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June 05, 2011


chris y

After all, Vickery may not have any rights over her course, but QMC presumably does, and they may not feel like sharing.


Alex wins the prize I think, though Chris's 2) and 3) above are also coconut worthy. A half-baked, not-fully-hatched pipe dream being brought to market way before ready? From a financial PR man, a media don and a jobbing private equiteer? When has that ever happened before? Dawkins sez:

This is the brainchild of A C Grayling, NOT me. I have no idea why the BBC chose to use my face. Professor Grayling invited me to join the professoriate and give some lectures. I accepted the invitation, partly because I liked the idea of lecturing to non-scientists after reaching Oxford's compulsory retiring age, partly out of respect for A C Grayling, and partly out of respect for the other professors from around the world who had already agreed to lecture, and whom I felt honoured to be invited to join.

I think the actual thing about the superstar academics' contractual issues may be tied up with the bold text above - with the exception of Ferguson alone, they are all old as hell and plenty of them at least 50% emeritus.


I assume that Cannadine will be teaching students to seek not to know the answers, but to understand the questions.


Re: dsquared's comment above, I suspect it might be a similar case fos Steve Jones, as this was his last year teaching undergraduates(and possibly at the university - he gave away loads of his old books in the last few lectures).


Ah, the "one last heist" effect...


Eh, Vickary's course 'Experience, culture and identity: women’s lives in England 1688-c. 1850' is still there, in group B between the Crusades and modern British identity.

It'll be interesting to see if any of the more peripherally involved members of the professoriate like Dawkins & Jones jump ship before it sets sail.

Chris Williams

Ah, I was just testing you all. No, I'd failed to spot it, lurking with the further subjects. Luckily this evidence of my inability to note detail will in no way influence my standing as an external examiner for the University of London's B--kb--k College.

I wonder if the whole project could go as wrong as this ObDolan:


I have just noticed the typo in the post title and am now happily humming "Ooooohhhh, Ooooooh, The Human-ites" to myself.

Chris Williams

Need to change the bit about _every_ mouth being fed, though.


And now Jamie has edited it so I look like an idiot for the second time in this thread. Curses!


Jesus that was terrible of me. Changed now, though, after every bugger's seen it.


The key thing about the Dolan one is the involvement of professional neocons plus the vast quantities of non-accounted, presumably CIA, cash.


Compulsory retirement ages and "distance learning" (what used to be (a) called "correspondence courses" and (b) generally despised) are the key to making sense of this one, I think. Although what you end up with looks even less like higher education than we thought, and even more like something out of Hustle.

Chris Williams

Ooh, I don't know: it certainly compares adeqately with Oxbridge. Additionally, if the UoL have the bottle to spend a few million properly filming and supporting the backbone lectures for their online offering, they might have a half-decent product on their hand which could be taught online for £11k, or with the leaven of an hourly tutorial and the odd (110 per year in total) star lecture for £54k.

Although that £11k is the current fee, not next year's, and it's a bit worryingly low for my liking. Of course, if they spend the few million, they will probably have a different opinion about the fee level.

Richard J

It's got the look of a private equity backed start up to me, more like. If there's not a business plan kicking about the place somewhere that doesn't use the words 'strategic partnership with the University of London' somewhere in it, I'll eat my (metaphorical) hat.

Interesting question, mind, is what the exit strategy for the investors is - an IPO wouldn't seem to be a viable option, and I'm not sure whether it will be generating enough free cash flow for the company to buy them out. I wonder if they're angling for a takeover from one of the Ivy League?

Richard J

(Yes, it's depressing to consider an educational institution like it were a normal company. Mais, sous les profs, le profit.)

Chris Williams

Hmm. There are going to be serious IP issues in maintaining these courses if they do spin it off from the UoL. In which case, I intend to pull up a chair, get comfy, and watch smugly. Unless I'm asked to validate it, in which case I will do so professionally.


Interesting question, mind, is what the exit strategy for the investors is - an IPO wouldn't seem to be a viable option, and I'm not sure whether it will be generating enough free cash flow for the company to buy them out.

Silly rabbit. Get another round of investors to buy out the first - like so.


belle le triste

"identikit Islington man": Eagleton puts the boot in

Richard J

Easier said than done when your business model has an implicit 1:1 scaling between staff costs and revenue generated.

Richard J

By which I mean, it's easier to find bigger fools when your business model relies on being able to being able to sell virtual hats to people, but when your model relies on a low teacher:pupil ratio, you're not going to be able to justify whacky growth rates. Ahem.


"...implicit 1:1 scaling between staff costs and revenue generated"

Online tutorials, innit?

Still, I was wondering about that because I just can't see an export market for the product. the niche is sort of Bard-Bennington in the states, inasmuch as I know anything about those fine institutions. If they try China they'd have to have some radically different marketing material written. Come to think of it I'm having trouble visualising a domestic market.

