The naivete of (some) UK universities

David Mitchell had a terrific piece in the Observer triggered by stories that up to 10 British publicly-funded universities are in talks with Carl Lygo, the CEO of BPP (Britain’s first for-profit ‘university’), about possibility of running the business side of these institutions by going into “partnership” with them.

The idea is that they’d still make all the academic decisions, while BPP would deal with the admin. Mitchell has this to say about the proposition: “There is little doubt that state funding changes an institution’s attitude to money and can increase its propensity for waste.”


I think it’s a big jump from that observation to the current orthodoxy that the public sector’s flabby inefficiency and the private’s dynamic productivity are inevitable and universal – that the private sector possesses some kind of magic which, by dint of being paid by the state, no one in public service has access to; that the private sector is always brilliant and the public always useless.

I suspect Lygo of subscribing to this view when he says: “We have got a lot of universities in the UK and not all are in a strong financial position… the private provider would add expertise in the back-office functions.” What expertise? Expertise in administering, say, Bristol University that the people currently administering Bristol University don’t possess but a new company that’s never done it before is going to be brimming with? Won’t they just employ the same people to do the job but pay them less or sack a few? Is that what he means by expertise?

It’s not expertise, it’s ruthlessness, it’s the prioritisation of profit. What Lygo is offering people running universities is the opportunity to divest themselves of many of the problems inherent in their jobs. If you don’t want to take the tough decisions, he’s saying, if you doubt you’ve got the backbone to make the efficiency savings, then we’ll handle them for you. Pass your troubles on to those of us untroubled by conscience. Not only would this be a dereliction of the universities’ duty, it would also help perpetuate the myth of the private sector’s omnipotence and the public’s doltish money-burning idiocy.

The private sector caused the credit crunch, the financial crisis, the global recession. The public sector bailed out the banks and brought the world back from the brink of ruin. When our railways were in public hands, they were shabby, unreliable and loss-making. In private hands, they still are but public money ends up in the hands of shareholders and the tickets cost vastly more. The NHS is the most efficient health service of its peers despite having, up till now, much less private sector involvement than they do. The armed forces remain in the public sector and people seldom have cause to criticise their efficiency or commitment.

What Mitchell doesn’t mention, but Howard Hotson did in his splendid piece in the LRB, is that BPP is an offshoot of Apollo, the US Corporation which owns the ‘university’ of Phoenix.

In 2004, a scathing report issued by the US Department of Education concluded that Phoenix, as the Chronicle of Higher Education put it, had a ‘high-pressure sales culture’ that intimidated recruiters who failed to meet targets and encouraged the enrolment of unqualified students – in short that it rewarded ‘the recruiters who put the most “asses in classes”’. Apollo illegally withheld the report, but it was leaked and the group’s value on the stock market crashed. A suit was brought alleging that its management had ‘disseminated materially false and misleading financial statements in an effort to inflate its stock price and attract investors’.

In 2006 the company’s controller and chief accounting officer resigned amid allegations that the books had been cooked; in 2007, the Nasdaq Listing and Hearing Review Council threatened to withdraw Apollo’s listing from the stock exchange; in 2008, a US federal jury in Arizona found Apollo guilty of ‘knowingly and recklessly’ misleading investors, and instructed the group to pay shareholders some $280 million in reparations. Apollo appealed, but the appeal was rejected by the US Supreme Court on 8 March this year.

In the face of strenuous lobbying from the for-profit university industry, the Obama administration is now reversing the regulatory changes of the Bush years that allowed this bonanza. It has just been revealed that attorney-generals in ten states are investigating the University of Phoenix ‘for possible deceptive practices in its student recruiting and financing’ dating back to 2002. It looks like the party may be over, at least for the Apollo Group. Enrolment at Phoenix dropped by 42 per cent in the last three months of 2010. In January the group conceded that it expects applications to drop by another 40 per cent in the first quarter of 2011.

So this is the group that is going to offer its commercial nous to the UK higher education sector? “Is it possible”, asks Hotson, “that [David] Willetts just doesn’t know what the Apollo Group was up to at the University of Phoenix? Or does he imagine that for some reason the same thing couldn’t happen here?”

I’ve seen too much of universities over my professional career to think that their administration and management couldn’t be improved. But the idea that an outfit like BPP has anything to contribute to their management is, well, insane.

Which means, of course, that it is now quite probable.