UCU demands inquiry into trebling of taxpayers' money for private colleges

• Amount of money paid to private colleges through unregulated courses has trebled in one year and now exceeds £100m

• Number of students studying with private colleges on unregulated courses has doubled in one year

• 23% of the total public money captured by one provider - Greenwich School of Management - owned by private equity fund Sovereign Capital

• Sovereign Capital's founder advises the government on public sector reform

• Greenwich School of Management were banned from recruiting stranded foreign London Metropolitan University students after a poor inspection from the Quality Assurance Agency

Private colleges now receive over £100m of public money, despite the fact that they are not subject to the same regulation as public universities. Private providers do not have to observe controls on the number of students they recruit, nor do they have to collect information about recruitment figures or completion rates.

In 2011 the government increased the amount of public money private providers could receive in the form of student loans from £3,000 to £6,000. At the same time, the government dramatically increased the number of courses designated fit for public support - one college got 98 courses approved by officials in just a single day.

In 2007/8, loans paid to private providers totalled £15,156,700. By 2010/11 it had risen to £33,006,000. Government figures released last week showed that the figure had almost trebled in size to £100,069,600 in 2011/12.

In the letter the union raises concerns that some of the companies accessing public money are subsidiaries of some of the worst offenders in the scandal hit US for-profit education system.

BPP University College, for example, is owned by the US for-profit education giant Apollo, which has been subject to million dollar legal action in America. Data published in a recent Senate report showed that Apollo depends on federal loans for 88% of its revenue and spends twice as much on marketing as it does on teaching.

Three-fifths (60%) of Apollo students dropped out of their courses within two years, while of those who completed 21% defaulted on paying back their loans within three years of completing their course.

Another big beneficiary of public money is the Greenwich School of Management, owned by Sovereign Capital - a private equity fund whose founder advises the government on public sector reform. Last year, it received £22.6m through student loans - almost a quarter of the total money handed out to private providers.

This is despite the fact that Greenwich School of Management was removed from the 'clearing house' for London Metropolitan University students after a poor inspection from the Quality Assurance Agency, which stated 'the quality of the student learning opportunities' at the institution 'requires improvement to meet UK expectations'.

The union said it was extraordinary that at a time when money is being cut from university and college budgets in the name of austerity that £100 million of taxpayers' money has been handed to private providers through the designation of their courses for public support. This money has to be found within existing government budgets.

UCU general secretary, Sally Hunt, said: 'The amount of taxpayers' money being handed out to private companies has ballooned. In its enthusiasm to crowbar new providers into the sector, the government has created an uncapped, unregulated shadow higher education sector, profiting from public money without having to undergo even the most basic quality checks or provide any information about their performance.

'The biggest beneficiaries are for-profit companies like BPP, owned by the US for-profit giant Apollo, and Greenwich School of Management, which is owned by a private equity fund whose founder advises the government on public sector reform. Greenwich School of Management has walked away with a cool £22m of taxpayers' money, despite the fact it was thrown out of the 'clearing house' for London Metropolitan students on the back of a poor inspection from the QAA.

'We have raised this issue time and again with ministers but, in the absence of any coherent response, we are now asking the Public Accounts Committee to investigate whether public money is being spent with appropriate safeguards in place. It is quite extraordinary that at a time when money is being cut from university and college budgets in the name of austerity that £100 million of taxpayers' money has been handed to private providers.'

A copy of the letter to the PAC is available from the UCU press office.

Notes

• The full government figures on money given to private providers through student loans
• 98 courses approved in one day
• Apollo in the US (.pdf)
• John Nash Sovereign Capital founder advising government on public sector reform
• Greenwich School of Management banned from recruiting London Metropolitan University students
• QAA report into Greenwich School of Management (.pdf)