Ouroboros finance

October 13, 2011

David Willetts claimed at the Conservative Party conference in Manchester that in future most universities will not need to comply with European Union procurement directives because they will be less than 50 per cent publicly funded ("Private contracts: 'EU rules no longer apply'", 6 October). This is also hinted at in the higher education White Paper. The "less than half" principle was established by the University of Cambridge in the course of years of expensive litigation and accordingly it now publishes its claim to be less than 50 per cent state funded every year.

But the justification for the changes that will turn the Higher Education Funding Council for England into a regulator is that public funding will continue, only now in the form of student loans. That is to be the basis of the individual contracts with institutions that will replace the all-purpose financial memorandum and will justify the range of sanctions Hefce will be able to impose if conditions in those agreements are not met. Moreover, private providers "designated" so that their students can access those loans are likely to be drawn into the net of public funding.

One foresees a whole new raft of litigation to resolve this paradox that public funding is not public funding for EU procurement purposes. This will have to be paid for by providers out of tuition fees, I suppose. A dragon swallowing its tail?

G.R. Evans, University of Cambridge

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