This House would encourage the creation of private universities in the UK

British universities are facing cuts in government funding and as a result there will be no new places created to cater for rising demand. Professor Steve Smith, president of Universities UK noted the fact that the budget cuts that could soar to as much as £950,000,000 over three years would decrease the quality of education whilst keeping the numbers of University places stagnant. In 2009, 160,000 students who applied did not go to University. In 2010, 75,000 more people applied.¹ Governments in rich countries all over the world are facing squeezed budged over the next few years and will be unable to increase funding for universities. This leaves private universities as the only way to meet increasing demand for higher education.

¹Shepherd, 2010

Encouraging private universities will not increase the number of university places available. Instead they will skim off the students who can afford to pay, but who would be going to university anyway. This will leave remaining publicly funded universities having to pick up the strain, often with less money and just as many potential students without places.

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In the rest of the economy, when consumers are allowed to choose between goods or services, the higher quality products are successful and the bad ones fail. Similarly, when consumers can makes choices between universities, and are putting money on the line (thus taking a risk) they will choose the good universities, and consider the bad universities as not worth wasting their money on. As a consequence, the best universities will expand, and the worst universities will either improve or fail. The New College of the Humanities for example is aiming to rival Oxford and Cambridge¹ so helping to provide these two elite institutions with the necessary competition to force up standards. This will result in a higher quality of education being available to more people.

¹ BBC News, "Academics launch £18,000 college in London.” 5 June 2011

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Universities can't be guided by an "invisible hand": the conditions in the higher education market are not such that optimum results will obtain from this sort of "free market" idea. There are several reasons why. First, demand for university courses fluctuates, and a low intake for a course one year, and therefore decreased funding, could unfairly penalise other people studying in that department, who are not free to leave (and take their money elsewhere) but simply have to suffer the decrease in quality until the end of their degree course. Second, universities don't operate in a true free-market system: the high start up costs (buildings, libraries) mean that it is very difficult for new universities to enter the market, even if standards in existing ones fall.Thirdly, there will always be those students who are poorer and have to go to the worse universities (if they cannot afford or do not want the burden of a student loan). A poorer student will either get a second rate education and waste valuable time and money or will opt out of higher education all together and accrue none of the benefits, since graduates typically earn more than non-graduates¹.

¹ Lexington, "Higher education: Is it really the next bubble?" The Economist, 21 April 2011,

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Privatisation of universities allows for a greater range of educational provision: universities are no longer restrained by government targets and bureaucracy, and are incentivised by possible profits to set themselves apart and provide "unique selling points" that will gain them more students: the current system does not provide this motivation because universities receive their funding regardless of student numbers.

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If more diversity is necessary, then governments can change the way in which they fund universities, perhaps by giving a proportion of funding based on student numbers.

However, for the large part so-called "increased diversity" would not constitute improvements on the quality of academic education, but rather gimmicks to make a university look more attractive to the young people who apply – there are incentives to make the university popular to sixth-form applicants, not to existing undergraduates.

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The majority of people in the UK have not benefited from a university education, and graduates earn more, on average, than the rest of the population. Further, universities accept a larger number of richer people than they do poorer people. A National Audit Office report claims "Socioeconomic background remains a strong determinant of higher education participation. People from lower socioeconomic backgrounds make up around half of the population of England, but represent just 29 per cent of young, full-time, first-time entrants to higher education."¹ It is therefore wrong on principle to use tax-payers' money to subsidise universities, because when universities are subsidised from a general "pot" of taxation, a redistribution of wealth occurs whereby the rich benefit at a cost to the poorer people in society. This is wrong, because we should be using taxation to attempt to mitigate economic inequality, not to exacerbate it.

¹ Woolcock, Nicola, "White working class boys least likely to go to university." Times Online, 25 June 2008,

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It is unfortunate that the current system constitutes taking from the poor and giving to the rich, but this is justified as long as two things are true: first, overall, the government does redistribute wealth in such a way as to take from the rich and give to the poor, and second, the funding of universities from the public purse is of benefit to the poorer people in society. In this case publicly funding universities gives the poor the option of going to university that they would otherwise not have, even if they fail to take that option up. (The opposition arguments explain why this latter condition is the case.)

