Private expansion has let in 'a lot of dross', Cable says

The coalition’s move to allow for-profit colleges more access to student loans opened the door to “a lot of dross”, Vince Cable has admitted

October 7, 2014

The business secretary, whose powers as secretary of state are used to grant individual private providers access to the public loans system for their students, also said the benefits from increased private provision were “ambiguous”.

Speaking at a fringe meeting at the Liberal Democrat conference in Glasgow on 7 October, he suggested there were legal obstacles preventing the government from exercising greater control over public funding at private providers.

The total bill for public-backed student support at private providers is projected to soar to nearly £1 billion this year, according to government figures, after the coalition encouraged private colleges to play a greater role in the provision of higher education.

Some argue that this could put added pressure on other parts of the Department for Business, Innovation and Skills budget, including funding for universities and research.

Mr Cable told the meeting, co-hosted by the Social Market Foundation thinktank and Sutton Trust: “The aspect of [the expansion of student numbers] that worries me…is that what we have done is opened the door to private sector alternative providers, including for-profit companies. Some of these have been very good, really outstanding, innovative institutions.

“But there’s a lot of dross and some of those operations are providing cheap and cheerful courses, recruiting students who then get maximum grant…We’ve had to crack down on them pretty hard because there was some immigration abuse taking place in them.”

Mr Cable added that there was a question over “how much do we really want to encourage this private provision, which is expensive to the state and ambiguous, I think, in its wider benefits”.

The government’s position, as stated on an official website, is that: “Courses delivered wholly or partly by private higher education providers must be designated by the Secretary of State [Mr Cable], so that students can receive financial help in the form of a student loan or grant.”

Critics, including the University and College Union, have argued that the government has failed to undertake proper checks on private providers before granting them designation.

Times Higher Education asked Mr Cable why he had allowed his powers to be used to grant for-profit colleges that were in his own words “dross” access to public funding.

He replied: “I brought in fairly draconian controls about a year ago when we discovered that there was abuse in the sector. The reason why we can’t just say ‘this is a nuisance and it costs money, let’s close the whole lot down’ – there is a legal reason and there are legitimate institutions. As the law stands at present their students can gain access to student grants and loans.

“And they would sue the government if we stopped them doing so, unless the law changed. We’re walking a balance here. But I’m certainly aware of the problem it presents.”

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Reader's comments (1)

It's a funny old way of regulating a private industry that uses government-subsidised loans to provide higher education. So far, the government has had cause for concern about 'ATM' colleges, recruitment of eastern-european students who mysteriously became eligible for maintenance loans and the whole visa thing (700 bogus colleges closed, said the PM). There was clear advance warning about allowing colleges to have designated courses without student number controls and with regulation being via Pearsons or validating universities. Anyone paying attention would have seen the for-proft sector in the US having loads of issues, and plenty of calls to get the regulation sorted. Now we find the government 'walking the balance'! That's only because David Willetts got it into his head that for-profit colleges were the 'disruptive innovators' that he'd read about, and they would (a) improve the quality of the whole sector and (b) bring down the price. Nonsense, of course, many have just gone off and scooped up people onto HND courses who didn't know they wanted HE (potentially great, but also some worrying signs regarding the work of agents getting them on courses). So, we find ourselves in the position that Vince thinks there's 'dross' out there, but can't or won't act and in a moment of genius BIS has decided that its work of regulation is comercially confidential. It won't release the information that it has declined to designate courses - that might damage the providers. HEFCE have a list of places that have had course designation and don't have it for 2014/15. As we are now in October, you have to guess that some on that list have been turned down by BIS.

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