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Universities Could Be In Private Hands 'in Six Months'

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A private equity firm or private higher education provider will buy a UK university in whole or part "within the next six months", according to a sector legal expert.

The prediction by Glynne Stanfield, a partner in the education group at Eversheds, comes as government documents reveal that a US private equity firm, Warburg Pincus, has twice met with David Willetts, the universities and science minister.

Mr Stanfield, who was lead partner on the merger between the University of Manchester and Umist and is company secretary of the Russell Group, highlighted the government's technical consultation on the recent White Paper proposals, which closes on 27 October.

The consultation document repeats a passage from the White Paper: "It has been argued that it would be helpful to institutions to ease their ability to convert to a legal status of their choosing - for example, to make it easier for them to attract private investment."

The document then poses the question: "Would you welcome legislative change to make the process of changing legal status easier?"

Mr Stanfield said private equity firms or "trade buyers" (established private higher education providers) could buy out a university in its entirety and thus gain its degree-awarding powers.

"You can offer a degree under any name. If you bought the University of X, you might offer the degree under the name of the University of Y," he said.

"If it was bought by a well-known brand - a trade buyer or private equity buyer - they can use that name or any other name."

More likely, Mr Stanfield said, a private equity firm or trade buyer could buy a stake in a university, providing the institution with working capital in return for using its degree-awarding powers overseas, for example.

Private buyers would want those degree-awarding powers for use overseas for "online and distance education", Mr Stanfield said. "They would think there is a huge market in that, particularly in Asia and the Gulf."

The firm buying a stake would see the degree-awarding powers as an intellectual property right, Mr Stanfield said. "What private equity wants to do is take that current IP right and brand and do more with it."

By buying a university in whole or part, a private firm could circumvent the established process for winning degree-awarding powers, which are granted by the Privy Council on the advice of the Quality Assurance Agency.

Currently there are only five private providers with degree-awarding powers.

A university selling a stake to a private buyer gets "increased working capital to get better staff, better infrastructure. Its dependence on the taxpayer is lessened," Mr Stanfield said. The university would go "from being seen as a public sector body to a private sector body".

Asked whether whole or partial buyouts by private buyers were likely in the near future, he said: "I would expect to see something within the next six months, maybe sooner. There are a number of private equity buyers and trade buyers who are in talks with British universities about doing various things. There is no one model."

Mr Stanfield said private investment could be attractive to "lower-ranked institutions", particularly those "with a capital need".

He added: "I don't think it is just the post-92s. It is those institutions that are going to struggle to charge a fee in excess of the current cash they get."

But Mr Stanfield said the "challenge for those universities that actually wanted to dip into the private sector is they may have to reconfigure their legal status".

He said UK universities break down into five different legal statuses, with "companies limited by guarantee" able to access private investment most easily.

Universities with a Royal Charter could not currently attract such investment. But Mr Stanfield said he would not want to give the impression that companies limited by guarantee were "the only ones that could attract the investors - others would have to change their legal form in whole or part first".

Private equity firm Warburg Pincus - the biggest stakeholder in Bridgepoint Education, which operates Ashford University and the University of the Rockies in the US - attended round-table meetings with Mr Willetts in December 2010 and January 2011.

Private providers such as BPP, Laureate, Pearson and ifs School of Finance were also present at both meetings, logs of external meetings published on the Department for Business, Innovation and Skills website reveal.

Warburg Pincus declined to discuss its interest in higher education in this country when contacted by Times Higher Education.

Barry Gardiner, Labour MP for Brent North, who has asked Mr Willetts a series of written parliamentary questions about his contact with private firms, said: "If we are looking at private equity coming into higher education, then really the concept of public benefit, public good, public service has gone out of the window."

Poorly funded Uni's/Colleges DO have much lower standards of graduates, that is a fact.

After all, about 80% of the education offered today in the higher learning market is pure nonsense. Anything outside of the established vocational training is a waste of your parents money and your own future.

And if on the chopping board, why not offer 'education' to the public from a private corporation by selling to a bag of money?

Hamburger University in America is a long established corporate owned school, and I dare say that the qualification from there will get you a lot further in life than probably 95% of the universities in America.

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If you primarily see universities as training ground for the slaves to the system, then they might as well be owned by the corporations like everything else.

On the other hand in that case the term university doesn't really apply anymore, they should be called professional colleges.

