Universities worldwide are confronting escalating challenges, encompassing soaring expenses, dwindling revenues, mounting student expectations, and disruptive technological advancements. The COVID-19 pandemic has exacerbated these issues, particularly in countries where neoliberal higher education reforms have been most extensive.
In the United Kingdom, approximately 40 institutions – over a quarter of all universities – are reportedly grappling with severe financial crises. The once unimaginable prospect of a public university facing insolvency is now a distinct possibility.
In response, many university leaders are undertaking drastic measures to slash costs and cultivate new revenue streams through outsourcing and commercializing research. These strategies include patenting and licensing, establishing spin-out companies, forging industry partnerships, and engaging in other “third mission” activities.
Additionally, some institutions have sought guidance from private management consultants and embarked on extensive restructuring initiatives based on principles of New Public Management (NPM).
In recent years, there has been an unprecedented surge in reports on the “future of the university” by global consultancy giants such as Accenture, Bain and Company, McKinsey, PwC, KPMG, EY, and Deloitte.
The expanding presence of these firms in higher education is both a consequence and a driver of the increasing financialization of academia, raising crucial questions about the trajectory of “academic capitalism.”
Consultancies are notably entrenched in UK higher education, a trend underscored by a recent Financial Times article. Both the Labour and Conservative parties have committed to halving the UK’s consultancy expenditures in the next parliamentary term, following revelations that firms like Deloitte, EY, KPMG, PwC, McKinsey, Bain, BCG, and Accenture secured over £7.1 billion (US$8.9 billion) in public sector contracts since 2019.
This phenomenon extends beyond the UK. In Australia, universities have faced significant criticism for spending hundreds of millions on consultancy services, even amidst staff layoffs, budget cuts, and wage controversies.
A 2023 report by the National Tertiary Education Union underscored the remarkable extent to which governing bodies of public universities are populated by consultants and corporate executives from for-profit entities.
In a newly published journal article, I explore the reasons behind this trend, its methodologies, and its implications for higher education.
Redefining Higher Education
The escalating presence of private management consultants in UK universities and beyond reflects the culmination of four decades of neoliberal reforms aimed at promoting free-market ideology and private-sector management practices within the public sector.
My hypothesis posits that these elements have converged to create a new amalgamation, one that not only redefines the public university as an institution but also reshapes the entire higher education ecosystem that sustains it.
This signifies a new phase in the evolution of ‘academic capitalism,’ wherein audit and accounting techniques are utilized to ‘unbundle’ universities and expose them to potential capture by profit-driven providers and financial interests. In the UK and other Anglophone countries, private management consultants have played a pivotal role in this transformation.
While critics often highlight the corrosive impact of neoliberal policy reforms in dismantling public higher education, less attention has been directed towards the equally detrimental effects of NPM and its role in facilitating the marketization of public sector organizations.
NPM, introduced in the early 1990s in the UK, New Zealand, and Australia, drew inspiration from ideas in ‘new institutional economics’ and public choice theory. It aimed to inject market rationality and private-sector management into public services.
This approach did not merely entail applying management practices to organizational governance but also promoted the notion that effective decision-making necessitates centralization under professionally trained and ‘objective’ managers.
Consequently, NPM sought to dismantle traditional public administration models characterized by delegated authority structures, replacing them with business-style managerialism or a ‘post-bureaucratic’ management approach based on decentralized relationships.
NPM introduced internal competition, outsourced services, customer service metrics, and departmentalized budgeting systems based on ‘user pays’ principles, aimed at making public organizations less rule-bound and bureaucratic, and more open, entrepreneurial, and consumer-oriented.
In the context of universities, NPM ushered in a new governance model that “substituted professional judgments of quality with continuous ‘metrication’ of outputs in both teaching and research domains.”
As an organizational discourse, it prioritized economic rationality and market competition, legitimizing and promoting the empowerment of managers in public institutions previously overseen by professionals adhering to their own standards.
The outcome was the de-professionalization of faculty roles and the adoption of a corporate enterprise model starkly at odds with the traditional notion of the public university as an autonomous, collegial institution founded on principles of academic freedom and tenure.
NPM’s endorsement of private-sector models, free-market logics, and managerialism also eroded another fundamental characteristic defining public universities – their status as contributors to the ‘public good.’
In the UK, for instance, nearly all universities hold charitable status, with their primary mission being the advancement of education and research for public benefit. As stated in the University of London’s public benefit declaration, “The University of London exists to benefit the public,” thereby necessitating adherence to specific charitable purposes outlined in the Charities Act 2011 (updated 2022).
However, how compatible is NPM with these principles of public benefit?
Marketization in Australia and the UK
Historically, discussions on the future of universities and the crisis in higher education have largely been dominated by left-wing critics such as Jacques Derrida and Jean-François Lyotard. Today, however, these debates increasingly reflect the influence of conservative interest groups, think tanks, and private consultants.
