By Ian McNay

The sale of two recently designated ‘for-profit’ universities to owners outside the UK is one indication of the government’s market approach to higher education. I return to this below, after covering another piece of evidence.

Those who do not read the financial pages of the Guardian will not have seen an article by Rupert Neate Cannes on student accommodation as giving ‘first class returns to investors’ (17 March 2017, p33). It included two things that shocked me. ‘Last month, the value of contracts awarded to build student housing projects in the UK totalled more than the deals to build care homes, housing associations, local authority housing and sheltered housing added together’, and flats in ‘some student blocks… in London cost as much as £650 a week’. In Reading, there is one block where prices are £300 per week, and the UK average for one builder was £175 a week. Rents for university owned properties already constitute a supplementary fee and exceed the level of the maintenance loan, adding another financial obstacle to equity of access.

That may be one reason why, paradoxically, students are turning to private HE – alternative providers as they were called by government in last year’s White Paper, and now the subject of an enquiry by the Higher Education Commission, to which Ron Barnett and I were recently invited to give evidence. I did some digging around and the picture that emerged surprised me, and moved me from my initial stance of total opposition.

There is a history of alternative provision to challenge the mainstream of the system – the Royal Societies, way back, CATs, Polytechnics, the Open University. I have worked in all of those last three, and been frustrated at trying to innovate and be flexible in provision to meet student needs. A combination of academic conservatism, bureaucratic obstacles – ‘what you are proposing won’t fit on the computer model’ at the OU, ‘if we change the Resource Allocation Model to recognise the different cost profile of distance provision, everybody will want something different’ at Greenwich – and government/HEFCE rigidity, e.g. over funding for non-standard patterns of participation, were part of the problem. The recent decision to provide condensed student support for accelerated degrees is a first recognition of this, and has come because of pressure from the private sector: Buckingham has campaigned for years on the issue. That tendency for innovators to develop new norms that then become standardised traditions, defended as symbols of identity was compounded by the 1992 re-structuring into single sectors in the different UK administrations. It led to isomorphism, with HNC/D courses being dropped and foundation degrees limping along. As Howard Newby has said: ‘The English [and I think he was choosing that subset deliberately] have a genius for turning diversity into hierarchy’. A space was thus created for a new sector, just as, after Robbins, Tony Crosland and Toby Weaver decided they could not change the universities, so set up the polytechnics to be different, but equal. Now they are not very different but certainly not equal.

Ian Dunn, at Coventry, did the same thing in microcosm. He decided that setting up Coventry University College, now just CU, with four new institutions, would make it easier to innovate from the start in a new structure, rather than to try to re-shape the university. The business studies degree does one module at a time, in series rather than in parallel with others. One student, with a job fixed up with Goldman Sachs, welcomed that: ‘I did four A levels. When revising one, I lacked focus because the others were always hovering in the back of my mind. Here there is one thing to concentrate on at a time’. There is also a concentrated, repeated timetable with a morning, afternoon and evening option, rather than the sometimes family unfriendly and time inefficient arrangements elsewhere. 35 There is a diversity of institutions. DBIS counted 732 in 2016, concentrated in London, with very few outside the south-east. 122 had specific course designation and were registered with HEFCE, and reviewed by QAA. Many have been below the radar. The first few pages of the HEFCE list show the Academy of Live and Recorded Arts, the Architectural Association, Arden University, Assemblies of God Incorporated, BPP University Limited, University of Buckingham, Chicken Shed Theatre Trust… More than half have fewer than 100 students; only ten have more than 1,000. Only four entered fully in to the TEF exercise, despite the consultation report on phase 2 giving prominence to quotes from private respondents. It is a volatile sector: since 2012 over 100 have closed or stopped offering HE courses.

