Is Pearson an octopus or an “800-pound gorilla”? Perhaps animal metaphors are too brutish and sinister: maybe Pearson should simply be described as the “world’s leading learning company”, as the FTSE 100 firm itself puts it.
However you describe Pearson, universities in the UK and around the world are facing competition from a £10 billion multimarket giant that has come a long way from its origins as the construction company that built the first road tunnel under the Thames in the 1890s.
Pearson is fairly open about its plans for UK higher education, as shown in its consultation response to the government’s higher education White Paper, released to Times Higher Education under the Freedom of Information Act.
“We have made no secret over a number of years of our ambition to contribute to higher education provision in the UK, and we fully endorse the [government’s] intention to enable Pearson, and other commercial providers like us, to enter the marketplace with greater ease,” the company wrote.
In schools and further education, Pearson is already established as a dominant player in vocational education through its ownership of examination board Edexcel and its BTEC qualification.
And some senior figures in higher education say that the sector is not as wary as it should be about Pearson, given the way the firm has established a market position in schools.
The 2011 government-commissioned Wolf report into vocational education was clear that BTECs that were equivalent to A levels had value in the labour market and were an established route to higher education.
But it also found that since 2003, student numbers on the newer BTECs that were equivalent to GCSEs had “exploded” (Pearson formed a partnership with Edexcel in 2003 before taking complete control of the board in 2005).
The report said that the “dramatic shift in the volume and nature of ‘vocational’ education” at GCSE level posed questions such as why students were being encouraged to take many more such awards and whether they boosted achievement.
For Pearson’s critics in higher education, the Wolf report offers a clear lesson on the need to exercise caution over the firm’s growing involvement in the sector.
Change of plan
In December 2010, Pearson announced plans to launch BTEC degrees, with further education colleges teaching the vocational qualifications under validation agreements with the company.
That was before the shelving of the coalition government’s plans for higher education legislation that was set to allow non-teaching bodies a path to degree-awarding powers - a change that appeared to be aimed specifically at giving Pearson far greater involvement in the sector.
Instead, the company had to scale down its ambitions, launching Pearson College in September 2012. The college offers a BSc in business and entrepreneurship, comprising a two-year Higher National Diploma - a BTEC foundation degree from Edexcel - followed by an additional year leading to a full degree validated by Royal Holloway, University of London.
Pearson’s need to partner with Royal Holloway stems from the fact that without a change in the law, it cannot gain its own degree-awarding powers. So the firm’s aims are limited by the dictates of its partner - and universities tend to keep a tighter rein on validation agreements these days in the wake of the University of Wales scandal.
A Pearson spokeswoman says the college recruited a cohort of just under 40 in 2012. “Providing a quality education is our first priority, so we aim to grow slowly and build our reputation for teaching and learning in this sector,” she adds.
“You could say the higher edu-cation sector is holding its breath, waiting to see what the ‘800-pound gorilla’ does,” says Matt Robb, senior principal at the Parthenon Group, which advises private firms about the higher education market.
In that context, Robb thinks that the small-scale nature of Pearson College was an anticlimax. But although it feels like the company “missed an opportunity to have a really big go at the higher education sector in a direct and aggressive way”, he thinks Pearson could be following a canny strategy - “feeling its way” before scaling up the college.
Comments from the firm’s spokeswoman also indicate that Pearson College is being seen as a way of allowing the firm to travel the orthodox route to degree-awarding powers. “As a teaching body, we have a clear route to [the] powers, and we will be working towards that in future,” she says.
The pursuit of powers
Partnerships seem to be a key focus for Pearson. Among the potential partners it has approached to discuss overseas operations are private providers with degree-awarding powers. Richard Price, one of the founders (now retired) of major UK private provider BPP, is said to be advising the firm as it tries to negotiate these links.
In return for investment, Pearson would receive payback over the long term and some of these international operations might be offered under the Pearson name.
Another potential route to a firm foothold in the sector is for Pearson to buy a university or private provider that already has taught degree- awarding powers.
Such powers would be a major asset that the firm could use overseas to expand into emerging markets for higher education, including Asia, potentially using online provision.
Pearson was one of the unsuccessful bidders in the sale of the former College of Law, now the University of Law, which was eventually sold to Montagu Private Equity for around £200 million.
In terms of Pearson’s future, Robb does not believe the firm will find it easy to compete with universities for domestic students. Instead, he points to BPP’s success in offering professional qualifications that can be used worldwide. “If I were Pearson, I would be going after that market in a big way,” he says.
On its higher education strategy, Robb adds: “It feels like early days. The main strategy is to get into delivery.”
Andrew McGettigan, a writer and researcher on higher education, points to Pearson’s success in US secondary education, where it dominates in-state student testing and also has a presence in the market for teacher performance data.
He suggests that the firm could use its size and ability to invest and move into new markets, to “tie up” careers advice, examinations and degrees in the UK.
“Looking at the States…that would worry me about what [Pearson] would be prepared to do over here if [it does] get degree-awarding powers,” McGettigan says.
The government has “always been very keen” to get Pearson involved in UK higher education “because it would offer cheap mass higher education”, he argues.
And unlike Robb, McGettigan believes that Pearson has a “sufficiently recognised brand to compete with universities on the same terms”.
So UK universities be warned: whether octopus or 800-pound gorilla, Pearson has only just begun to flex its limbs.
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