By Andrew McGettigan

Last week, it was announced that the government had conferred the university title on BPP, formerly a ‘university college’ specialising in professional courses in law, accountancy and business. Although presented in the mainstream press as the second UK ‘for-profit’ university, BPP University is a not-for-profit subsidiary of BPP Holdings, which in turn is owned by Apollo Global. It is not a charity, but it is barred from distributing profits to its parent company, and as such benefits from a VAT exemption on tuition fees for degree level courses.

BPP becomes the second dependent entity to receive permission to use the ‘university’ title following the upgrade of College of Law Limited last November prior to its sale to Montagu Private Equity. The Department of Business, Innovation and Skills [BIS] has also confirmed that it is satisfied that what is now the University of Law still meets the governance criteria for universities under its new ownership.

Such developments have become possible because the government has lowered the bar to the full ‘university’ title and created a new route to the title for companies and their subsidiaries.

Applicant institutions must already have been granted the power to award degrees by the Privy Council, but since July last year the minimum size requirement, set in 2004, has been dramatically reduced in England and Wales. Previously, institutions needed 4 000 full-time equivalent HE students to qualify. Now, only 1 000 are needed ‘of whom at least 750 are registered on degree courses (including foundation degree programmes), and the number of full-time equivalent higher education students must exceed 55 percent of the total number of full- time equivalent students.’

This is smaller than some secondary schools (the count includes overseas students). The final condition is that a prospective university needs to demonstrate good financial, corporate and academic governance. Carl Lygo the head of BPP University and BPP Holdings, states: “BPP University has independent governance, is financially self-sufficient with no debts and fully satisfies the principles of good corporate governance.”

Significantly, BPP and University of Law used a newly formalised procedure separate to that by which the Privy Council has the power to create universities. It has been termed the ‘Companies House’ route’.

Both ‘degree’ and ‘university’ are protected terms in the UK. This means that companies wishing to use ‘university’ in their name must apply to Companies House for permission. The Registrar then checks with BIS to see if it has any objections. This process, which also covers the use of ‘university college’ is used for pubs seeking to be called ‘The University Arms’, for universities from abroad seeking to operate under their title in the UK and for the names of subsidiary companies operated by UK universities (one recent example being Coventry University College). This process was designed to prevent crammers and training providers passing themselves off as universities, but the government is now using it in a more positive fashion[M1] : not merely to police its proper use, but, in effect, to elevate colleges with degree awarding powers to ‘universities’.

The July 2012 policy announcement noted:

“The award of the title ‘university’ is granted by the Privy Council for publicly-funded providers. Other organisations must apply to Companies House to use the sensitive word ‘university’ in their name.”

The new specifics covering this second route, explicitly for ‘non-Hefce’ funded institutions (more on this below), were sent to Hefce last September and published in December. In this ‘self-certification process’, the applicant commissions a report explaining how it meets the prerequisites. BIS then seeks advice from the QAA and Hefce before taking the final decision. In this way, it claims to replicate the steps taken by the Privy Council when it is deliberating the same matter.

So are the two routes the same? Clause 4 of Section 77 of the 1992 Act outlines that as a result of the Privy Council route: “Any educational institution whose name includes the word “university” by virtue of the exercise [set out] above is to be treated as a university for all purposes.”

Is there a difference between being allowed to use the word ‘university’ in a company title and being ‘treated as a university for all purposes’?

The main difference is access to public funding – as opposed to student loan funding. Those undertaking the Privy Council route have access to public funding by right, those using the alternative route do not. Since the two institutions under discussion here only offer courses that no longer attract block grant and are research-inactive, does this leave the matter as an abstract distinction that has no importance in real terms?

David Willetts greeted the announcement with the comment that it represented an “an important step towards increasing the diversity of the higher education sector”. Given that this diversity is now a BIS objective and lowering the ‘barriers to market entry’ a key HE reform, you might wonder about the conflicts of interest that arise with BIS itself overseeing this process.

Such concerns pale beside further evidence of current government aims. Last month, a new strategy for boosting the export revenues of English Higher Education was published. There the contentious sale of College of Law to private equity was held up as a key model for established universities seeking to capitalise on new opportunities in ‘transnational’ education. The government believes the current status of most universities is an impediment to growth.

“UK education institutions have a noble history, rooted in the charitable impulses of past generations. To this day, many schools, universities and colleges have charitable status. They consider that this is an important part of their identity, and they discharge their obligations willingly and diligently. Although this model has many strengths, it does not lend itself to rapid growth. The governance structures and obligations of charities, or of bodies of similarly ancient pedigree established by Royal Charter or equivalent instruments, were not designed to grow rapidly, or to run a network across the world. …

“The challenge will be to ensure that decisions are not taken by default. A positive strategic commitment to remain at a certain size is one thing. A reluctant ossification and decline, caused by an inability to see how to change a structure that is thought to have outlived its usefulness, would be quite another.” (Paragraphs 2.12-2.14)

The split in the old binary system was formalised in the titular distinction between polytechnics and universities. The new multivalent system will be determined by market positioning, corporate form, ownership and relation to private finance[M2] .

In Northern Ireland and Scotland, universities need to have received the power to award research degrees. This is no longer the case in England and Wales, where the meaning of ‘university’ has been so diluted that the significant issue is now clearly the granting of degree awarding powers. The bestowal of the title is more to be understood as branding, a kitemark or simply recognition that the current government approves of this form of provision. Little concrete change to the institution itself will follow, beyond boosts to marketing, recruitment and the ability to strike international deals.