Government reform of Higher Education - Business, Innovation and Skills Committee Contents

7  Alternative higher education providers

The role of alternative higher education providers

204.  During the course of this inquiry, we took evidence from three alternative higher education providers: BPP University College, a for-profit provider, owned by the American Apollo Group, which has recently acquired its own UK degree-awarding powers; the University of Buckingham, the oldest 'private' university in the UK, a charitable, not for-profit institution which has not "chosen to sign financial memoranda with a funding council, which […] brings obligations as well as money from the Government"[216]; and the London School of Business and Finance, a for-profit institution with campuses in five countries and online, which offers professional qualifications and degree programmes validated by the University of Wales and also delivers degree courses in the UK on behalf of the Grenoble Graduate School of Business.

205.  Both BPP University College and London School of Business and Finance focus almost exclusively on teaching (rather than research), close links with business, and take a utilitarian view of higher education. They described their place in higher education in the following terms:

If you are a student who wants a research?intensive university, if you are a student who wants a full?service, campus?based university lifestyle, then you probably would not choose BPP. BPP is very career-focused; it invests in the things that we believe are important for teaching excellence in a career?focused environment. There is a very distinct mission in comparison with what I might describe as the publicly funded sector.[217]

The dominant purpose is not making profit; the dominant purpose is education and serving our communities.[218]

We are research?active, but it is fair to say that we are teaching?led and we are not following the research?intensive path.[219]

206.  However, University of Buckingham, which came top in the National Student Survey for five years running (2006-10), did not want to overstate the difference between itself and traditional universities:

I think it is important to understand what we think a university is about at Buckingham. We think universities should, in the main, be run as mutuals in the traditional academic self?governance way, because we think that it is very important to teach and we are very proud, of course, at Buckingham of the National Student Survey. Of course we think teaching is very important, but ultimately the university has to be a centre of unfettered scholarship, where scholars are free to do research almost in a Mertonian way—those Mertonian norms of scholarship. That is why, incidentally, we at Buckingham were created independent of the state, because we feel there is an awful lot of self?censorship in the public?funded sector, which […] can be overlooked.[220]

207.  The clear attraction of bringing alternative providers into the higher education sector is that it increases the physical capacity of the system without the need to provide additional capital resources; courses are sometimes offered more cheaply than by traditional universities and are often business or vocationally focussed. Alternative providers may also have higher 'success rates' for students who complete their courses, and increasing numbers of graduates with the kinds of qualifications offered by alternative providers may help to contribute towards a 'skills economy'.

208.  The Government's stated intention is to increase choice, diversity and competition within the UK higher education market by opening it up to a larger number of 'alternative providers'. The Government estimates that, in addition to the 'traditional' universities, there are over 1,600 bodies, including 250 further education colleges, which currently offer some form of UK higher education provision.[221]

209.  Alternative providers do have relationships with 'traditional universities' both though validation of their degrees and through co-development and delivery of content as part of a course at a traditional university. This may include incorporating specific industry-recognised qualifications or certifications within degree courses (e.g. Microsoft, CISCO qualifications), or the involvement of the alternative provider in the delivery of the university's own course material online. In some cases, the university may simply provide support or facilities for students studying the alternative provider's course through distance learning.[222]

210.  These providers sit outside the statutory "higher education sector" and do not currently receive any teaching grant from the Higher Education Funding Council for England or the Skills Funding Agency. They are not subject to tuition fee regulations or oversight by the Office for Fair Access. As a result, fees can vary greatly, from below £3,000 per year to over £20,000 per year depending on the institution, the course, and whether the student is from the UK or overseas.