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British universities are facing cuts in government funding and as a result there will be no new places created to cater for rising demand. Professor Steve Smith, president of Universities UK noted the fact that the budget cuts that could soar to as much as £950,000,000 over three years would decrease the quality of education whilst keeping the numbers of University places stagnant. In 2009, 160,000 students who applied did not go to University. In 2010, 75,000 more people applied.¹ Governments in rich countries all over the world are facing squeezed budged over the next few years and will be unable to increase funding for universities. This leaves private universities as the only way to meet increasing demand for higher education.

¹Shepherd, 2010

Encouraging private universities will not increase the number of university places available. Instead they will skim off the students who can afford to pay, but who would be going to university anyway. This will leave remaining publicly funded universities having to pick up the strain, often with less money and just as many potential students without places.

improve this

In the rest of the economy, when consumers are allowed to choose between goods or services, the higher quality products are successful and the bad ones fail. Similarly, when consumers can makes choices between universities, and are putting money on the line (thus taking a risk) they will choose the good universities, and consider the bad universities as not worth wasting their money on. As a consequence, the best universities will expand, and the worst universities will either improve or fail. The New College of the Humanities for example is aiming to rival Oxford and Cambridge¹ so helping to provide these two elite institutions with the necessary competition to force up standards. This will result in a higher quality of education being available to more people.

¹ BBC News, "Academics launch £18,000 college in London.” 5 June 2011

improve this

Universities can't be guided by an "invisible hand": the conditions in the higher education market are not such that optimum results will obtain from this sort of "free market" idea. There are several reasons why. First, demand for university courses fluctuates, and a low intake for a course one year, and therefore decreased funding, could unfairly penalise other people studying in that department, who are not free to leave (and take their money elsewhere) but simply have to suffer the decrease in quality until the end of their degree course. Second, universities don't operate in a true free-market system: the high start up costs (buildings, libraries) mean that it is very difficult for new universities to enter the market, even if standards in existing ones fall.Thirdly, there will always be those students who are poorer and have to go to the worse universities (if they cannot afford or do not want the burden of a student loan). A poorer student will either get a second rate education and waste valuable time and money or will opt out of higher education all together and accrue none of the benefits, since graduates typically earn more than non-graduates¹.

¹ Lexington, "Higher education: Is it really the next bubble?" The Economist, 21 April 2011,

improve this

Privatisation of universities allows for a greater range of educational provision: universities are no longer restrained by government targets and bureaucracy, and are incentivised by possible profits to set themselves apart and provide "unique selling points" that will gain them more students: the current system does not provide this motivation because universities receive their funding regardless of student numbers.

improve this

If more diversity is necessary, then governments can change the way in which they fund universities, perhaps by giving a proportion of funding based on student numbers.

However, for the large part so-called "increased diversity" would not constitute improvements on the quality of academic education, but rather gimmicks to make a university look more attractive to the young people who apply – there are incentives to make the university popular to sixth-form applicants, not to existing undergraduates.

improve this

The majority of people in the UK have not benefited from a university education, and graduates earn more, on average, than the rest of the population. Further, universities accept a larger number of richer people than they do poorer people. A National Audit Office report claims "Socioeconomic background remains a strong determinant of higher education participation. People from lower socioeconomic backgrounds make up around half of the population of England, but represent just 29 per cent of young, full-time, first-time entrants to higher education."¹ It is therefore wrong on principle to use tax-payers' money to subsidise universities, because when universities are subsidised from a general "pot" of taxation, a redistribution of wealth occurs whereby the rich benefit at a cost to the poorer people in society. This is wrong, because we should be using taxation to attempt to mitigate economic inequality, not to exacerbate it.

¹ Woolcock, Nicola, "White working class boys least likely to go to university." Times Online, 25 June 2008,

improve this

It is unfortunate that the current system constitutes taking from the poor and giving to the rich, but this is justified as long as two things are true: first, overall, the government does redistribute wealth in such a way as to take from the rich and give to the poor, and second, the funding of universities from the public purse is of benefit to the poorer people in society. In this case publicly funding universities gives the poor the option of going to university that they would otherwise not have, even if they fail to take that option up. (The opposition arguments explain why this latter condition is the case.)