This shift is particularly evident in Australia and the UK, where a series of reports, position papers, and conferences have emerged since 2010, speculating on the ‘future’ of the public university and urging urgent action from university leaders and policymakers.
These reports are typically framed as diagnostic studies and impartial exercises in ‘thought leadership,’ but they play a crucial role in shaping the realities they predict.
The University of the Future report on Australian higher education by EY exemplifies this trend. Subtitled “A thousand-year-old industry on the cusp of profound change,” it forecasts that the current Australian university model, characterized by broad-based teaching and research with substantial assets and administrative support, will likely prove unsustainable except in a few cases.
The report contends that private providers will carve out new opportunities and anticipates “exciting times ahead.” It underscores universities’ role as a primary driver of Australia’s economic future, essential for fostering talent, generating new ideas, and producing intellectual property crucial for building a high-performance knowledge economy. Consequently, universities are seen as falling short of these economic imperatives.
The following year, the UK’s Institute of Public Policy Research published a landmark report titled “An avalanche is coming” (2013), with Michael Barber, then chief education advisor at Pearson Education and former McKinsey partner, as its lead author. This report painted an even more dire picture, using metaphors of extreme weather and environmental catastrophe.
Barber et al. described a world marked by heightened educational competition, disruptive technological advancements, rising costs, and proclaimed that “the student consumer is king.” Despite painting a challenging landscape, Barber et al. expressed optimism, suggesting that these changes could herald a new “golden age for higher education,” contingent upon proactive leadership. Failure to act decisively, they warned, would result in a catastrophic upheaval within the system.
To avert such a scenario, Barber et al. proposed “unbundling” as a strategy to unlock the “value chain” of public universities by outsourcing their functions to external providers. They outlined five alternative future models, ranging from the ‘elite university,’ leveraging global brand prestige, robust endowments, and exemplary research track records, to the ‘lifelong learning mechanism,’ a non-university entity with degree-accrediting authority.
From Prophecy to Policy: UK White Paper
The Conservative government under David Cameron embraced many of the recommendations outlined in the Barber report in its 2016 White Paper, “Success as a Knowledge Economy: Teaching excellence, social mobility and student choice.” The White Paper asserted that opening universities to competition from private providers would “deliver better outcomes and value for students, employers, and the taxpayers who underwrite the system.”
By reimagining universities as commercial enterprises, the government argued that “competition between providers incentivizes them to elevate their offerings,” providing consumers with a wider array of more innovative, high-quality products and services at reduced costs. This logic, it posited, applies equally to higher education.
Central to the government’s vision were a series of reforms designed to enable for-profit providers to obtain degree-awarding powers (DAPs), thereby challenging the “monopoly” traditionally held by public universities in granting recognized degrees.
With DAPs, these new providers would gain access to state-funded student loans and could levy maximum tuition fees. The White Paper also proposed removing size thresholds for university status, thereby facilitating the creation of smaller institutions.
To achieve these objectives, it recommended establishing a robust new regulator, the Office for Students (OfS), described as a “consumer-focused market regulator” armed with statutory authority to oversee quality and standards across all registered higher education providers. The OfS’s mandate included safeguarding academic freedom and institutional autonomy.
Operating as a “non-departmental public body” at “arms’ length from government,” the OfS would distribute grants, confer university status, and assume responsibility for granting DAPs and university titles from the Privy Council. Notably, Sir Michael Barber, a former McKinsey partner, was appointed as the inaugural chair of the OfS in 2018.
The White Paper laid out a blueprint for fundamentally reshaping the relationship among the state, higher education institutions, and students, while also advocating for unbundling and outsourcing universities’ core functions to for-profit providers. It extolled the virtues of free-market dynamics as a means to enhance quality, transparency, and student empowerment.
Broader Implications
Critics of the White Paper and its attendant reforms argued that they risked undermining the public’s trust in UK higher education. They pointed out that increased competition and marketization could lead to the commodification of knowledge, the erosion of academic standards, and the marginalization of vulnerable students.
The White Paper’s supporters countered that universities faced mounting financial pressures amid declining state funding and surging global competition, necessitating bold, market-driven reforms to secure their long-term sustainability.
In recent years, the debate over marketization and privatization has intensified, reflecting broader ideological divisions over the role of government in supporting public services and the appropriate balance between market forces and public interest.
Conclusion
The role of private management consultants in UK universities has grown significantly in recent years, reflecting broader trends towards marketization and privatization in higher education. While these consultants have played a crucial role in helping universities navigate financial challenges and implement efficiency measures, their presence has also raised concerns about the commodification of knowledge, the erosion of academic autonomy, and the marginalization of vulnerable students.
Moving forward, it is essential to strike a balance between the need for universities to operate efficiently and sustainably and the imperative to uphold their public mission of advancing knowledge and serving the public good. This will require careful consideration of the role of private management consultants and the broader policy frameworks shaping higher education in the UK and beyond.
