University building with corporate logos and pound signs swirling around it

The Never-Ending Hunt for a Bargain

Spoiler alert: nobody ends up bathing in gold coins, but at least the catering’s cheaper.

Setting the Scene

Back in 2010, ministers decided that what British higher education really needed was the bracing draught of the free market—plus the occasional spreadsheet from a management consultant. Since then, almost every UK university has flirted, dated or gone fully steady with private-sector partners. On paper the romance promised three irresistible benefits:

  • Lower costs (because cleaners apparently thrive on fresh air and gratitude)
  • Improved “efficiencies” (a word that does heroic work in policy documents)
  • A dash of entrepreneurial sparkle (complete with PowerPoint animations)

Fifteen years later, we can ask: who actually made any money? And did anyone remember to turn the lights off when Carillion imploded?

1. Outsourcing the Basics: Beans, Bins and Broken Boilers

Campus support services were the first to be handed to the private sector. The logic was simple: specialist firms would run catering, cleaning, IT and security more cheaply than your average university could manage in-house. London Metropolitan University even tried to outsource virtually everything except actual lecturing—although that grand plan soon hit a wall thicker than most dissertations123.

Did universities save cash? For a while, yes. Did contractors get fabulously rich? Not exactly. Margins were so slender that giants like Carillion toppled over in 2018, leaving half-finished projects and a nation of bemused vice-chancellors45.

Bonus irony: many outsourced staff discovered they could enjoy lower wages and weaker holiday pay and poorer pensions—proof that modernisation can, indeed, be a triple win (just not necessarily for them).

2. Digital Dreams: MOOCs, OPMs and Other Acronyms

When Massive Open Online Courses (MOOCs) burst onto the scene circa 2012, prophets foretold a future of “frictionless” global education. The Open University duly launched FutureLearn; venture capital flowed; and newspapers welcomed “the end of the campus” (again).

Alas, FutureLearn managed to burn through cash at roughly the speed of a freshers’-week overdraft, racking up multi-million-pound losses before being sold off like a slightly scuffed laptop on Facebook Marketplace6.

Meanwhile, Online Programme Management (OPM) companies—those nice people who promise to design your master’s degree, recruit your students and then split the fees 50/50—multiplied faster than seagulls near chips. By 2023 there were almost 50 UK OPM partnerships7.

Sadly, negative financial results also multiplied. Pearson, sensing a party turning awkward, paid a private-equity outfit to take its ailing OPM arm off its hands8. Industry analysts now describe the traditional OPM market as “in freefall”, which is consultant-speak for “bring a parachute”910.

3. Pathway (and Occasionally Slipway) Colleges

Nothing says global Britain like outsourcing your foundation year to a for-profit joint venture. Firms such as INTO, Study Group and Navitas set up “embedded” colleges right on campus to recruit and teach international students. Universities liked the steady pipeline of tuition; investors liked the steady pipeline of, well, tuition.

Reality, however, proved trickier. Several INTO ventures haemorrhaged cash, survived only on university loans or shut down entirely. INTO’s London branch with UEA cost the university millions before the plug was pulled111213. Staff enjoyed lower pay, students occasionally enjoyed lower entry standards, and auditors enjoyed wondering where all the money had gone.

4. Private Universities and the Great GSM London Meltdown

The government also invited wholly private universities to join the fray. BPP University and the University of Law still stand, but others fared less handsomely. The collapse of GSM London in 2019 left 3,500 students hunting for new courses and demonstrated that “challenging market conditions” is polite code for “we ran out of cash”14.

Regulators have since developed a keen interest in preventing more such episodes, chiefly to avoid headlines involving stranded undergraduates and smouldering piles of student-loan money.

5. Where the Money Is: Student Accommodation

One area has minted profits: purpose-built student housing. Firms like Unite Students and UPP erect shiny new halls, charge eye-watering rents, and report earnings that make the average OPM executive sob quietly into their latte. Unite’s pre-tax profit quadrupled to £444 million in 202215, which is almost enough to afford the rent on one of its deluxe ensuite studios in Zone 1 (plus maybe a kettle).

Why does this work when other ventures flop? Simple: the revenue comes straight from students’ wallets, the product is literal bricks and mortar, and no one has to mark essays at 3 a.m.

6. The Consultants, the Software and Everyone Else

Elsewhere, ed-tech vendors (Turnitin, Blackboard, assorted proctoring start-ups) have done rather nicely by charging annual licences and letting academics argue about plagiarism in their spare time. Management-consultancy firms, meanwhile, discovered that universities are prepared to pay handsomely for PowerPoints advising them to “do more with less” and “unlock stakeholder synergies”16.

There is no recorded instance of McKinsey going bust because a vice-chancellor drove too hard a bargain.

Drawing a (Wobbly) Bottom Line

After a decade-plus of experimentation, the ledger looks something like this:

  • Campus outsourcing: minor savings for universities, major headaches for suppliers, existential dread for cleaners
  • Online education: technological utopia postponed; investors queue here for refunds
  • Pathway colleges: profits highly dependent on immigration rules, exchange rates and luck
  • Private universities: some winners, several spectacular losers
  • Student accommodation: champagne all round (unless you’re paying the rent)
  • Consultants & software vendors: steady as she goes, thanks very much

In other words, privatisation has certainly sprinkled higher education with market forces. It just hasn’t sprinkled everyone with money. Universities shaved costs here and there; employees often absorbed the haircut; and many private firms discovered that teaching, supporting and housing students is fiendishly expensive—unless you own the halls, in which case it’s rather cosy.

The next time someone breezily promises “efficiencies” courtesy of a shiny new partnership, remember: in academia, as in life, you rarely get something for nothing. Except, of course, PowerPoint animations. Those are apparently free.

References

All hyperlinks accessed July 2025.

  1. The Guardian – “London Metropolitan University outsourcing services” (20 Aug 2012) ↩

  2. The Guardian – “Universities could save ÂŁ3 bn by outsourcing” (23 Dec 2010) ↩

  3. Times Higher Education – “Outsourcing plan hits the wall” (25 Oct 2012) ↩

  4. LSE British Politics and Policy Blog – “What Carillion’s collapse tells us about public-sector outsourcing” (2018) ↩

  5. The Guardian – “Lessons to be learned from Carillion’s collapse” (16 Jan 2018) ↩

  6. Class Central – “FutureLearn burns through SEEK funding” (2022) ↩

  7. Neil Mosley – “OPM and UK university partnerships: the state of play” (2023) ↩

  8. Neil Mosley – “Pearson exits the OPM business” (2023) ↩

  9. Forbes – “For traditional online-college managers, the party is over” (17 Oct 2024) ↩

  10. Sage Journals – “The OPM market in freefall” (2023) ↩

  11. UCU – “Say NO to INTO” briefing (2014) ↩

  12. UCU – INTO venture loss data (2014) ↩

  13. View from a Bridge – “Rulings, Filings and Finances” (2023) ↩

  14. The Guardian – “Private higher-education college goes into administration” (31 Jul 2019) ↩

  15. PBSA News – “Unite Students increases turnover by 8 percent” (25 Feb 2025) ↩

  16. Public Money & Management – “Extraordinary growth of private management consultancy involvement in UK HE” (2024) ↩