"The home undergraduate market is not offering growth, not offering the margins ... If you need growth, you've got to be looking outside that."
MIKE BOXALL, EDUCATION EXPERT, PA CONSULTING GROUPJeevan VasagarThe Guardian1 July 2011
Unnamed specialist institutions thinking of going private, vice-chancellors' survey shows, as experts predict emergence of 'super league' of British universities
Two English universities are "actively considering" opting out of the publicly regulated higher education system in a radical move that would mean cutting themselves off from all state funding, including student loans.
By going private, a university would be able to remove itself from government demands to widen access to pupils from state schools.
The two universities are not identified in a survey of 65 vice-chancellors, but are specialist institutions that are not members of the Russell Group, which represents 20 of the top UK universities.
The survey, carried out for management consultancy PA Consulting, predicts the emergence of a British Ivy League – a "superleague of strong institutions".
One of the report's authors, Mike Boxall, a higher education expert at PA Consulting, said strong universities were expected to grow stronger because of a concentration of funding for research and government reforms that would allow top institutions to accept more of the best-performing A-level students.
Around half (55%) of vice-chancellors foresee "a number of institutional failures and bankruptcies" and a similar proportion expect mergers or takeovers of struggling universities. This is less pessimistic than last year, when over 75% expected failures and mergers in a similar survey. Only two vice-chancellors admitted to fears that they would be casualties of failure or takeover.
The survey finds that 64% of universities expect government-funded and -regulated business, including teacher training and NHS training contracts, to remain central to their business. But are seeking to reduce their engagement with public sector teaching and research and to develop new opportunities in private markets. Around 10% said that they would actively reduce their involvement with government-funded and -regulated activities, and another 23% expected such activities to become relatively minor factors in their business planning.
Several vice-chancellors expressed concerns about the role of government in higher education. One said: "Government's ability to continue interfering with price and demand is a concern."
A large proportion of vice-chancellors, around 37%, are looking outside the public sector for future growth. These include new markets such as employer-based training and courses aimed at professionals who want to improve their skills.
Boxall said: "The home undergraduate market is not offering growth, not offering the margins. Prices are being pushed down – the whole thrust of the white paper was trying to push tuition fees down – costs are being pushed up, arguably, by raising students' expectations. If you need growth, you've got to be looking outside that."
Some are considering expanding overseas. "A couple of universities are in talks with overseas governments about going in and effectively managing foreign state universities," Boxall said.
A white paper published on Tuesday introduced competition between English universities for a quarter of the students they will recruit next year. Competition based on strength of student demand and pricing of courses will put pressure on mid-ranking institutions to bring down fees or focus sharply on improving quality.
To request a copy of the survey, please click here.
Reproduced by kind permisson of Guardian News and Media LImited.