Chris Williams

Writing or otherwise producing course material, and maintaining a syllabus, produces economies of scale. Teaching doesn't, even if you put it online. In fact, especially if you put it online. Once you get beyond a certain size (roughly, can you get all the tutors in one room?) you meet some significant diseconomies of scale as well, until you put other systems in place to overcome these.

As for exporting the product, this is also harder than it might initially sound. Getting into the US, for example, takes accreditation with a number of different regional conferences, and this is non-trivial. My employers, for example spent a sum a long way north of ten million quid proving this fact in the 1990s.

As for the other big HE markets: China is porous, India isn't even a little bit.


Chris, do you have any thoughts on why the OU model hasn't spread? The Distance Learning universities in the US are basically a scam, and everywhere else people are sniffy about them. Whereas I always think that the OU is something that British people should be as attached to as the NHS. Genuinely innovative (possibly the one serious innovation in higher education of the last 70 years), brilliantly executed, efficient and world class. I know so many people for whom an OU degree was life changing (in a good way). Whereas Oxbridge... whatever.


I always think that the OU is something that British people should be as attached to as the NHS.

Oh, I definitely agree. It's a great institution.

I suspect there are two reasons why not. First, almost everyone in Britain has come into contact with the NHS and had a fairly good experience thereby (as in, cured of illness/injury pretty much for free), while only a small minority of Brits have come into direct contact with the OU.

Second, as a result, OU is still the butt of unimaginative jokes (generally about beardy professors rabbiting on about particle physics on BBC 2 at two in the morning) and is therefore not cool (see also science fiction, accountants, the Welsh).

Chris Williams

It has spread, but in a largely half-arsed way. We were pretty free with the 'Open University of Ruritania' nameplate in the 1970s, which tended to contaminate an already dubious 'correspondence course' brand. The OU worked for two reasons - the first was that in 1970 there were an awful lot of people with teaching certificates who would get a pay rise if they got degrees, who provided a lovely first generation of guinea-pig scholars on which to test the model. The second was that it was New! and White! and Hot! and we sent out whole packing crates with chemistry sets in them. At one point we even invented our own 1982-generation computer and gave it out in kit form to several tens of thousands of students. How cool is that?

The other reason is that we were lucky. Every ten years since then an education secretary has tried to do their own version of the OU, and it's bombed. I worked for 1990's iteration, the Open College, for a time. After that came the e-University and the NHS University, both of which joined the OC in the institutional graveyard.

The Arab OU is right now an amazingly successful franchise operation. But although they use re-versioned OU course material, they do most of the teaching face-to-face.

Remember that we are odd. Like most of us here, I have a romantic view of HE as a place where people go to learn stuff. This is true for us goodies, but for many of the baddies, HE is there as a marker of being one of the owners. And the baddies are in charge.


Hang on, let's fire up the steam powered calculator here and do some Dragons' Den numbers.

200 students @ 18,000/yr is £3.6m. Except it isn't because 40 of them get a free ride, so your revenue is £2.88m.

300k of that goes out the door immediately to pay UoL's fees for the degree program. I would guess you'd be doing very well to get library and facilities for another 300k so say £2.2m revenues net of that little lot.

If you want a ratio of 1:10 academic staff to students you need 20 heads, paying above scale as per the brochure - fully loaded for tax, insurance and such I'd b surprised if you got the average cost below 50k, so that's a cool million academic wage bill there.

I would be amazed if you got the premises for less than 40k pcm (I'll throw in custodial and secretarial staff) so now we have 700k and odd left to pay a) senior nonacademic staff including the CEO b) organise the lecture program (and since I don't think Niall Ferguson flies economy these days, travel and honororia here is easily going to get into six figures and c) pay for your advertising and promotionnal costs.

This doesn't make it on its current profile. The real business must besomething else.


I don't think Niall Ferguson flies economy these days

Dsquared, you've made me happy, just thinking about him queueing on Ryanair, fumbling to see if he has a pound coin for the toilet in change ...

Richard J

Without having run the numbers, that seems about right, intuitively. I'd be interested in seeing the PPM for this, really I would.


P.S. I think your numbers are broadly plausible but since everyone has pointed out that the 1:10 staff ratio must, surely, be based on jobbing insecure grad students doing the actual student contact work I'm not sure you need budget £50k a head for them. I'd have thought there will be (quite good) people in that particular bind who'd work for three stale buns and a CV enhancement plus the minimum wage...

Richard J

Charlie - once you factor in overheads, employers NI, insurance, facilities, pension payments, etc., you'd be surprised how much a low paid employee actually can cost in budgeting.

I'm very much not an expert on this specific sub-field of tax, but reading through HMRC's guidance on the topic, I'm having a nasty suspicion that it's not £18k, but £18k + VAT at 20%...



If there is another actual business lurking under all the fluff, what is it?


