all of this are the private companies currently sizing up the higher-education sector and their powerful backers in the Anglo-US financial sector. For-profit companies in education have deep pockets and big ambitions, and they are capable of fast and aggressive growth.

In the space of 20 years, private companies came from nowhere to grab a 13 per cent share of the massive US student market. In the process, they have siphoned off 24 per cent of all federal subsidies to students.

A US congressional report following a two-year investigation into for-profit colleges found “overwhelming documentation of exorbitant tuition, aggressive recruiting practices, abysmal student outcomes, taxpayer dollars spent on marketing and pocketed as profit, and regulatory evasion and manipulation”.

At for-profit colleges, barely one in five students completes the course. This is a poor return indeed for the $32 billion of US taxpayers’ money taken by those colleges.

The warning is clear: for-profit higher education in the UK would bring educational failure and profiteering on a grand scale. It would be at the expense of students, taxpayers and the reputation of UK higher education.

University vice-chancellors would be better advised to reflect more critically on their myopic rush to enter a game that many of them have little hope of winning.

Even at this late stage, it would be possible for them to re-join the battle for public higher education. They would be welcome.

Sally Hunt is general secretary of the University and College Union.

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