If on the other hand you see universities as places for scientific research and advancement of human knowledge and development of young minds (not indoctrination!), then this is a very bad development. Any research or knowledge that doesn't lead to immediate financial gain for the corporations will be marginalized.

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How are they not private at the moment. Sure they take money from the public purse, but then so do millions of private businesses.

Lot's of Unis already raise significant income from private sector investment in research and sponsorship from business. IMPO they are already private. My understanding is it's about a change of legal status, perhaps not the existing mechanics so much.

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Poorly funded Uni's/Colleges DO have much lower standards of graduates, that is a fact.

After all, about 80% of the education offered today in the higher learning market is pure nonsense. Anything outside of the established vocational training is a waste of your parents money and your own future.

And if on the chopping board, why not offer 'education' to the public from a private corporation by selling to a bag of money?

Hamburger University in America is a long established corporate owned school, and I dare say that the qualification from there will get you a lot further in life than probably 95% of the universities in America.

If its a private equity firm the one thing you can practically guarantee is that the it will be bought with debt leverage (it is the pirate equity business model after all), that has to be serviced in addition to other costs, the state (cum taxpayer) may even give them a sweetener to take it in addition to the sweetener it already gives Pirate equity via the tax system, not really a step forward given what is clearly the basis of this crisis

Still i bet the tories are noshing at the bit, more pointless private debt expansion arbitraging the tax system/payer, yippee, what could possibly go wrong

maybe clegg can celebrate the first transaction by walking across London Bridge talking more nosh, on the bright side in these times of Austerity for the UK they can save on the camera crew as Stasi Labour made sure Britain was at the front of technological development with more street cameras than ants on the planet

Edited by Tamara De Lempicka

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If on the other hand you see universities as places for scientific research and advancement of human knowledge and development of young minds (not indoctrination!), then this is a very bad development. Any research or knowledge that doesn't lead to immediate financial gain for the corporations will be marginalized.

Don't forget where the research money actually comes from though.. the government. If EPSRC etc want fundamental research, the 'private' universities will supply it.

The person with the purse strings controls the research, and in this case it would still be the government ;)

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Don't forget where the research money actually comes from though.. the government. If EPSRC etc want fundamental research, the 'private' universities will supply it.

The person with the purse strings controls the research, and in this case it would still be the government ;)

And you really believe that any patentable ideas or useful results from such research will end up benefiting the public rather than the private owners of the universities?

Like Redcellar says, universities have already degenerated towards corporate ownership and profit, this is just a step further in that direction.

In reality we would need steps in the opposite direction.

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If its a private equity firm the one thing you can practically guarantee is that the it will be bought with debt leverage (it is the pirate equity business model after all), that has to be serviced in addition to other costs, the state (cum taxpayer) may even give them a sweetener to take it in addition to the sweetener it already gives Pirate equity via the tax system, not really a step forward given what is clearly the basis of this crisis

My first thoughts when reading the above, they may have capital for a short while then the pain of debt repayment kicks in.

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If you primarily see universities as training ground for the slaves to the system, then they might as well be owned by the corporations like everything else.

On the other hand in that case the term university doesn't really apply anymore, they should be called professional colleges.

If on the other hand you see universities as places for scientific research and advancement of human knowledge and development of young minds (not indoctrination!), then this is a very bad development. Any research or knowledge that doesn't lead to immediate financial gain for the corporations will be marginalized.

Well said. This was already happening, research agendas being completely distorted by the large corporations both dictating and exploiting them. This would simply compound the problem.

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Poorly funded Uni's/Colleges DO have much lower standards of graduates, that is a fact.

Well that's a no-brainer isn't it? We (as in the British public) should be funding our higher education system properly. If we're already charging our poor undergraduates 3000pounds a year, that's 3000 more than a lot of other EU countries,

The general view in the UK is that of students slacking off and spending their time drinking and any thought of actually funding this type of behaviour is seen as unacceptable by your average Daily Express reader.

The UK public shows a general distrust in the university system, especially within the lower middle-class. Being from that part of society or at least my family being so, I spent 6 years having to answer questions about the usefulness of going to university. "Well you don't actually learn anything useful do you?", "I guess you only really learn once you're working?" "What we need are more apprenticeships...", always being told how someone else had gone straight into work without studying and is doing ok, therefore university education is pointless and just a luxury.

