Lancashire university could go private

The University of Central Lancashire (UCLAN) could become the first mainstream higher education institute to become a private company.

UCLAN announced to staff last week that it is seeking to dissolve its corporate form to become a private company, raising fears among staff that the institution could become a for-profit enterprise selling off university assets and inviting investment from private equity funds.

The local branch of UCU is organising a meeting of members at the institution to discuss its reaction to the news and possible protests against the plans.

The university is currently a higher education corporation and, although it would remain a charity, the proposed changes would make it easier for the university to slim down its governance structures and possibly regroup some or all of its assets into a for-profit subsidiary company.

UCU says such a move would erode democratic checks and balances on management and may be a prelude to the university seeking private equity investment. The union has recently published a report 'Public Service or Portfolio Investment', which highlights the danger presented to quality, standards and to public assets presented by private equity funds.

The government's ill-fated higher education bill was likely to have included legislation to make it easier for universities to become companies limited by guarantee, but its abandonment means that UCLAN has to apply to the secretary of state to dissolve the corporation.

UCU said it regards the proposals as a move in the wrong direction and will be campaigning to ensure that any change of status involves the protection of university assets for the sole purposes of providing education for the public benefit. It said there must also be strong governance structures to ensure proper scrutiny of the university's management team.

A recent report by Senator Tom Harkin into the scandal of for-profit companies in America concluded that for-profit companies - especially those with private equity backing - need greater regulation. Senator Harkin's report identified the US government's de-regulatory policies at the start of the century as a key factor in the growth of the current problems.

In America for-profit companies offer derisory graduation rates, crushing levels of debt and degrees of dubious value. According to the US Education Trust, only 20 per cent of students at for-profit colleges complete a four-year course, and a fifth of those who do finish default on their loans within three years.

UCU is currently compiling a report looking at different universities' reactions to the new funding regime. The report, expected to be published in the coming months, will focus on institutions turning to outsourcing, risky private sector partnerships or selling off parts of their operations to deal with financial problems.

UCU General Secretary, Sally Hunt, said: 'Government policies coupled with the proliferation of for-profit companies are leaving many universities considering radical strategies to cope in the new higher education landscape. However, we do not believe that sleepwalking into arrangements with private firms or seeking to become private companies will do anything to maintain our international reputation for excellence.

'The problems from America make it quite clear that we need greater regulation of the for-profit sector currently circling higher education. We have serious concerns that private equity funds will come in seeking a quick buck. We believe that any profits must be pumped back into education.'