09 February 2007
As the UK rushes to improve the skills of its workforce, a door has opened for more private sector involvement in further and higher education. Is this filling a gap or taking over at the expense of quality and staff? Stephen Court reports
The government is under pressure to 'upskill' the UK's workforce by expanding further and higher education and providing more relevant and work-related courses for students. This was one of the key messages from the recent Leitch review on skills, and certainly lies behind current moves to raise the school-leaving age to 18. But where is all the extra capacity to educate and train these students going to come from?
One eager contender is the private sector, which is increasingly involved in providing further and higher education in the UK. Under the government's Private Finance Initiative, a considerable amount of infrastructure has recently been built in both sectors involving private companies. And their input is set to develop with the extension of competition for further education funding, and with the growth of tuition fees, employer-led provision and the international student market in higher education.
The response to this has been mixed, with fears about the potential impact on teaching quality, as well as hostility from employees in both sectors anxious about future work conditions. Past failures provide a warning for colleges and universities of the risks attached to joint ventures with businesses.
But there are rich pickings to be had. The Learning and Skills Council, which oversees public funding for further education in England, spends more than £10bn a year. The 2006 Department for Education and Skills' further education white paper Raising skills, improving life chances proposed 'contestability' – opening up funding to competition from independent and voluntary providers, as well as other colleges. It said that any 'failing or coasting' college that did not improve within a year could be handed over to the private sector.
The most striking example of opening up provision is in the new work-based programme Train to Gain. Designed to be led by employer demand, it will receive £460m in 2007/08. The LSC states: 'Train to Gain is 100% contestable, and all providers must win employers' business to realise their contract's value.'
In general, the council sets out four 'triggers' for competitive tendering: new investment (such as Train to Gain); restructuring of provision; gaps in provision; and poor quality.
Not surprisingly, private providers are positioning themselves to compete for a slice of further education funding. Two leading companies are Carter & Carter Group and VT Plus Training. Both have recently bought up other training providers, and are growing fast.
Carter & Carter provides training in manufacturing industries and runs apprenticeship programmes. Last October it announced a partnership with Castle College Nottingham to offer training in automotive retail, automotive engineering, construction, sport, health and social care, as well as work-based learning. Carter & Carter says it is looking to work with other FE colleges.
VT Plus Training, part of Vosper Thorneycroft, the support services, military supplies and shipbuilding company, describes itself as the second largest private sector provider of vocational training in the UK. It mainly works in the hospitality, leisure, engineering and care sectors but is expanding into retail training.
Other independent providers include: the Centre for British Teachers, a charity that specialises in prison education and in the government's Skills for Life adult literacy and numeracy programme; Capita Learning and Development – part of the Capita Group – which provides courses for the government's Learndirect IT training scheme; and Nord Anglia Education, whose portfolio includes training for colleges, careers advice and learning support for offenders.
The University and College Union, which represents lecturers in further and higher education, has expressed concern about these developments. It says that education and training should be run by 'democratically accountable local bodies', and does not accept that private companies can give staff a better deal than FE colleges.
Nevertheless, the privatisation trend appears to be catching on. In January, Ioan Morgan, principal of Warwickshire College and chair of the '157 Group' of large FE colleges, proposed a system of self-regulation for the group, and said: 'Some colleges could opt out and try to become private companies. Why not?'
One reason was offered by Barry Lovejoy, UCU's head of further education. He told a recent Trades Union Congress rally that: 'Morgan should remember that “shares can go down as well as up”, and if colleges go private there won't be a public safety net waiting to catch them when they fail. We shall fight any attempt to sell off colleges for a song.'
The experience of Individual Learning Accounts – a DfES lifelong learning scheme administered (but not provided) by Capita – has made the sector wary of involvement with private enterprise. ILAs had to be closed in 2002 because of fraud and abuse by learning providers costing almost £100m, as well as poor quality assurance. More recently, the Association of Colleges, an umbrella body representing further education institutions, ended up with debts of almost £1m after the collapse of a training company it owned.
Meanwhile in HE, the government's target of 50% of young people participating by 2010 has increased demand for courses and created opportunities for private providers. The introduction of maintenance loans for students, tuition fees and top-up fees – taking annual tuition costs to a maximum of £3,000 – means that potential students have become used to the idea of borrowing money and paying for higher education.
Students are therefore more likely to consider paying a private provider for HE, and the concept of a market has developed in the sector, with students seen as demanding customers prepared to shop around. Relatively low-cost courses in vocational areas such as business, law and computing are particularly attractive to private providers. Another tempting area is the growing international student market: the combination of provision in English and the high reputation of UK universities means that companies are keen to work with the sector to attract high fee-paying foreign students.
