The Quasi-Private World of the UK University

We have been provided with some Russell Group news that surprised us.

Russell Group

“Going private: now it isn’t the LSE

I noted in the Newsletter two weeks ago newspaper speculation that Cambridge was considering going private. It ran for a few days, despite – or perhaps because of – being officially denied. This week the same has happened with the LSE. It has been a curious experience. The story seems to have started with a student newspaper, have become further developed in a piece in the Guardian, then recycled in the Independent and ended up in the New York Times.

There appears to have been no basis for it, other than as one of several options for the future to have been modelled by their Council but quickly discarded.

It is perhaps worth making some basic points. First, all universities in the UK like the LSE and UCL are already private. They are not owned by the State, nor are their employees civil servants. This is quite different from the position commonly found in continental Europe. UK universities are autonomous self-governing institutions. That is one of their strengths. However, they do not have the freedom of action of a private commercial company, for two reasons.

First, they receive Government funding, in the form of support for teaching (still, just), and for research. That funding comes with conditions – for example, no university may presently charge a UK-EU undergraduate student a fee higher than the stipulated maximum of around £3,300 a year. When people talk of a university “going private” they usually mean foregoing this funding in return for being liberated from control over fees. Under existing rules, that would be a huge sacrifice. Students would no longer be able to postpone payment of the fee until after they graduated, and would lose entitlement to the Government-backed loan. As I mentioned 2 weeks ago, fees would have to be paid upfront and clinical and laboratory science subjects would lose supplementary State support.

Second, universities are charities. Their resources may be used only for their charitable purposes. If there is a surplus at the end of a financial year, it may not be distributed to shareholders. It must go back into the business. It provides a fund to assist the institution through lean years, and to invest in priority areas such as equipment and facilities.

It is not correct to assume that “going private” would convert a university into a for-profit institution. That would require a further step, which would not be possible under charity law and would require a new and separate legal structure.”

So UK unis are funded by the taxpayer and run as charities. Doesn’t seem very private to us. No taxation, nothing. No university. That UK universities are private seems pointless unless you can rely on wealthy alumni like the US and go it alone. But how can they? Unless they sell local people out and rely only on international money, of course.

Seems proposterous but not so implausible. Many newer UK unis already do just this, to all intents and purposes.

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