Pearson and for-profits gain direct UK government funding

A college owned by FTSE 100 company Pearson and another owned by a private equity firm are among the for-profit owned and for-profit higher education providers set to receive direct UK government funding for the first time.

The recurrent teaching grant announcement released by England’s Office for Students on 9 May lists 25 new providers in receipt of direct public funding in 2019-20, after they were included on the OfS’ new register of providers. The grant funding, for high-cost subjects and the costs of teaching disadvantaged students, amounts to about £10 million between these new providers, or 0.8 per cent of total sector grant funding.

The need for the OfS to spread teaching grant across new providers’ students is among the factors that will cause average grant funding per student across all providers, including universities, to drop by 4 per cent.

Of the new providers now being funded by the OfS, the biggest recipients of grant will be for-profits or for-profit owned. The biggest recipients are the British and Irish Modern Music Institute (BIMM), a music college owned by Sovereign Capital (teaching grant of £2.4 million, including £853,000 in high-cost subject funding); Arden University, owned by for-profit group Global University Systems (£1.5 million); SAE Education (£1.4 million); the University of Law, also owned by GUS (£733,000); and Pearson College London, owned by Pearson (£707,000). Pearson College London contacted Times Higher Education to say that it “has been not-for-profit since its inception in 2012 and its articles of association have always prevented it from distributing any dividends”.

While these institutions have previously been in receipt of indirect public funding via the student loans system, they have not previously been in receipt of direct government funding through grants.

Other colleges now in receipt of smaller amounts of direct public funding for the first time include a clutch of theological training institutions, such as Cliff College (which describes itself as having a focus on evangelism), Nazarene Theological College, Moorlands College (another evangelical institution) and the Queen’s Foundation for Ecumenical Theological Education.

The direct public funding for new and for-profit providers follows the government’s 2017 Higher Education and Research Act, which established the OfS and the register of providers. The government aimed to encourage new providers to enter the sector to compete with universities and to establish a “level playing field” between new and traditionally publicly funded institutions.

While the OfS’ grant budget sees a small increase in cash terms to £1.039 billion in 2019-20, because of a transfer of nursing students previously funded by the Department of Health, extra medical students and the funding of new providers not previously funded by the OfS, average funding per student declines by 4 per cent across all institutions.

The changes on health courses mean that the OfS has to fund 25,000 extra students in 2019-20, while the new providers bring 17,000 extra students.

Within its overall budget, the OfS has also set aside £14 million to fund students at new providers that may be added to the register at a later date, which is yet to be allocated.

Universities saw major variations in their funding levels, related not just to their mix of students in terms of those who are disadvantaged or studying high-cost subjects, but also to their recruitment levels. Oxford Brookes University, for example, sees an 18 per cent decline in its funding in 2019-20.

But the University of Bedfordshire, for example, sees a 13 per cent increase.

john.morgan@timeshighereducation.com