The creation of the UK’s first for-profit university has left a legal expert asking whether the government has allowed degree-awarding powers to be sold or transferred - a move that is not permissible.
The College of Law has become the University of Law after the Department for Business, Innovation and Skills decided that the institution meets the threshold for university title.
Previously a charity, it is in the process of being sold to Montagu Private Equity for around £200 million to create a for-profit university - a major landmark in the government’s drive to expose English universities to competition from new providers and a potential model for the sale of publicly funded institutions.
BIS is expected to give the go-ahead to other privately funded universities soon.
Regent’s College, a non-profit charity, will have its application for university title considered by the Higher Education Funding Council for England board in January, while for-profit-owned BPP University College is thought to have carried out a consultation on its proposed title - a prelude to applying for university status.
The University of Law gained approval for its university title from Companies House after BIS gave the application the green light.
It opted against seeking approval from the Privy Council, the more orthodox route taken by the 10 state-funded specialist colleges expected to gain university status after an announcement this week (see story, right).
The Companies House route is expected to be followed by Regent’s College and BPP, which secured its university college title in the same manner. However, questions have been raised over how the former College of Law’s degree-awarding powers - a precondition for gaining university title - can be held by the University of Law, a private company established in February.
A BIS spokeswoman said that degree-awarding powers “cannot be ‘transferred’ from one institution to another”.
But she added that the College of Law’s taught degree-awarding powers (DAPs) were “now contained within the University of Law”, explaining that “where an institution with DAPs changes its legal status, provided that it is the whole institution that is contained in the new legal entity, [the powers] should remain with the institution”.
However, key elements of the College of Law do not appear to be part of the University of Law.
The proceeds of the sale to Montagu Private Equity - which appears to have hinged partly on the successful application for university title - will create an endowment for a newly created charity, the Legal Education Foundation, to be used for scholarships and bursaries.
As well as keeping the College of Law’s charitable status, the foundation will also hold its Royal Charter, awarded to the institution in 1975.
The University of Law, by contrast, appears to be an entirely separate legal entity from the former College of Law.
Companies House records show that a company limited by share - a profit-distributing entity - was established under the name “Col Subco No.1 Limited” on 2 February.
The name of the company was changed to “The College of Law Limited” in July, then to “The University of Law Limited” on 22 November after university title was granted by Companies House.
Dennis Farrington, visiting fellow at the Oxford Centre for Higher Education Policy Studies and co-author of The Law of Higher Education, said it did “appear unclear…how the DAPs granted to one body with a Royal Charter have transferred to Col Subco No. 1 Limited, then The College of Law Limited, then The University of Law Limited”.
A University of Law spokeswoman said: “The process of applying for and subsequently being granted university title was through BIS in a heavily regulated and rigorous process. We then applied to Companies House for a change of title and the minister [David Willetts] informed Companies House that he had no objection to its use.”
She added that the taught degree-awarding powers “are held in the company registered under the name The University of Law”.
The BIS spokeswoman said: “It was the whole education and training business (of the college) that was transferring into the new company … with only a limited set of activities that weren’t associated with the DAPs remaining with the chartered body.”