Government proposals

211.  Under the Government's proposals, all alternative providers will be able to apply to be designated for student support, meaning that students attending eligible courses would have access to publicly-backed tuition fee and maintenance loans.[

223] In return, all designated institutions would have to abide by undertakings similar to those which are currently attached to receipt of the teaching grant, including the tuition fee cap (and the adoption of an access agreement if they wish to charge fees above the basic limit), subscription to the Quality Assurance Agency and Office of the Independent Adjudicator, publication of the Key Information Set and provision of certain statistics.[224] Alternative providers which are designated for student support and those which operate on a not for-profit basis would also be eligible for direct grant support from the Higher Education Funding Council. [225]

Source: adapted from Department for Business, Innovation and Skills, Students at the heart of the system (June 2011) pages 69-70

212.  We welcome the Government's intention to create a more level playing field for all providers of higher education. In particular we agree that where public funding is applied, alternative providers should be subject to the same criteria as traditional universities. This is both a sensible and proportionate approach to expanding Higher Education provision.

213.  We further welcome the fact that the Government has decided to restrict access to direct grant funding to institutions operating on a not for-profit model. However, for-profit providers may still be designated to receive student support from the public purse, and it is not clear from the proposals set out in the Government's technical consultation whether they will be able to profit directly from tuition fee income backed by public student loans. We recommend that the Government clarifies the situation in its response to this Report.

Access and widening participation at alternative providers

214.  At present, alternative providers (for-profit or otherwise) do not receive any teaching grant, and are thus not subject to any of the requirements imposed on the traditional higher education sector as 'conditions of grant'. These conditions include the requirements to put in place Widening Participation Strategic Assessments and access agreements. As a result, although a small number of scholarships and other mechanisms are available, there is not yet a culture within the alternative higher education sector of prioritising widening participation in admissions.

215.  Carl Lygo of BPP University College told us that BPP was not "set up for widening access" and that its focus was on "ABC1s, so high?quality students who are going on to high?quality jobs". However, he pointed out that BPP funded around 100 full scholarships and bursaries out of the surpluses that it made from its operating business. He went on to explain that:

Ninety-nine per cent of our revenues are derived from the private purse; 60% of our students are sponsored by employers. Essentially, we plough back employers' and student money into helping those students who need more help. Very many of us who teach at BPP have come from backgrounds where we did not have great life choices, and so we feel compelled, even though we are for-profit, to put something back and give others access to the legal profession, to the accounting profession.[226]

216.  Terence Kealey, Vice-Chancellor of the University of Buckingham, believed that it would be a long time before institutions such as his were able to offer need-blind admissions. Although the University of Buckingham spends 4% of its income on bursaries and scholarship schemes. Mr Kealey argued that:

The difficulty we have, quite simply, is that we are funded almost exclusively by student fees and, therefore, we are simply under?resourced for what we would really like to do, which is a much wider widening participation agenda".[227]

In the long term, Mr Kealey believed that his sector should aspire to establish endowment programmes on the scale run by institutions such as Harvard, Yale and Princeton. The size of their endowments made it possible for them to provide needs?blind admissions. However, he argued that it would take around 50 years to build up those endowments.[228]

217.  While we recognise the fact that alternative providers to have scholarship and bursary programmes, our witnesses' admission that they are not yet designed to accommodate the Government's proposals for widening access is disappointing. That said, there are other ways in which alternative providers may be able to contribute to widening participation more generally. Private providers often work in partnership with universities to deliver the universities' courses in local colleges and institutions, sometimes charging lower tuition fees than the validating university. This can help increase the available student places on some popular courses, and enable students who may not wish, or be able, to attend the validating university to access its courses. Access to student support for these courses could remove the barrier currently faced by students who would otherwise have to pay tuition fees 'up front'. This arrangement does places the alternative provider in direct competition for students with the partner university, although the university would still receive some income from validation fees.

218.  Another approach might be to follow the example set by the London School of Business and Finance in making its course materials available for free, and only charge fees for exam registration. Valery Kisilevsky, Managing Director of the London School of Business and Finance said:

Our rationale in doing so was, by widening access and enabling people to access content, by effectively waiving our rights to that content, we will enable people to pursue qualifications that would lead to better outcomes in terms of full academic programmes. Our approach was that, in this day and age, it is appropriate to be more relaxed about intellectual property rights to some types of content.[229]

219.  Access to public funds brings with it responsibilities. We acknowledge the Government's ambition to open up the market to all providers of higher education, but alternative providers must be held to the same standards as traditional universities in respect of widening participation and access.

