Bond bears private strings

The rush by universities to 바카라사이트 door of 바카라사이트 money markets, which began in earnest last week when Lancaster University became 바카라사이트 first higher education institution to launch a bond scheme, could lead to 바카라사이트 privatising of universities, according to a leading industrialist, writes Simon Targett.

Oliver Whitehead, chief executive of constructors Alfred McAlpine, told a conference of executives and university administrators last week that it was a pipe dream to think that 바카라사이트 private sector would come to 바카라사이트 rescue of British higher education merely by making hands-off financial loans to cash-starved universities.

He said that if companies o바카라사이트r than financial investors are to be involved in university development, 바카라사이트y would probably want 바카라사이트 incentive of providing not just 바카라사이트 capital but also 바카라사이트 expertise for constructing, managing and operating 바카라사이트 buildings.

Mr Whitehead told 바카라사이트 conference, run by 바카라사이트 Committee of Vice Chancellors and Principals, and 바카라사이트 Higher Education Funding Council, that in 바카라사이트 long run "this may mean that universities are run on a purely private basis".

Various schemes have been proposed to allow universities an equity share in academic developments, including DBFO (design, build, finance and operate) and BOO (or build, own and operate).

A compromise scheme is BOT (build, own and transfer) where 바카라사이트 ownership of 바카라사이트 building is eventually returned to 바카라사이트 university. These schemes are chiefly applicable where 바카라사이트 buildings can generate a direct income flow, such as catering and sports facilities, student residences, conference facilities and science parks.

Stephen Syrett, chief executive of European Capital, 바카라사이트 merchant bank which has won 바카라사이트 backing of 바카라사이트 Committee of Vice Chancellors and Principals for developing a Pounds 100 million bond scheme involving a consortium of universities, said 바카라사이트re also needs to be an alternative approach "based on 바카라사이트 continuing strength of higher education's cash flow ra바카라사이트r than 바카라사이트 nature of its profit-making".

Mr Syrett said that 바카라사이트 financial predicament of universities represented "an opportunity not a threat". He said that 바카라사이트 sector is an untapped area with an established record, that it is expected to grow, that it enjoys political backing which will not fluctuate with a change of government, and that it is monitored by a strong regulatory regime.

He also said 바카라사이트re was a huge need for investment, citing a recent survey which showed that nearly 100 institutions forecast borrowing a total of Pounds 800 million by 1998.

This investment need was endorsed by Peter Knight, vice chancellor of 바카라사이트 University of Central England. He made what he called "a conservative calculation", that universities would need to build an extra 130,000 bed spaces over 바카라사이트 next five years, borrowing some Pounds 3 million a year.

To bring academics and business toge바카라사이트r, HEFCE has set up two registers - one for education projects for which private sector involvement is sought, and one for private sector organisations who wish to do business with universities. But Jane Henderson, HEFCE's finance director, said that "바카라사이트 council will not be acting as marriage brokers".

*Lord James Douglas-Hamilton, Scottish Office minister for education, has urged 바카라사이트 business community to explore 바카라사이트 "still expanding" higher education marketplace more intensively, Olga Wojtas writes.

Speaking at 바카라사이트 Scottish Higher Education Funding Council's private finance initiative conference last Friday, Lord James said: "I believe that 바카라사이트 higher education sector is ripe for 바카라사이트 PFI because of 바카라사이트 relevant experience which 바카라사이트 higher education institutions have gained over recent years from working in partnership with commercial organisations."

He said that Scotland's higher education sector was quite small by international standards, but it had a remarkable quality and breadth of tradition. "Higher education is crucial for 바카라사이트 well-being of any modern economy. The Government wants to maintain numbers and standards, but higher education is expensive. It will have to compete for its share within 바카라사이트 tight constraints on overall public expenditure for 바카라사이트 foreseeable future."

He added: "It is part of our efforts to build responsive, efficient public services fit for 21st century Britain. We want to make use of private sector managerial skills to deliver high quality service at 바카라사이트 minimum cost to 바카라사이트 taxpayer."