UCLan – changing corporate form

In an internal announcement last week,  the University of Central Lancashire (UCLan) told staff that it was altering its group structure as of 1 August 2013 and had applied to the Secretary of State, Vince Cable, to dissolve its current corporate form, a statutory ‘higher education corporation’, at that point and move assets, undertakings and staff into a new company limited by guarantee, UCLan Group. Hefce have also been informed of the intended changes. Last summer a similar process was used to dissolve Leeds College of Music into Leeds College of Music Limited a subsidiary of Leeds City College.

Around 20 higher education institutions in England use the private form of a company limited by guarantee, including London School of Economics, London Metropolitan (tellingly) and indeed all the former polytechnics that were under the aegis of the Inner London Education Authority.

What is novel about the UCLan case is that it is not pressing financial difficulties that is prompting the change nor is it the preparatory stage in a merger or takeover.

Technically, though, this is privatisation. A quasi-public corporate form, a higher education corporation, is being replaced by a private company. The telltale sign that UCLan is quasi-public is that it does not have the fundamental right of ownership – the ability to dissolve itself. That power rests by statute with Cable, who is obliged to consult with the current governors and approve the statutes and articles of the ‘successor company’.

Since this move is consistent with the 2011 Higher Education White Paper there is unlikely to be any hold-up at that end. That this can be sprung on staff and students without consultation is one clear example of the democratic deficit at the heart of the governance of many English universities.

UCLan is primarily looking to achieve a more streamlined, business-like structure, the better to manage its overseas expansion. The current vice-chancellor, Malcom McVicar, will become the Chief Executive Officer of the Group, his role being the strategic development of the overseas campuses (in Cyprus, Sri Lanka and Bangkok) and the development of the Group overall as a commercial operation. The university in Preston will be repositioned as a subsidiary of the group with a new vice-chancellor to be appointed shortly.

This all tallies with the analysis I published in a recent article for UCU Left’s, Another World is Possible: “… vice-chancellors increasingly act as chief executives who in the absence of any clear owners have even fewer limits on their powers than the equivalents in other sectors. Institutional autonomy may translate into the freedom to act autocratically without regard to the constituencies that the organisation originally set out to serve.”

The university is seeking ‘greater autonomy and independence’ from parliament and government. According to the internal press: “Announcing the changes, Brian Harris, Chair of the University Board said:

“The University operates in a highly dynamic landscape and we need to become more agile, both in terms of future challenges and the opportunities presented to us. Becoming a Company Limited by Guarantee will provide us with much greater flexibility to respond to the constantly shifting political and regulatory landscape in which we operate in the UK and to take advantage of the opportunities around the globe.”

A Q&A provided to staff reiterated this point: “The University will be more able to shape its governance and structural arrangements to meet the needs of the changing operating environment and new opportunities. As such we will be able to respond more effectively and more quickly as needs change.”

The key challenge for the next few years would be to resist the conflation of ‘institutional autonomy’ with corporate practices and more autocratic executives, whilst defending university democracy by means of academic and public oversight. This won’t be won by lobbying, but needs more direct, local and urgent action.

The Q&A document denies that UCLan is engaging in ‘privatisation by stealth’:

“As a [company limited by guarantee], UCLan will retain its status as a University along with its tax status as a charity. The University will not be responsible to a set of shareholders with a vested financial interest in its profitability; it will continue to be accountable to its Board of Governors. There is no plan to privatise the University; this has never been mentioned or discussed by the University Board.”

However it is aping commercial forms of organisation and operation and as a company limited by guarantee it is one step closer to the ‘fullblown’ switch to profit-distributing corporate forms (as forthcoming events at London Metropolitan may illustrate and as I have outlined in earlier work for Research Fortnight).

Increasingly commercial orientation will push up against the question of equity investment (investors cannot buy shares in charities), by which point the difference between a company limited by guarantee and one limited by share may appear as academic as the difference between the formerand a higher education corporation does now.

The key question for UCLan staff and students is: what do the proposed articles of UCLan look like? Do they protect the assets of the university? What say do staff and students have in governance of the Group? Will they even have board level representation?