Higher Education in Further Education

220.  A second potential solution to increasing capacity in the Higher Education system and widening access can be seen in the increasing provision of higher education courses by further education colleges. According to the Association of Colleges, 262 further education colleges provide higher education courses, across all areas and regions of England, enrolling around 10% of all HE students in England.[230] College income from HE provision is presently £500million, and the majority of Colleges charge between £1,700 to £2,200 in tuition fees to their degree students.[231] We understand that "the vast majority of FE Colleges teaching higher education will be charging fees of £6,000 or below next year".[232]

221.  "HE in FE" courses tend to be specialist skills-based vocational and/or technical courses, which may be tailored to the particular needs of the local or regional economy. Students at FE colleges are often older than those at university, often live locally, and are more likely to study part-time to fit around work or family commitments. Colleges often provide HE in areas that traditionally have lower HE participation rates, and to students with lower eligibility qualifications than many higher education institutions.[233] According to the Mixed Economy Group, FE colleges now have "a significant, established, strategic and development role in the provision of higher education" and "colleges also offer value for money by focussing on teaching and learning, with smaller class sizes and longer student contact hours".[234]

222.  The Government has been explicit that it expects to see a growth of HE in FE as a result of its allocation of 20,000 student places for 'low-cost, high-quality' provision with fees below £7,500 per year.[235] However, the Association of Colleges was keen to make clear to us that "FE Colleges are not competing with traditional universities […] it should be noted that over 80% of those accepted to study higher education have qualifications other than A Levels (compared to fewer than 50% of all HE acceptances)."[236]

223.  The Mixed Economy Group and 157 Group, both of which represent further education colleges which offer a significant amount of higher education courses, were keen to emphasise the distinct mission of "HE in FE":

[The] college role should not be seen as doing the same as universities only more cheaply but expanding the numbers of part time students, extending opportunities for those in work and using their links with industry to emphasise local, flexible and work related programmes. In large part this involves bringing in new types of student rather than repackaging the offer to traditional undergraduates.[237]

224.  Further education colleges offer another avenue to higher education and we welcome the Government's focus on the potential that is in the college system. However, if overall student numbers are to remain capped (particularly for institutions recruiting applicants without high A-level scores), the expansion of places at further education colleges may well come at the expense of places at traditional universities. We will expect the Government to set out clearly whether the expansion of HE in FE is a real expansion in higher education or merely a transfer of higher education provision from 'traditional universities' to potentially cheaper alternatives.

216   Q 552 [Terence Kealey] Back

217   Q 553 Back

218   Q 554 Back

219   Q 561 [Carl Lygo] Back

220   Q 567 The "Mertonian norms" of scholarship are communalism, universalism, disinterestedness, originality and scepticism. Back

221   Cm 8122, (June 2011) paragraph 4.3 Back

222   The Growth of private and for-profit higher education providers in the UK (Universities UK, March 2010) pages 24 and 25 Back

223   Under the present arrangements, designations are made on a per-course basis. The Government proposes moving to a per-institution basis, removing the need for each eligible course to be designated separately. Back

224   Department for Business, Innovation and Skills A new fit-for-purpose regulatory framework for the higher education sector: technical consultation (August 2011) Chapter 2 Back

225   Department for Business, Innovation and Skills A new fit-for-purpose regulatory framework for the higher education sector: technical consultation (August 2011) paragraph 3.2.9 Back

226   Qq 555, 561 and 571-2 Back

227   Q 57 Back

228   Q 57 Back

229   Q 573 Back

230   Ev 163 Back

231   Ev 163 Back

232   Ev 166 Back

233   Ev 163 Back

234   Ev 224 Back

235   Cm 8122, (June 2011) Foreword page 3 Back

236   Ev 166 Back

237   Ev 224 Back

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Prepared 10 November 2011