I've never encountered this type of view or distrust in any other country I've lived or worked in and there are many...

The UK completely underfunds its university system and the whole 9000 pound tuition fee increase is only masking this. The government's clear attempt is to improve university funding while the government shies away from performing its duty to help educate its population to a standard that can match the standards of the global market.

Other than the risk that this may have a complete adverse impact to participation, the whole approach flies completely in the face of fairness in our society. While we have an older adult generation living in houses with overinflated prices, the increases of which they do not deserve in any way, this same generation is still expecting to be taken care of by a young population, saddled with debt, who have had to invest in their own education so as to fund the state pensions and the upkeep of the country while these lazy old pensioners continue enjoying the high life.

In politics, the British love to compare their model to the US model. This has been noticeable in debates about the NHS: will it become like the US model? (nevermind a comparison with the French, German or Canadian models...). In the same way, people are wrongly suggesting that there are no issues with the tuition fee increase since we would only be moving towards the US model and since British universities aim to compete on the international stage with US universities, it would only make sense.

This concept is entirely wrong and born from ignorance about the US university system, of which most Britons would have vague ideas mostly influenced by Ivy League universities. There are a huge number of other universities, state universities and community colleges, with strong public funding that make the US one of the best countries for access to higher education.

Paying almost 9000 a year to go to a university like Coventry (nothing wrong with Coventry but it doesn't play in the same league as Oxbridge)? How is that a decent deal? Essentially British students will be paying for an education of the same quality as the education that some Americans receive for a fraction of the debt/cost.

Working in London, I am surrounded by other students having gone through foreign higher education (despite being a UK graduate, I also studied in Canada and have a degree from a French university) and they are testimony to the quality of graduates that they produce. Note that this is different to producing great research (the UK unis are in the top league). Scandinavian countries, Germany, France: these are countries that have understood that investment in higher education pays off for everybody in our society, even those who never go to university. Without the quality graduates, frankly we're f***ed and that's what our current government is blindly leading its public towards...

No economist in his right mind would recommend scaling back public spending on higher education but of course we have a government that thinks that you can just experiment with the economy and ignore economic principles that have been proven right time and time again and who will pay the bill when Cameron and Osborne and thrown to the annals of history as being completely incompetent on economic principles?

Public Spending on Higher Education Pays Off

http://chronicle.com/article/Across-30-Nations-Public/48323

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The general view in the UK is that of students slacking off and spending their time drinking and any thought of actually funding this type of behaviour is seen as unacceptable by your average Daily Express reader.

A large portion of that general view is formed from going to university yourself. Certainly was for me anyway - plenty of drinking on my part, and i was relatively well behaved.

To generalise, half the people that go to university have no need to be there, and are just pissing their student loans up against the wall week after week.

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To generalise, half the people that go to university have no need to be there, and are just pissing their student loans up against the wall week after week.

I agree with you on that, universities need to become more exclusive again, but the entry barrier should be intelligence, not money!

There should be no way to buy yourself a place at university (no matter how rich someone's parents are), instead strict admission exams should decide who gets in.

Of course at the same time there is a need for more professional colleges and proper apprenticeships (like Germany has), so that those excluded from university can still obtain good skills for their chosen profession.

Edited by awake_eagle

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Why bother funding them at all. At the start of my second year I decided going to lectures was a waste of time and rarely went into the department from then onwards. Everything I needed to know I could get from reading the book,. I passed with no problems.

Open up the examinations and let people pass using whatever means they wish, so long as they reach the standard. The staff are useless, they do nothing. This is proven by all the courses I passed without ever attending a single lecture.

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Why bother funding them at all. At the start of my second year I decided going to lectures was a waste of time and rarely went into the department from then onwards. Everything I needed to know I could get from reading the book,. I passed with no problems.

Open up the examinations and let people pass using whatever means they wish, so long as they reach the standard. The staff are useless, they do nothing. This is proven by all the courses I passed without ever attending a single lecture.

That's because standards have been lowered drastically to allow the masses to get a degree.

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That's because standards have been lowered drastically to allow the masses to get a degree.

Perhaps, but then I got my degree over 30 years ago so doesn't apply. You simply don't need tuition in subjects like maths/physics. Your working and answers are either right or wrong and never subjective. Thus it can all be learned from books provided you know what the syllabus covers. You are learning a body of knowledge, not some lecturers opinion and thus do not need them.