The maximum fees allowed for private providers were high enough to make such provision a viable proposition. High fees in the established sector deterred some students, despite claims to the contrary – UCAS figures show applications in England down 2% on 2012; in Scotland they are up by 10%. For applicants aged 20 and older the figures are extreme – 23% down in England, 29% up in Scotland. Most students at alternative providers had not applied through UCAS. They are not deterred by low cost provisions beyond the teaching context. HEPI/Which? Survey figures asking students how their university should save money put spending less on buildings top – 49% – and spending less on sports and leisure facilities second – 46%. The third choice – larger class sizes – drew 25%, and other options were much lower. Despite the protestation of one member of the Commission that such extracurricular activities were an essential part of being a student, I could present figures from Coventry Students’ Union, where I am a trustee, showing that 80% of students did not join clubs, nor play sport, nor volunteer in the community through the union, nor stand as course or other reps nor even vote in SU elections. Many, even full–timers, are local commuters, who do not switch their community identity, nor their address. They simply want good teaching focused on enhancing employment possibilities. Young, full-time, rite of passage, campus-based students are a diminishing minority.

So, a low-cost, basic provision, sharing with students a strategic aim linked to the job market – recall Robbins’ first aim for higher education – met a rising demand from those who did not fit with the expectations of the traditional market suppliers. One student said: ‘they understand who I am and where I am coming from’ – he felt more engaged and ‘at the heart of the system’ than any of a second year class I met last week in a session on HE policy. There are more black staff, many, like the students, with experience of FE and BTEC programmes, which are built on so that there is a more seamless progression. GSM, my ‘local’ alternative has an induction process looking to find individual strengths and develop them as well as filling in gaps.

The ‘alternative’ student body is different. Of those getting SLC support – and over £50 million a year of public money goes through to these private providers – 48% were doing HNC/D courses, 40% were studying for a degree. 52% are men, compared to 45% in state provision. 61% are from BME groups, compared to 23%. GSM, has 94% BME students, reflecting its surrounding community; my university has reduced its intake from such groups as a consequence of raising entry tariffs as a tactic to move up league tables. 43% are aged over 30, compared to 6%, and 23% are aged under 20, compared to 63%. Such a difference implies that there is a market segment that established institutions are failing to reach. It is the market segment that is growing at twice the rate of UK white applicants.

There have been many reviews of this provision, including that by NAO, exposing problems of fraud and lack of rigour in testing criteria for entry, especially of international students. QAA has found some deficiencies, but they have been remedied, in the main. Academic commentators, such as Paul Temple and Gillian Evans are almost uniformly critical. I have reservations – my wife had a disastrous experience with a bullying owner/director at one provider, now closing down. But, there is a well established group of leading providers, with the supportive ear and muscle of a government with a policy in this area unlikely to change in the next eight years by which time low cost providers will be 36 in demand to meet rising student numbers. They may well be the ‘preferred providers’ for degree apprenticeships, perhaps displacing the HNC/D courses taken up when they were abandoned by the modern universities. The state sector institutions had better get used to them. GSM is a member of GuildHE, and Carl Lygo, former head of BPP, is a new member of HEFCE board, so they are joining in community networks as newcomers should.

My presentation to the Commission made two strong recommendations:

• that all providers should be registered charities, and conform to the values and processes laid out in last year’s Charities (Protection and Social Investment) Act legislation on transparency, governance and the use of funds, among other things;
• that there should be a probationary period of supervision and support, not an assumption, as in the White Paper that ‘high quality entrants’ can be identified before they have done anything and given autonomy and even degree awarding powers from the outset. Students need protecting from seductive charlatans. The Lords have insisted on that, but may be over-ruled in the Commons on a three-line whip.

That does imply that they will be both UK-based and regulated, not having owners in the Netherlands and the USA, and ‘not-for-profit’ which removes the distortion of values and corruption of practices that might come from trying to serve Mammon as well as Minerva. Radix malorum est cupiditas.

SRHE Fellow Ian McNay is emeritus professor at the University of Greenwich.