Does the University of Law’s sale to a foreign consolidator offer a glimpse into the future of higher education?
The Gazette exclusively revealed last month that underlying profits at the University of Law have soared since it sold out to private equity. This was sensitive information and the institution did not wish to comment publicly.
Understandably enough. After all, many of its students incur huge debts to study there as their learning institution piles up the cash. Students are told they can borrow up to £25,000 via the Metro Bank Professional Studies Loan Scheme for Legal Studies (though there is no guarantee that it will prove a good investment). The highest-paid director, meanwhile, now takes home at least £366,000 a year, the latest accounts disclose.
So what? That’s the free market. Nobody is forcing the students to invest in a potential legal career and UoL has a good record of getting its students into coveted top-100 jobs.
All true. What’s my point?
Just this. Less than three years ago, our biggest legal education provider was owned by a charity with a Royal Charter, half a century after it was formed from a combination of the Law Society School of Law and Gibson & Wheldon. It has antecedents dating back to 1870 and was a valued constituent of our public realm. Today, the university is in the hands of a Netherlands-based consolidator of higher education institutions whose ownership is unclear.
What do we know? Not much. We don’t know what the purchase price was or how much of a killing Montagu has made on the bargain £180m it paid for the institution in 2012. Montagu has done what PE firms do – sold off assets to generate cash. This has included disposing of UoL’s prestigious Bloomsbury campus, which alone raised £68m.
Montagu must have been presented with an extremely good offer and its exit after less than three years certainly looks like the textbook private equity ‘strip and flip’. Good business and perfectly above board. Private equity houses exist to generate profits for their investors.
The Times Higher Education perhaps offers a few clues as to UoL’s immediate future. Global University Systems is privately owned and based in the Netherlands – its primary business address is right in the middle of Amsterdam’s Schiphol airport, curiously enough. At least one of its institutions (London-based St Patrick’s International College) is run through a ‘BV’ structure, the Dutch equivalent of a private limited liability company – a structure that some companies have used for tax advantages.
The Netherlands does not require accounts of such companies to be made available. However, the UoL will continue to publish UK accounts, which should at least sustain a degree of transparency.
Is this the future of higher education in the UK? The last government commended Britain’s first for-profit university as a model that publicly funded universities may wish to follow. But education sector observers have expressed concern, comparing UoL’s sale to Montagu - which piled debt on to the institution - to the kind of leveraged buyouts seen in Premier League football. UoL Ltd is (or was) ultimately owned by L-J Holdco, a company registered in Guernsey.
Perhaps one day soon many of our universities will have foreign owners with few disclosure obligations. After all, so many of our iconic companies are now foreign-owned. As Daily Mail City editor Alex Brummer reflected in his book Britain For Sale: British Companies In Foreign Hands, the UK ‘is unique in having such a supine attitude to selling off its crown jewels’. Wasn’t the old College of Law a ‘crown jewel’?
Education it seems, like pretty much everything else these days, is simply another public endeavour from which a private rent must be extracted as discreetly as possible. It is the way of things.
Paul Rogerson is Gazette editor-in-chief