Friday, 15 May 2009

Privatise business and law schools

In September 2007, BPP Professional Education made history by becoming the first for-profit private company in the UK to be awarded degree-granting powers by the Privy Council. While this is clearly a positive development, it also helps to shed light on the depressing fact that throughout the twentieth century successive UK governments have discriminated against for-profit institutions in higher education. The end result is that in the first decade of the 21st century, one of the UK’s most important service sectors is now dominated by approximately 133 non-profit educational charities, which nobody appears to own and which are heavily dependent on government handouts. As the profit motive plays a critically important role in a majority of the other sectors of the economy, it would be naive to believe that the crowding out of the profit motive from higher education would have no unintended consequences or hidden costs.

While some may question the use and role of the profit motive in higher education and whether private investors would be interested in investing in the sector, the recent growth of for-profit universities in the US and around the world confirms that all law and business related education and training programs do not need to be delivered by publicly funded non-profit charities. With the benefit of hindsight it should come as no surprise to find out that it is possible to generate a profit from teaching others the art of profit making (all business and related degrees). The fact that the American education investor Apollo Global has also recently shown interest in taking over BPP Professional Education (as a result BPP’s shares increased by 50%) confirms that this has the potential to develop into a highly profitable and therefore a highly competitive sector of the economy.

The simple fact that BPP can now deliver degree programmes in business and law in two years instead of three, without receiving government handouts, at a lower cost and still generate a profit, confirms that there is no market failure in the provision of these services. Instead it’s simply the case that the market has not been allowed to develop. The solution is to privatise every law and business school across the country, allowing each university to keep the proceeds from each sale.

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