For-profit higher education in the UK

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Changing corporate form: Why
is UCLan doing it and why does
UCU care?
Jonathan White
Deputy Head of Campaigns,
University and College Union
Overview
• Why is UCLan doing this?
• Why is it important?
• Why is UCU opposed?
“Exciting times in higher education”
Wider policy context:
• renewed attack on public services through
the Health and Social Care Act, the Work
Programme and the higher education
White Paper: “Putting students at the
heart of the system”
“Students at the heart of the
system”
• Changing the form of the public subsidy from grant funding
to a fee and loan system that is choking off student demand
• Creation of a competitive ‘margin’ for student places that is
creating a ‘squeezed middle’ of universities
• Removed some of the regulatory barriers to new providers
getting access to the markers of prestige – university title.
• Deliberately subsidising the creation of new, for-profit
providers
New providers with deep pockets
A new kind of animal: for-profit companies with
Big Capital backers:
• BPP University College – owned by Apollo
• The University of Law, owned by Montagu
Private Equity
• Greenwich School of Management – owned by
Sovereign Capital
• Pearson college – owned by Pearson plc
Financiers looking for new
investment opportunities
• The financial crash and the search for new
assets
• Private Equity: UK HE is a ‘Treasure
Island’
• Investment Banks: ‘demand would be
enormous’
Universities and the dash for cash
A scramble to access new sources of capital to fund the
beauty contest for students:
•
•
•
•
•
•
•
Private partnerships and Joint Ventures
Outsourcing
Subsidiary companies
International campuses
Bond issues
Buyouts
Changing corporate form
Corporate form matters
Different HEIs have different constitutions and different
corporate forms:
• chartered universities – broadly the Pre-92 sector
• higher education companies – the majority of the post-92
universities
• companies limited by guarantee – former ILEA Polytechnics
and more recent new HEIs
• now, with BPP, Pearson, Kaplan and the University of Law:
companies limited by share.
Different corporate forms give institutions different
powers.
What changes if UCLan
becomes a CLG?
• Does not have to seek Privy Council approval for
fundamental changes
• Loses statutory requirement to have governing board
and academic council
• Could dissolve or sell itself to a third party without
seeking Privy Council permission
• Could float a loan on the stock market
• Easier to set up a for-profit subsidiary company with a
private investor, controlling the university’s assets
Why is this new?
• Other CLGs: former ILEA Polytechnics and HEIs created
after 1992
• Little evidence that it’s a stronger form of governance –
London Met, anyone?
• Key thing is the policy context and the movement of
private capital into the sector.
• This makes the move to CLG status a key stage in the
hollowing out of democratic governance and the placing
of charitable and public assets at the disposal of private
profit.
• It’s privatisation.
To conclude:
• UCU is opposed to this form of privatisation as
it is to others.
• Students are not consumers and universities are
not businesses.
• The corporation’s limits on management are
imperfect, but valuable, instruments for
asserting the interests of university stakeholders,
including the public.
• There is an alternative.
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