Universities could rival big business in global market

August 25, 2000

If universities were set free in the market to pursue their own destinies, what would happen? Tony Dickson, deputy vice-chancellor of Northumbria University, thinks "it's high time we found out".

"Most of Britain's universities would claim to be world-class institutions, so why not test the rhetoric and let them get on with it?" Professor Dickson said.

He believes British universities are exceptional performers that should be allowed to grow as global companies.

Professor Dickson commissioned the Northern Economic Research Unit to assess the performance of his university against other businesses in the Northeast.

The research found that over the past decade the number of Northumbria students has doubled, staffing has increased by 40 per cent and turnover has increased by 60 per cent. Productivity had also increased sharply.

Like many major companies, the university has internationalised its activities, tripling the number of overseas students.

The university is the fifth largest employer in Newcastle. During 1997-98, it was responsible for a total expenditure in the region of between Pounds 171 million and Pounds 193 million a year.

The overall growth in its income would place the university in the top third of a league table of growth rates among the 100 largest locally owned or controlled businesses in the Northeast. Compared with the largest ten regionally-based businesses, its growth rate during the 1990s was faster than all but three.

Professor Dickson said that there was no recognition, either nationally or locally, of the significance of universities as world-class businesses.

"It seems unlikely that this could ever happen with the current over-regulated, semi-nationalised relationship with government," he said. "But in a knowledge and dotcom economy, it would be interesting to see what market capitalisations would be set for universities as huge knowledge and content creators."

Since the university sector is one of the last semi-nationalised industries in the UK, the government tends to view universities as indirect deliverers of its policies, Professor Dickson believes.

"The secretary of state appears to see universities mainly as channels for policies to encourage social inclusion and equity, for instance, widening participation," Professor Dickson said.

What is needed, he believes, is a recognition of the contribution universities make as businesses in their own right, and action to encourage them to grow in the global economy.

But what about equity?Surely on that logic universities would be encouraged to charge the highest possible price to get the best return for their shareholders.

Professor Dickson said he would establish a contract between each university and the government, which would set specified student numbers, the maximum price to be paid by government and a requirement for scholarships to guarantee access for students on low incomes. Universities could then set appropriate levels for tuition fees and recruit additional students. The government could retain a 51 per cent share and allow the rest to float, raising capital for future growth.

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