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Perhaps, but then I got my degree over 30 years ago so doesn't apply. You simply don't need tuition in subjects like maths/physics. Your working and answers are either right or wrong and never subjective. Thus it can all be learned from books provided you know what the syllabus covers. You are learning a body of knowledge, not some lecturers opinion and thus do not need them.

I have an engineering degree, work in engineering, and I doubt I've ever used more than 1 or 2 % of the knowledge I learned in order to pass my university exams.

The problem is that, at least for many subjects, a degree is not about acquiring knowledge but is simply a three year long mental assault course. The product is not what you know, but the evidence that you are 1) adequately clever, and 2) adequately disciplined.

I have often thought that there must be a better way of preparing people for a career. The silver lining of the national debt might hopefully be that decision makers start looking for that better way.

Edited by the shaping machine

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No, it doesn't matter if corporations take over English universities.

Too many English don't like anyone with intelligence, nor anyone with an education; whenever they hear the word degree, they start wishing graduates end up flipping hamburgers. They'd be more comfortable with a university system that was reserved for the upper class. And strictly vocational courses for a few of the rest.

There are plenty of countries that value education. England just isn't one of them. Why worry?

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They'd be more comfortable with a university system that was reserved for the upper class. And strictly vocational courses for a few of the rest.

Slightly playing devils advocate here; but from the taxpayer's point of view is the above such a bad thing?

There are plenty of countries that value education. England just isn't one of them. Why worry?

Education for education's sake is fine, I'm just not sure that we should be subsidising it.

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Slightly playing devils advocate here; but from the taxpayer's point of view is the above such a bad thing?

Yes, it is, the distinction should be on merit/intelligence not on class like I said in my previous post.

Education for education's sake is fine, I'm just not sure that we should be subsidising it.

If you boil everything down to money and profits then you are right. According to your thinking why should anyone study arts, literature, philosophy, history, etc, what value does it have?

On the other hand a society without art, literature awareness of history would not be the kind of society I would like to live in.

And those subjects shouldn't be restricted to the wealthy but rather to the most capable (admission exams).

University should be elitarian, but with access based purely on merit not on financial means of the parents.

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Yes, it is, the distinction should be on merit/intelligence not on class like I said in my previous post.

I'm not suggesting the poor are excluded, quite the reverse. As long as they want to do a course useful* to the rest of us, and can meet the entrance standard I would like everyone to have that option. However if Tarquin insists on taking PPE at Oxford then his parents can pay the entire cost.

*yes, I know, the problem is who gets to decide this.

If you boil everything down to money and profits then you are right. According to your thinking why should anyone study arts, literature, philosophy, history, etc, what value does it have?

If these subjects have value, they would continue to be studied, though perhaps not as much in state universities. Remember the current system really only goes back to the 1960s, and I don't believe the UK was in a cultural dark age until 1959.

Edited by the shaping machine

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Perhaps, but then I got my degree over 30 years ago so doesn't apply. You simply don't need tuition in subjects like maths/physics. Your working and answers are either right or wrong and never subjective. Thus it can all be learned from books provided you know what the syllabus covers.

only if you are a genius. For a student who struggles to understand the subject you need lecturers and tutors to ask questions of and interact with. And you cannot learn research from a text book - research makes up a significant part of a physics degree.

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only if you are a genius. For a student who struggles to understand the subject you need lecturers and tutors to ask questions of and interact with. And you cannot learn research from a text book - research makes up a significant part of a physics degree.

Indeed. I'd say it is easier to gain an arts or humanities degree without tutoring, as the subject matter is understandable in it's own terms (provided you can read), That's why one went to University to "read" philosophy. Complex mathematics, physics and engineering however, need a great deal of explanation, the material being obtuse, non-intuitive and mostly explained in a foreign language (maths).

Anyway, for arts, when and why did a good writer or painter need a degree?

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For a student who struggles to understand the subject...

This student probably shouldn't be doing that subject then.

lecturers and tutors to ask questions of and interact with.

Unless things have changed that's the last thing that universities provide. Sending a post-grad to read out the lecture notes was the reality.

you cannot learn research from a text book.

Why can't you?

research makes up a significant part of a physics degree.

Of a first degree, really?

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