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Why we need private providers in higher education

publication date: Mar 1, 2012
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In this month’s Executive Soapbox, David Myers, Partner at investor Sovereign Capital, discusses the UK’s higher education landscape and the role that private providers play in meeting demand.

 

Much has been made recently about the delay in introducing – or possible “indefinite” postponement - of the Higher Education Bill, which the Daily Telegraph noted was “reportedly caused by coalition concerns about the role of for-profit providers”. But if there was a concern at the core of this decision, should there have been?

 

First of all, enrolment statistics point to a supply/demand imbalance in UK higher education. Over the past two decades, UK higher education institutions have seen enrolments increase dramatically: in the early 1990s there were around 300,000 full-time students in higher education, which had jumped to around 1.3m by the mid 2000s. Even taking into account the fall in applications seen after the announcement of annual fees up to £9,000, applications are already 50,000 ahead of the number of acceptances in 2011 and last year UCAS received over 100,000 further applications between January and the close of the cycle. This shortfall will be exacerbated by the Government’s decision to cut 10,000 University places in 2012.

 

At the same time though, UK government funding for education has decreased – the Institute for Fiscal Studies reported that in real-terms public funding per head for higher education students fell by around a third from 1990 to the mid 2000s.

 

When demand for higher education outstrips supply, and far exceeds available government funding, shouldn’t we be encouraging an increase in private provision?

 

Education stands and falls on quality, and perhaps recent events in the US have raised alarm bells – that some private providers will be most interested in their profits, rather than securing positive outcomes for their students.

 

Having invested in private education providers for more than a decade, this isn’t our experience. In any sector there may - of course - be disreputable providers, but they won’t have a long-term future. As an investor our aim is to build robust organisations that will continue to be successful after our investment, so we think long-term. The education establishments that we are working with have seen enrolments increase because they consistently deliver high-quality education and positive outcomes for their students, year after year.

 

One such organisation is Greenwich School of Management (GSoM), which offers University validated Bachelors, Masters and Doctoral degrees. Courses at the School are in the fields of Business, Law, Finance, Economics and Management. Based in Greenwich, London, GSoM has seen demand for its courses increase since it was founded in 1973. In particular, its students value the choice of course lengths; for example, GSoM is one of only a few providers in the UK to offer accelerated two-year bachelor degrees. Even before the increase in annual tuition fees, this option has proved to be an important part of GSoM’s accessibility strategy, as it gives students who may not be able to afford, or have the time to pursue, a three-year course a viable alternative so they can enter higher education.

 

Successive governments have targeted increasing accessibility in higher education. However, as well as raising awareness among students who might not otherwise consider university, it needs to be a realistic possibility financially if as a country we are to continue making headway. On a two year course at GSoM, for example, fees are £14,000 in total. This compares very favourably with £27,000 in fees at many public universities from next academic year. Moreover, if you factor in the cost saving of living at home while studying at GSoM, the difference in financial outlay increases further.


Clearly students shouldn’t have to choose between quality and cost and our experience is that private providers can excel at providing value for money. GSoM ensures the quality of its education through its long-standing partnership with the University of Plymouth (which also benefits from the partnership by reaching a greater number of students) and GSoM is a Quality Assurance Agency Subscriber.


Another differentiator between public and private providers is that private establishments are often able to offer a more specialised learning environment. The advantages of this approach is that the course can be more closely connected to the specific industry that students wish to be employed in after graduating, and students have the opportunity to learn with a greater number of like-minded individuals than if they studied a similar course at a large public university. For example, the Brighton Institute of Modern Music (BIMM) provides contemporary music education at diploma and degree level. The BIMM group operates colleges in Brighton, Bristol and also in London (Tech Music School). The degree courses are validated by public universities – including the University of Sussex and Bath Spa University - and tuition is delivered by tutors who are active professional musicians.

 

BIMM has also seen a great increase in demand for its courses and sought external financial backing to help it achieve its expansion goals. We’ve been working with BIMM for two years now, and with our financial support it has been able to open a new college in Dublin, which offers Ireland’s first-ever BA (Hons) in Commercial Modern Music, validated by Dublin Institute of Technology. The college opened last autumn and attracted 150 degree course and 60 diploma students at its first intake, who are being given the tools they need to gain a career in a range of roles within the music industry, including performance, artist and tour management, music production and music publishing


Students are also increasingly looking at employability as a sign of quality, which is understandable when unemployment among 16 to 24-year-olds currently stands at around 22%. Both BIMM and GSoM can prove their credentials in this area, for example surveys of GSoM graduate students have shown employment rates close to 90%.


Looking to the future, when you combine decreasing public spending with an increased demand for higher education, it’s clear that there is a gap needing to be filled. The private sector can help fill this gap – not as replacement for publicly funded universities, but in addition to them, with the same focus on quality and ensuring positive outcomes for students.

 

To contact David Myers, email david.myers@sovereigncapital.co.uk



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