Until recently the only private higher education institution in the UK was Buckingham University, offering two-year degrees with annual fees of around £13,000. Then last year the College of Law, a non-profitmaking organisation providing postgraduate legal training, was also given the right to award its own degrees by the Privy Council.
Now a US education business, Kaplan, which is owned by the Washington Post Company, is preparing to apply for degree-awarding status for what would be the UK's first for-profit university. In 2005, Kaplan bought Holborn College, a private higher education institution in London specialising in business studies and law, whose degrees are validated by the University of Wales, the University of Huddersfield and Liverpool John Moores University.
UK higher education institutions are unperturbed by the prospect of for-profit competitors. A spokesman for the Universities UK representative body said: 'UK HE institutions undertake commercial activities alongside their public service obligations, but what distinguishes them from “for profit” education providers is that they reinvest any surpluses in improved services rather than paying shareholders. As a result, we feel that our reputation, combined with UK universities' strong brand and international appeal, provides a strong package for us to succeed in an increasingly competitive world market.'
In recent years a number of UK higher education institutions have set up joint ventures with private companies, chiefly to provide facilities for international students. Kaplan has established 'international colleges' on the campuses of Nottingham Trent University and the University of Sheffield. A further college at the University of Glasgow is opening in September, and other ventures are in the pipeline. The colleges offer English language teaching, plus foundation courses in a range of academic subjects.
The Australia-based IBT Education company runs centres for international students at Hertfordshire and Brunel universities. Its programmes include diplomas and teaching the first year of undergraduate courses, before its students transfer to Brunel University for the rest of their degree.
A Brighton-based company, Study Group International, provides joint venture on-campus 'international study centres' at the universities of Sussex, Surrey and Lancaster. It also operates stand-alone colleges in London, Brighton, Oxford and Cambridge, offering foundation courses leading to a place at UK universities, higher national diploma courses, and even a 21-month full honours business management degree validated by the University of Sunderland.
Into University Partnerships, a London-based business that is part of the Espalier property development company, set up a £35m joint venture last year with the University of East Anglia to provide teaching, accommodation and facilities for up to 700 international students. This was a significant deal, not least because the new chief executive of the Higher Education Funding Council for England, Professor David Eastwood, was vice-chancellor of UEA at the time. The University of Exeter has just transferred its English language teaching operation to Into in a similar joint set-up, amid considerable opposition. Newcastle University is planning to do the same. Into is also seeking ventures at a number of other institutions.
English language teaching staff at Exeter expressed concern at what they said was Into's 'lack of educational experience and expertise, unrealistic claims about recruitment and over-reliance on foundation students with inadequate educational background'. They also claimed that at UEA, salaries for new staff were 30% lower than those for existing staff.
Andrew Colin, chair of Into and Espalier, refutes the charges, stressing that they offer continuity for staff under the Transfer of Undertakings regulations.
But the British Association of Lecturers in English for Academic Purposes has urged universities to consult with it about proposed joint ventures, criticising some HE institutions for approving 'ill-considered undertakings' without wider consultation.
Universities UK defends the move on the grounds that, despite recent successful Spending Review submissions, resources are still very tight. 'As long as it still supports the core values of the institution and is within the law, our members may need to be more flexible in adopting innovative and diverse funding sources to help manage their finances,' a spokesman says.
Nevertheless, the failed e-University serves as a warning of the potential risks in joint ventures. Launched in 2000 as a joint venture between the government, universities and a private technology company, it was disbanded in 2005 with the loss of more than £50m after proving unpopular with online learners.
And the debate is hotting up. On January 29, UCU joint general secretary Sally Hunt wrote to Professor Drummond Bone, president of Universities UK, saying: 'We will resist any further attempts to transfer academic departments and staff into private ownership and will defend our members' terms and conditions, as well as the quality of students' education.' She asked Bone to use his influence to prevent further privatisation. And last week, staff at Newcastle and Oxford Brookes universities launched protests against private sector involvement in student services.
However, the battle to turn back the private tide will be tough – not least because Bone's own institution, the University of Liverpool, where he is vice-chancellor, is a pioneer of online master's degree courses with the US company, Laureate Education, which describes itself as 'the most profitable, rapidly growing provider of post-secondary education on an international scale'.
Stephen Court is senior research officer at the University and College Union. He is writing in a personal capacity
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