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Private Provision

June 21, 2012

John Gill, in today’s THE, is right to underscore the limited relevance of New College of Humanities. I argued this a year ago in an article for Open Democracy, ‘First as Farce’: the conclusions there are further confirmed with the news that NCH will not have ‘trusted sponsor’ status and so, for the time being, will be unable to bring non-EU students into the country to study.

Gill is also right to finish his editorial with a call to be clearer on the difference between for-profit and charitable private providers. Education debates are overshadowed by health here and the terms of the latter are not always a good fit for the former. I have tried to set out the meanings of ‘privatisation’ in education here.

But there are three important points to remember.

The government’s whole HE reform is designed to ‘create a level playing field’ for private providers. This is why block grant was removed in entirety from Band C and Band D subjects (arts, humanities, social sciences, etc).  This is the main market reform and drove higher fees.  From the point of view of private providers, that change removed a subsidy to established universities which had rendered private undergraduate fees uncompetitive in the home market.  Similarly, students at private providers are increasingly gaining access to public funding to support their study.

Further, it is one thing to recommend the use of private institutions to increase capacity so as to meet unmet demand for undergraduate study. This was Browne’s proposal: he wanted to see overall caps on student recruitment lifted.

This is not what we have from the coalition. We have a different form of market: with more providers but the same number of students we have an intensified zero sum game.  In addition, many established universities will be labouring under the new core/margin scheme with its continued use of institution-specific limits on recruitment of certain students (below AAB) – the core. This is the tenor of Pam Tatlow’s letter in today’s THE:

‘The real risk is that students will lose out if there is a cap on the overall number of students who are funded and places are transferred to private providers.’

Gill ignores number controls. But it is the framework which determines the impact of the entry of alternative providers into the state funded (backed) higher education system.

Finally, we shouldn’t ignore the very real capacity of some private providers to expand rapidly given the deep pockets of their backers (were numbers controls to relax). This is especially true of companies limited by shares. The government still plans to give Pearson degree awarding powers. For-profit and with an overall market capitalisation of roughly $10billion, it would have the potential to cause real disruption to established provision.

The latter is Gill’s ‘dangerous hornet’ but NCH’s ‘bee’ is far from benign if its buzzing distracts us.

  1. Whole point of HE Reform was to move year-on-year Govt HE spending out of national deficit by attaching a revenue stream to it, no?

  2. I think that’s a stage in the grand plan. Though there is the technocratic dream of a fiscally-neutral HE system, I’m not sure it’s what floats Tory boats.

    See this from today: “We are serious about supply-side reform. Those who are churlish about this forget that many of our universities started as alternative providers challenging Oxbridge dominance by offering something different often with support from local councils and local businesses. Those alternative providers were dismissed at the time – the new University College London was denounced when it was set up as a “mere lecture-bazaar” and now it is one do the world’s great universities. Now we are once more opening up our system to a wider range of providers that can take on students with public loan support.

    “There are many ways an alternative provider can enter our system. We welcome new start ups, and international institutions with experience abroad. Or an existing university might set up a commercial subsidiary aimed for example at the overseas market. The current transformation of the College of Law is another example of what can be done provided of course charitable funds are protected. I envisage a wider range of providers with a particular focus on teaching, or concentrating on the efficient delivery of licences to practise, or focussing on distance learning.”

  3. The long view would seem to suggest that new providers in and of themselves may bring innovation and alternative approaches that will ultimately prove to have been a Good Thing. To me the crux of the debate is the continued cap on student number, brought about by what Nick Barr has described as a “fiscally incontinent” student loans system. This means that non-university providers – which includes HE in FE as well as for-profit and not-for-profit organisations – can only steal market share from established universities rather than picking up on the significant unmet demand or filling genuine gaps in provision either in terms of subject area or mode of delivery. While this is unresolved, these other HE providing institutions will be pariahs.

    • Thanks for the comment. But the two go together – alternative providers are meant to undercut established provision and the cap creates conditions where that competition is significant. If the mass of HEI’s were able to recruit freely the ‘new providers’ would have no significant effect. The ‘core’ allocations at individual institutions also play a role here. If you start to look at the history of privatisation in the 80s and 90s, the analogies become clearer – the early days of the new ‘market’ are what you would design, if you wanted to break up what you saw as a state monopoly.

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