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University degree programmes, unlike other products like televisions or designer shoes, are tools of social mobility: unlike a TV, a good degree will help you to get other good things later in life (like a higher salary). This means that it is important that people have a fairly equal opportunity to access the best degrees. Market forces will make the best universities more expensive than the others, and mean that the best degree places are awarded not to the cleverest, but to those able to afford it. Universities are already elitist despite being open to all and being publicly funded. In the UK class is a major determinant of where you go to university. Oxford University only has 11.5%, and Cambridge 12.6% of its students coming from a working class background compared to an average of 32.3%¹. This is a situation that will only get worse as students have to pay for the best private universities.

¹ Davis, Rowenna, "Does your social class decide if you go to university? Get the full list of colleges." Guardian.co.uk, 28 September 2010,

Allowing market forces to control educational opportunity is as legitimate at university level as it is at school level. Parents wanting the best for their children should be allowed to spend the resources that they have accumulated in any way that they like, rather than have those resources taken from them by the state to create an education system that isn't as good as that which those parents could have funded themselves.

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New private universities will not have a long standing reputation to keep up. They may not be as well regulated and they will have no social interest beyond simply getting money from their students. This means that they may well offer cheap and poor quality education in order to find a gap in the market. This could damage the reputation of other universities as Dr Paul Greatrix registrar of Nottingham University worries "If there are entrants who are on the extreme end of cheap and cheerful, this will damage our international reputation."¹ In systems that are both private and state funded universities there is an immense divide between a few very good elite institutions that charge immense amounts and a much larger number of poorer quality universities. Take the US system, it is well known for its world class Ivy League universities. Its publicly funded universities however do much less well with only the University of Michigan near the top of the world rankings in 20th place. Of the state universities only those that do not face so much Ivy league competition over in California due to distance do well¹. Having Private universities clearly creams off the best students and the funding leaving the public universities in a worse position lowering the overall quality of education.

¹ Shepherd, Jessica, "What universities think of competing for their admissions." Guardian.co.uk, 28 June 2011. 
² Hotson, Howard, "Don't Look to the Ivy League." London Review of Books, Vol.33, No.10, 19 May 2011.

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Far from reducing the quality of university private universities would increase it. Private Universities would go where most money is, and this is most likely to be at the top where a lot of money can be charged for the degrees. This is what Grayling's proposed New College of the Humanities is doing. The New College of the Humanities will charge fees of £18,000¹. With the extra money they will be able to hire the best professors and have a very good student teacher ratio, better than 1:10, with the result that there will be a lot of one to one tuition and student-staff interaction to increase the quality of teaching².

¹ BBC News, “Academics launch £18,000 college in London.” 5 June 2011.

² New College of the Humanities

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Treating university education like any other commodity will increase the perception that, like any other very expensive commodity, it is a luxury, and that therefore those who can't afford it should just see that as an economic reality, and not as an assault against their life chances. This will mean that fewer people from less well-off backgrounds will go to university, even if they are very clever, and thus will decrease social mobility.

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The reason why people from poorer backgrounds are underrepresented at university is not because they perceive it as something only rich people can do. Instead, it is because their schools did not adequately prepare them: on average, they have fewer/worse qualifications, and are less likely to have performed the myriad extra-curricular activities that give people an advantage when applying to universities¹. Making university education private, then, does not disadvantage the poor: if the opposition really wants to help people from poorer backgrounds it would address the deficiencies of school-level education instead.

¹ Cassidy, Sarah, "Quality of education still determined by wealth, says report." The Independent, 8 August 2008,

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Funding universities through taxation rather than privately allows poorer people in society to access university education because the government can increase access in three key ways. First, it can subsidise universities to decrease the price, second, it can exert pressure on universities to increase diversity within their student populations (by increasing numbers of people from disadvantaged backgrounds) and third, it can easily control peripheral support structures such as student loan schemes that become difficult to manage under a privatised system.

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With regard to subsiding universities and the student loan schemes, both of these could nevertheless be operated even if universities were privatised. For example, assisted place-schemes,(which-School.co.uk) where the government funded bright students to attend private schools are successfully run in the UK.With regard to pressure to increase diversity in the student population, this merely treats the symptom and not the cause, which is the inadequate educational support given to some groups in society at a lower level: this should be directly addressed instead.

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