The College of Law has become the first private-sector provider to be granted degree-awarding powers under more flexible regulations introduced by the Government two years ago.
The college, whose 7,000 postgraduate students make it Europe's largest provider of vocational legal education and training, was granted the powers by the Privy Council last week after a review by the Quality Assurance Agency.
Nigel Savage, the college's chief executive, said: "It is a measure of public confidence in the college that it has become the first organisation to be given degree-awarding powers that hasn't had to be first accredited by a university."
In 2004, the Government introduced regulations designed to bring more competition to the sector. They paved the way for teaching-only institutions, including commercial companies, to become universities. With the regulations, the Government dropped the requirement for universities to conduct research but insisted that institutions have 4,000 full-time equivalent higher education students and that private-sector providers undergo an audit to renew their status every six years.
Private providers could in the long run pose a threat to public-sector providers of higher education. Competition is already fierce in subjects such as law, which has seen a 7 per cent drop in the number of applications this year.
The college, which runs a joint-degree programme with the Open University for about 3,000 students, is not planning to expand further into the undergraduate market at this stage.
But it moved quickly to offer degrees to students without undergraduate law degrees who were enrolled on the postgraduate vocational courses necessary for them to become lawyers. It is refunding the deposits of students who have switched to the college after signing on for graduate diplomas in law at other institutions.
This could affect the BPP Law School, which put in a bid for degree-awarding powers last year but is not expected to get them until the next academic year. "The QAA apparently has not been provided with any additional resources to complete the scrutiny and so we are all having to wait a while," said Carl Lygo, principal of BPP's academic division.
The QAA declined to comment.
Michael Shattock, visiting professor at the Institute of Education, University of London, said: "The private sector will bring healthy competition to higher education, rather as it does in the US. If we are to see 50 per cent of young people go into higher education, we need a range of different types of institution and courses on offer."