Private Contracts: 'EU rules no longer apply'

Many more commercial companies are expected to get involved in running parts of universities as the tripling of tuition fees has removed a major barrier to private-sector involvement, it has emerged.

David Willetts, the universities and science minister, used his speech at the Conservative Party conference this week to indicate that the shift from public to private funding in higher education had changed the game for investment by businesses in the sector.

Speaking in Manchester, he said that European Union rules that can deter universities from contracting out services would no longer apply for the "vast majority" of institutions.

This was because the increase in tuition fees meant that less than half of their funding would now come from the state - the key threshold at which complex EU rules kick in.

"Universities will be able to contribute more to their local economy by negotiating direct with local business," he told conference delegates, claiming this was "all part of the long march to freedom for our great universities".

The change, which fulfils a key recommendation of Universities UK's recent review of efficiency, means it is much more likely that universities will hive off parts of their operations to the private sector as companies will have more incentive to bid.

Jon Wakeford, director of strategy and communications for the University Partnerships Programme, which already runs services such as student accommodation, said the move was a "positive step".

"This could save millions of pounds which could be better used to support students," he said.

"Current procurement processes are both time consuming and expensive, and delay the delivery of critical infrastructure for universities and their students."

The announcement came as Mr Willetts faced further pressure over the government's plans to create a market for student places in 2012-13.

Les Ebdon, chair of the Million+ group of newer universities, used a fringe meeting at the conference to ask ministers to delay their proposals, which will create unlimited competition for students who achieve AAB grades and above at A level, and a margin of 20,000 places only available to institutions charging fees of less than £7,500.

"The White Paper proposals are the very opposite of the pupil premium. Rather than add extra resources to less-advantaged students, these plans will see the well-off receive more public funding for their degrees," he said. "Ministers would be doing students and universities a disservice to push ahead with changes in 2012-13."

However, Mr Willetts told a fringe meeting held by the Social Market Foundation that he was getting the message from many universities that they wanted to see the AAB reforms pushed further and faster by lowering the A-level threshold.

"Some of the criticisms about AAB are really from people who do wish us to go further. They don't object to the principle, but they say take it further down the track. I get that message increasingly from universities," he said.

simon.baker@tsleducation.com.