Privatisation and Shared Services in Higher Education

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2014 Higher Education Service Group Conference
7 November 2013
Carried as Amended

Conference notes the continued promotion of shared services and privatisation of higher education by the Coalition Government. Evidence from the outsourcing and marketisation of public services suggests that in many cases additional costs are incurred and, increasingly, public sector organisations are looking to in-source services in order to achieve greater efficiency and better value for money for the taxpayer.

Changes in the higher education sector have been rapid since 2010. Until recently the key driver for government policy in the UK was to encourage the expansion of Higher Education to increase participation with an express aim of creating a more educated workforce. However a combination of funding changes and policy directives are forcing universities to reassess the way they are managed and promoted to ensure maximum efficiency, sales and ‘profits’. This is despite the current financial health of the sector (a UUK survey conducted in 2012 identified planned investment by universities totalling £8 billion) and high profile failures of shared services and privatisation initiatives in the public sector.

This will be further accelerated following the recent changes to VAT regulations which provide Higher Education Institutions (HEIs) and further education colleges an exemption from VAT when setting up shared services arrangements or cost sharing groups (CSG). There is now a greater incentive to share services such as payroll and procurement, because a “new business” operation would no longer have to charge VAT back to the partner institution. David Willetts the Minister for Universities and Science has publicly stated that he perceives the higher education sector spends much too much on back-office functions and was surprised at the small number of shared services arrangements in the sector. Steve Butcher, head of procurement and shared services at the Higher Education Funding Council for England at a conference in December 2012 stated that students paying higher tuition fees “will want to see an efficient and effective sector, and the sector has to rise to that challenge.”

This conference calls on the SGE to:

1)Continue to support branches to campaign for the retention of services being delivered in-house,

2)Continue to provide information and technical advice to branches in regions to promote challenges to proposals to privatise or develop shared services

3)To work with the other campus unions including the NUS to campaign against privatisation and shared services