In the UK, government policies from the late 1980s have stimulated competition between existing universities, both for student recruitment and for research funding. The increasing significance, sophistication, and cost of university marketing activities – barely in existence a generation ago – is one testimony to the policies’ success (Maringe and Gibbs, 2009: 29; Temple, 2011). Competition for research funds is
worth particular examination, as it is readily quantifiable in cash terms (although of course excellent research and expensive research are not identical, and the focus on cash raises the profiles of universities with ‘big science’ departments at the expense of others), and because a major research portfolio affects the external perception of the university via league tables and publicity generally, and so feeds through into student recruitment. The first Research Assessment Exercise (to be known from 2014 as the Research Excellence Framework), intended to assess institutions’ research capabilities and to allocate funds differentially as a result, took place in 1986. As a result of successive exercises in 1989, 1992, 1996, 2001, and 2008, obtaining research funding has become increasingly competitive and led to a highly concentrated distribution. In 2006/07, six institutions each received over £100 million in dual support research income (that is, research funding from the Funding Councils and the Research Councils combined), while the median figure was around £2.5 million (UUK, 2008: 44). Even this figure, modest enough in research grant terms, tails off rapidly once the median institution is passed, meaning that nearly half of all UK universities carry out only very small amounts of research, or, effectively, none at all. On the criterion of research income alone, then, UK policy over the past quarter-century to increase competition among universities has, it may be argued, been highly successful: it has led to a more diverse university system, containing institutions that have increasingly little in common other than the title ‘university’. Indeed, it may even be thought that the very success of this policy has reached the point where it has the perverse effect of actually limiting competition, as a variety of factors – costly research infrastructures, existing research groups, international partnerships, and other matters – have made it very difficult indeed for a non-research-intensive university to compete with the handful of ‘premier league’ institutions. The football analogy is obvious, but a similar picture can be seen in other artificial attempts to create competition: in utilities, for example, where barriers to entry are so high that a small number of companies – including, in a further irony, foreign state-controlled companies – are able to manage the market.
But while the higher education market has become more competitive, the very title ‘university’, which effectively limits entry to this market, has become more fluid. There has been a slow but steady process over recent years of lowering the barriers to gaining degree-awarding powers and a university title. This led to a significant increase in the number of full universities in the UK: between 1992 and October 2012, in addition to the former polytechnics and their Scottish equivalents, 29 universities have been created in the UK from institutions that did not previously have the title.
The process has been accelerated under the Coalition Government which took office in 2010. In November 2012 Minister David Willetts announced that a further ten institutions would be put forward for the title of ‘university’. The government’s 2011 White Paper had previously set out a number of measures intended, apparently, to encourage greater private sector involvement in higher education – crucially, by
making it easier to gain a university title. The requirement to have a minimum of 4,000 students – dating from the previous government’s 2003 White Paper, which led to the requirement that a university should undertake research and be active in a range of disciplines being removed – has now been reduced to 1,000: about the size of the average English state-funded secondary school. The government also intended to remove any legal impediments to private companies buying existing universities. Such other changes will, the White Paper suggested, ‘make it easier for [new providers of higher education] to attract private investment’ (BIS, 2011: para 4.35). The implication here, though unstated, must be that these new providers will be for-profit organizations, as non-profit institutions are unlikely to be attractive to private investors (as opposed to philanthropists). It was expected that legislation to implement these and other changes would be proposed in 2012: in fact, it seems as if the government has had second thoughts about the political wisdom of at least some of these moves, despite their being strongly backed by the minister concerned, David Willetts.
A striking feature of the 2011 White Paper’s approach to the encouragement of greater private provision is the absence of a clear rationale: the precise problem that private providers are expected to help solve is never set out. In its Foreword the White Paper tells us: ‘Our university sector has a proud history and a world-class reputation, attracting students from across the world. Higher education is a successful public–private partnership’ (BIS, 2011: 2). So quality or standards – or attractiveness to students – are presumably not the problem, and nor is the relationship between universities and government. No examples of significant failures among existing institutions are given. Instead, and to add to Stefan Collini’s (2011) typology of tenses now used in official documents on higher education (mission statement present, future dogmatic), the conditional optimistic is widely deployed. So we learn that ‘new entrants to the sector ... may have different strengths ... they may offer particular well- honed teaching models ... [and they] may find it easier to include an international higher education experience for their students’ (BIS, 2011: para 4.5). Leaving aside the curious notion of seeking a ‘well-honed teaching model’ – the usual criticism of university teaching is that models are only too well-honed, through constant repetition – and the implication that existing universities lack international links – when a regular criticism is that universities spend too much time on supposedly glamorous international ventures rather than attending to domestic matters – what we see here is a breathtaking lack of specifics. The text bears the hallmarks of a writer casting around in an attempt to find vaguely plausible reasons to support a decision which has already been made on quite different grounds.
The White Paper also assumes that private providers are discriminated against by the current arrangements, and that legal and other changes need to be made to allow them to compete on equal terms with the ‘public’ sector. The ‘level playing field’ cliché makes an early appearance in the relevant chapter of the White Paper:
‘To achieve [wider] choice for students, all higher education providers, whatever type of course they offer, must be able to compete on a level playing field’ (BIS, 2011: para 4.7). However, a level playing field implies that neither end slopes. At present, public sector institutions have certain duties laid upon them which private colleges do not have, including being subject to the Freedom of Information Act (FOI) and the decisions of the Office of the Independent Adjudicator (OIA) in respect of student complaints. Both involve costly and time consuming processes, potentially involving awkward or otherwise undesirable (from the institution’s point of view) disclosures. Moreover, it is hard to believe that a commercial organization such as BPP would be willing to make available the kind of internal documents public institutions are routinely required to produce under FOI and OIA requests. The private sector currently benefits from such advantages over public institutions since they do not receive public funding, even if some of their students do – this argument is a less than compelling one, however, as the FOI applies equally to university activities that are not publicly funded, such as research or consultancy projects for private clients. The funding arrangements for undergraduates from 2012, however, will erode this distinction, if not completely remove it, and it is the logic of the White Paper’s position, in any case, that the public and private sectors should be ‘treated on a more consistent basis’ (BIS, 2011: para 4.10) and thus be subject to the same regulatory requirements.
