Company policy: where Uclan restructure plans lead, post-1992s may follow

November 22, 2012

Post-1992 universities could begin to change their legal status and open up to private investment in the wake of the University of Central Lancashire's application to the government to become a private company.

Uclan also plans to adopt a "group structure" from August 2013, whereby its international branch campuses in Cyprus, Thailand and Sri Lanka would be managed separately, with its vice-chancellor running only the UK university and reporting to a group chief executive.

Switches to company status and changes in structure were both advocated in a 2009 report to Universities UK by Eversheds, Uclan's law firm, as ways for higher education institutions to attract private investment.

Malcolm McVicar, Uclan's outgoing vice-chancellor, will stay on as interim chief executive of the group. Questioned about the changes, he said: "We started taking some legal advice on moving to a group structure and our lawyers said: 'You also need to consider your legal status'."

The Eversheds report said that institutions taking the form of private companies, either limited by guarantee or by shares, have "greater freedom" than higher education corporations, the status held by the majority of post-1992s.

Private companies "have the advantage of being able to raise equity or quasi-equity investment from third parties", the report said.

Its author, Glynne Stanfield, a partner in Eversheds, has reportedly described himself as a "legal, non-party political" adviser to David Willetts, the universities and science minister.

Mr Willetts has previously criticised the "restrictive regime for higher education corporations" and said that such institutions should be given more freedom in areas of "governance and dissolution".

By taking the form of a company limited by guarantee - a non-profit distributing entity - Uclan would have "more control and autonomy", Professor McVicar said.

But he added: "It isn't privatisation. It isn't about taking the university into the market and forming a limited company with shareholders. It stays a university, stays a charity."

Dissolve us, we want you to

Uclan's move is likely to stir up interest in becoming companies limited by guarantee among other post-1992s.

Under section 128 of the Education Reform Act 1988, the secretary of state - currently Vince Cable - can, by order, dissolve a higher education corporation and transfer its assets and liabilities.

Uclan has already applied to the Department for Business, Innovation and Skills seeking such an order.

"I understand we are the first," Professor McVicar said.

Regarding the group structure, he added that "as group demands have got bigger, I'm very keen to make sure the university in the UK gets sufficient time and attention from its vice-chancellor".

The Eversheds report said that a group structure, potentially including distinct higher and further education and even school brands, "is likely to be intermeshed with commercial companies within the group which could have funding and interest from outside stakeholders".

Professor McVicar said that the group structure idea came from the university's board, which considered it to be "a model ... used in many medium-sized companies which have ambitious plans for the future".

He added that although he will still retire as vice-chancellor in summer 2013 as planned, he will stay on as interim group chief executive for about a year after that.

john.morgan@tsleducation.com.

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