50/100: British For-Profit Education - Point of Departure

There are 157 Degree granting institutions in Britain, only 5 of them are privately funded. Two of them are in the news, The University of Buckingham, which got its charter in 1970s, and BPP, the Business, Accountancy and Legal Education company, which received its charter only recently. The others are Ashridge, a well-regarded business school, the College of Law, a legal education provider and IFS, which specializes in Financial Services training.

That is going to change, as the Government is making overtures that there will be much more welcoming approach to the private sector in education than there has been in the past. In fact, one can argue that the government has embarked on a risky strategy by cutting the funding for the universities and by allowing the universities to raise the fees, which can lead to a significant decrease in the number of people pursuing higher education, unless the private sector steps in, creates capacity and competition and expands access. The Quality Assurance Agency in Britain is gearing up to offer services to Private Sector that can lead to the charter, and just appointed Professor Nigel Savage, the Chief Executive of the College of Law, to advise on the same.

The other significant change for this sector is the deep changes in the immigration law: The government has set about virtually shutting down the private sector, as it exists today. The business model of getting the students who did not qualify for a university admission and could not pay the university fee effectively became a conduit for getting ‘visa’ students, people who wanted to use the excuse of study and come and live in this country. The Labor government’s businesslike agenda of getting immigrants to come to Britain and fuel the economic upturn was anyway doomed as recession set in and Gordon Brown started talking about ‘British Jobs For British Workers’: The Conservative government just wanted to take this to a logical conclusion, though they may have just taken this further down the road that previously imagined.

So far, the private sector has reacted with disbelief – the sense of denial was clear in statements made by various business representatives, which almost always started with the assertion that such changes would be unsustainable. But, it is not, the changes are real and here to stay. What we see now have a very clear objective and the policy direction could not be clearer. The harsh immigration controls were only half of the game. The other half, messages are all positive: If a business is above-board and offer quality education and has the scale, it can apply and get the accreditations required to become a degree granting institution within the next three years. Also, once the business proves itself to be a high quality education institution, there will be no limits on how many students they can bring in from overseas. What we are seeing today is the process of separating wheat from the chaff, and a process which improves the attractiveness of the private education sector, and not the other way round.

These are pointers for the things to come – a much larger scale For Profit higher education industry – and the stakes are already quite clear. A range of likely players are already positioning themselves, which include only a handful of current players. The source of investment is likely to be global, global funds, American For Profit Education companies and some of the City-based funds, specialized in education, are already in the fray. It is not coincidental that Becker Professional Education, an arm of the company which owns DeVry University, just bought over ATC, a publishing company which specializes in training materials for British Accountancy Training bodies.

We may see a range of new and innovative start-ups entering the market in the next 12 to 18 months, as the universities look to maximize their income and investment in the sector becomes available. However, the current players are unlikely to survive, mostly: What they have shown so far is a combination of lack of will and lack of imagination, and ended up going backward rather than forward.

The issue of lack of will is understandable. Here was a lucrative market where people paid you for nothing – just for the privilege of being in London – and suddenly you are being asked to compete on service. There was no culture of service or innovation in most private sector colleges, nor they employed people who could align themselves quickly and effectively with what the new marketplace demanded. While privatization of education will certainly happen, but this time around, the rules may be completely different and the current players have already sapped their energy trying to protect the old system.

Besides, while the talk of the industry is surely around the ‘Home’ students, the lack of imagination is evident too. Most colleges tend to operate with an assumption that the two markets, overseas and home, are essentially the same, and can be serviced with similar products and service levels. What they have missed the sight of is that the greatest attraction for an overseas student to do a course in Britain is that they are getting a British qualification, which is not a lot for Home students. Hence, there needs to be more in the package than just the certificate in the end, and the Diploma mills need to reinvent themselves in terms of course design, delivery and alumni services. So far, however, very little effort has gone in any of these areas, except that the adverts have changed – ‘your local college’s have appeared but they remain all the same.

Also, most private players today crowd in narrow segments, accountancy, business, IT, tourism and social care being the most common, in the hope that these streams will imply greater employability and hence attract more students. However, if experiences of other countries, where private sector has flourished from similar starting points would show that successful new players have emerged and created new segments. It is interesting to think about arguments like Daniel Pink makes in A Whole New Mind (or Howard Gardner in Five Minds for The Future) where the abilities like Creativity, Design and Integrative Thinking are pointed out as critical skills for the Western economies. I shall argue that these are the areas where there is an educational deficiency, and this will become quite grave as public institutions start replicating private sector models and start crowding in to ‘popular’ sectors. For a matured economy like Britain, there will be more people doing Media Studies and Liberal Arts than Business and Computer Science at this point of time, and this is a segment new and successful private players will effectively serve.

So, in summary, interesting times for the For Profit education sector in Britain where the Creative Destruction is clearly in evidence. For the old must make way for the New, and market systems ensure that unmet demands always create new sources of supply, we shall see new players emerge or invade in droves. Unfortunately, the current players, suitably positioned to take advantage, will mostly miss out. It will be tragic, but one say, such was scripted anyway.


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