This news story appears only to have been properly reported in yesterday’s Times. Since News International decided to install a pay-wall a year or more ago to prevent people from hearing about things affecting their lives, most students won’t have stumbled across this article. I am reproducing it here in full for the benefit of all who would like to see how their university is going to be shafted.
Universities face threat of private takeovers
Costs and courses would be cut at failing colleges Failing colleges face threat of takeover by private companies
Private companies are to step in to run failing universities as the Government abandons direct help for colleges in financial trouble.
Unprofitable courses will be scrapped and running costs drastically cut back under the plan, which will prompt vice-chancellors to pay private providers to take day-to-day control under contracts lasting ten years or more.
The approach marks a dramatic reversal of policy because the Government has supported universities in financial trouble, or taken the lead in brokering mergers with stronger institutions. But the combination of severe cuts in grants for teaching and higher tuition fees of up to £9,000 a year from 2012 will introduce new market pressures on weaker universities.
David Willetts, the Universities Minister, confirmed the plan to The Times. He said: “Our forthcoming White Paper will look at a variety of ways of delivering higher education. This is one possible way in which a failing institution could be turned around in the interests of students.”
The new policy seeks to protect students but not universities, many of whose vice-chancellors have angered ministers by rejecting pleas for restraint in setting fees, intensifying the controversy over the coalition’s higher education reforms. Privately ministers have attacked some universities as “oligarchies”.
BPP, one of the private providers approved by ministers for such work, told The Times that it was interested in running several universities and believed it could cut their costs by a quarter in some areas. The company, which was granted university college status last year, is already in talks with struggling establishments.
Carl Lygo, BPP’s chief executive, said: “One option is that the private provider would have a contract to run the university on behalf of the university governing body.”
A private university might also cut courses to control costs, he said. “You have to determine whether, having reduced the operating costs of the university, [some] programmes still remain viable.”
Since universities are autonomous, ministers and the higher education funding council cannot order a failing university to contract out its management.
But they could force the issue by refusing to sanction a bailout as they have done in the past.
Fees are expected to be based on comparable management charges, although a university council could introduce performance-related pay based on targets such as savings. Alternatively, private providers could set up a joint trust with a university council to run its campus, or allow it to appoint a proportion of the governors. Vince Cable, the Business Secretary and architect of the new hands-off approach to failing universities, warned vice-chancellors earlier this month that some “may find themselves in trouble” if students balk at their fees.
Students will be offered loans of up to £6,000 a year to study at private universities from next year and further steps to enable private providers to expand are expected in the higher education White Paper.
Mr Lygo said that the first step for anyone taking over the management of a university would be to cut or merge functions already covered by its head office, such as finance team, marketing or public relations. He said: “I have looked through some of the university cost base and I think we could probably save them, just on procurement savings alone, 25 per cent of their cost base, which is obviously very interesting to government.” He added: “Universities are not good at squeezing the last ounce of value for money out of their spending, which the private sector is.”
Crucially, BPP would review tuition fees at any campus it took over. “There is definitely an opportunity to have a lower price than the £9,000 headline figure some universities might want to charge,” Mr Lygo said.
Malcolm McVicar, Vice-Chancellor of the University of Central Lancashire in Preston, told The Times in February that several universities could fail as a result of lost teaching grants and visa restrictions on international students. His university, which will lose 90 per cent of its public funding, has set fees at £9,000.
About seven universities are said to be on a secret list of “higher risk” institutions held by the Higher Education Funding Council for England. These include the University of Cumbria, which was advanced several monthly payments last year to overcome a cash flow problem.
The University and College Union, which represents lecturers, has published research suggesting that 49 of 130 English institutions were at risk from funding cuts, owing to their mix of courses and students. Most were post-1992 universities. It named four as at high risk: Bishop Grosseteste University College Lincoln, which has set fees at £7,500, Edge Hill University, which will charge £9,000, Newman University College and Norwich University College of the Arts.
Although universities disputed its analysis, vice-chancellors admit privately that they expect the coalition’s higher education reforms to trigger management changes and mergers.