Neither the supposed weakness of the current arrangements are set out, nor are the concrete benefits of an alternative approach described. It is hard to avoid the conclusion that increasing the number of private providers was set as an ideological goal and a policy framework (if that is not too grand a title) was put together to support such an objective.
It is worth pausing here to reflect on the significance of profitability because in the UK, as I have shown, the public/private divide that would be significant in many other countries has little real relevance if non-profit institutions – of the Buckingham model, say – are what are being considered as ‘private’. The recent growth of for- profit institutions in the UK raises new considerations. In economics, the notion of profit is usually seen as having theoretical benefits by signalling opportunities for investment and for indicating where innovation may generate high returns. Both could potentially lead to increased wealth for the economy in question. So, in principle, why should profitability not have a role to play in providing higher education? The argument that education is ‘too important’ to be left to the vagaries of the profit motive is not compelling: there seems to be little controversy in most countries about the supply of food being determined by judgements of profitability by food producers, distributors, and retailers.
There are several reasons why profitability is a difficulty in education, however – and in higher education in particular. One has to do with externalities (or spillover effects): the benefits of education are felt well beyond the individuals directly
involved in learning. Just as the construction of an urban subway line might be shown to be profitable if the increases in property values and the economic activity which it generates could be represented on the subway authority’s balance sheet, so a university receiving a public subsidy might be shown to be profitable if the increased incomes of its graduates, and the economic value-added and wider social benefits which they generate over their lifetimes, could be captured in the university’s financial accounts. While the argument applies most strongly to basic education – the returns to the whole society of near-universal literacy and numeracy are huge – it also applies to higher education since the benefits of high skills are also experienced widely. But if educational provision depended on the profitability of individual enterprises, it is likely that provision would be less than optimal since these externalities would not figure in calculations of profitability.
Supply could be increased through public subsidies to students and/or institutions but this would then create a set of perverse incentives that are hard to manage in an educational setting. Running a profit-making enterprise is problematic when your customers are both your raw material and your finished product: as with most other enterprises, you want to maximize the quantities of both – which sets up tensions in an educational institution. In countries with both non-profit and for-profit higher education institutions, this helps explain why it is the former which tend to be of the higher status, while the latter focuses on standardized courses in technical or professional fields. It also means that for-profit institutions have ‘an ambiguous relationship to the question of civic and community engagement’ (Watson et al., 2011: 11), which further limits their roles in creating educational value.
A large number of private institutions actually do provide higher education in the UK. There are certainly over a thousand of them, although no comprehensive register exists – and it would in any case become immediately out of date. Most are very small, typically teaching international students, often for non-UK awards. The business model of many of these institutions is puzzling to an outside observer: they seem to have no distinctive academic or professional expertise or a marketing proposition that would not be available, at a similar price, in more established, better- known institutions that are themselves degree-awarding bodies. They certainly do not have a recognized brand to offer. One conclusion must be that they are teaching students who would not be admitted to a mainstream university on attainment grounds, whether in terms of academic ability or English language competence. It might be that the government’s new, more restrictive, visa regime, in the teeth of opposition from the entire university sector, will put some of these small colleges out of business. It would be deeply ironic if one strand of the current government’s ideology – restricting immigration, even when the people affected are not immigrants at all in the usually accepted sense of the term – undercut another ideological objective, that of enlarging the private higher education sector..
Meanwhile, in the United States, a devastating critique of for-profit higher education was made in 2012 by Senator Tom Harkin, chairman of the Senate Health, Education, Labor, and Pensions Committee. ‘In this report’, Senator Harkin was reported as saying, ‘you will find 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’ (Lewin, 2012).The widely syndicated Doonesbury cartoon strip made this a storyline in summer 2012 in which the president of a less-than-stellar private but non-profit college, of which many of the strip’s characters are alumni, considers turning it into a for-profit organization. As his provost tells him: ‘Remember, for-profits take any warm body with federal aid. They’re all about enrolment, not completion.’
Similar cases appear to be emerging in the UK, where a lightly-regulated for- profit sector is now able, as in the US, to gain access to public funds. UK/EU students at private colleges are able to apply for student loans on courses designated by the government department responsible (currently, BIS), which gives the colleges access to tuition fee income from the Student Loans Company. The number of students at private colleges receiving this support more than doubled in 2011/12 compared with the previous year, involving £100 million in loans (Morgan, 2012b). While such provision appears to have encouraged their growth, problems apparently similar to those uncovered in the Harkin report in the US are now emerging. In a recent case, Guildhall College in London (not to be confused with the long-established Guildhall School of Music and Drama) was found to be registering students on courses designated for student support, when in fact the students concerned wished to study on courses that were not so designated. The College benefitted by some £750,000 before designation was withdrawn (Morgan, 2012a). It is difficult to see how, in practice, abuses of this kind can be prevented in a systematic way if there are hundreds of such colleges, each with relatively small numbers of students: it is unrealistic to expect BIS to police a system like this, constantly in flux, and likely to become even more fluid once opportunities for large-scale, low-risk fraud become more widely appreciated.