Richard, yes, I was exaggerating for effect. But I have some close up knowledge of the costs of setting up a (state) secondary school from scratch, and I reckon that Grayling Hall must have made some assumptions around employing the bulk of the teaching staff for undergrads on a salary close to that of a Newly Qualified Teacher in a school - the salary scale for which starts @ £27K in Inner London. Even adding on NI and a modest 6% pension only takes that to under £35K, not £50K. (Dsquared accounted for facilities and overheads in a separate part of his calculation).

& ,yes, I agree - from the basic info at the end of the link you supply it does seem to be a VAT-able enterprise as well . Perhaps this makes the '£18K' charge, actually closer to £21.6K?

Chris Williams

Organ donation, one hopes. But perhaps the other form of headhunting?

Note that the skills track for CHUMs will be very management-based, so perhaps they are hoping to be able to charge high-end City companies to get first pick of the graduates?

In any case, I reckon I could make money on this if Grayling was stupid enough to put me in charge of it. Note for starters that your fees are upfront but very few of your costs are. And if your entry is 200, your business plan soon ramps up to 600 FTEs in total, thus your lecture programme (which I imagine is going to be rolling, rather than at different levels) costs, as well as those of central admin, can be spread more thinly. Also, there's a chance that the UoL fee of £11,000 already includes a charge for their overhead (it's rather close to our actual cost of an arts degree, forex), and UoL's been too stupid to put in for anything extra on top. Or: the taxpayer gets to support the complex but necessary bits of UoL, while the private sector gets to mine them. See baddies, above.


P.S. As someone not involved in HE and who has never taken an OU course can I just say that it's one of the things which makes me not totally ashamed of this country as well. Basically, it's brilliant.

Michael Young's idea of course. I seem to remember he originally wanted to call it 'Karl Marx University' but I can't recall where I read that.

Shame about his son, really. Got the idea in outline but never really understood the content.


They did say they'd be paying above scale for proper lecturers, but even so, it's not going to make much difference. The business plan *has* to either a) assume they'll be able to expand it significantly, b) assume they'll be able to jam the fees up significantly, c) assume that they'll benefit from some sort of state subsidy. Or d) there is no real business here and never was; this is just a very ornamental trial balloon that has been floated with a load of gaudy celebrities attached to it to ensure that none of the serrious questions about for-profit universities in general get asked before they become part of the system at a decidedly lower level.

Chris Brooke

Phil -- the 14 profs are doing c. 100 hours between them, not 100 hours each.

Richard J

d) there is no real business here and never was; this is just a very ornamental trial balloon that has been floated with a load of gaudy celebrities attached to it to ensure that none of the serrious questions about for-profit universities in general get asked before they become part of the system at a decidedly lower level.

Getting umpteen HNWIs in suggests there is some proper business plan in there somewhere. My rough suspicion is a) - build up the IP in London and then franchise the fuck out of it to places like the Gulf States. (Memo to self: look up connected party disclosures in the stat accounts when they come up to see if there's any royalties being paid been paid offshore).


There's also pension contributions to be factored in as well.

I'm told that when you factor in other costs, that you should multiply by 1.5 to 2x base salary to properly work out the cost of hiring somebody. Part of the fudge factor is the cost of having to hire (and rehire in a high turnover industries).


I see an LSE academic has done similar number cruching. And Tim Dowling's had a look at the curriculum.


if your entry is 200, your business plan soon ramps up to 600 FTEs in total

Good point; that raises your income level a lot. You then need to triple your staff headcount, of course, to keep that 1:10 ratio, but the other costs (facilities, admin) are presumably going to remain constant. Does that help the maths? Can someone more numerate/more business minded/ less drunk comment?


If setting up a school is in any way analogous, central costs also rise as the facility does, albeit not by as much as front end costs. But the difference I can see right away is that what constitutes a 'central cost' differs if you're hiring space to teach, rather than increasingly filling up a building. Then property costs rise in rough proportion to front end use.


But between "rise in rough proportion to" and "rise in exact proportion to" lies a big space of increasing returns. You can definitely create models where it's much more profitable after a minimum efficient scale, but I still don't see anyone getting rich out of this. I still think it's a political kiteflyer and would be very interested to know if that £10m represents money in the bank or commitments.

Richard J

but the other costs (facilities, admin) are presumably going to remain constant

Rough rule of thumb - if a business plan assumes this, treat the rest with great scepticism... Don't underestimate the necessity of growing admin staff along with the front line. (Any relevance of this observation to, oh, i don't know, police levels is entirely intended.)

Richard J

D^2> the annual return should be out in a few months, which should shed some light in the shareholdings. Come to think of it, there weren't any fixed or floating charges registered at Companies House when I checked earlier.


But between "rise in rough proportion to" and "rise in exact proportion to" lies a big space of increasing returns

True - but they have rather hamstrung themselves with that 1:10 ratio being so upfront in the marketing bumf.

I'm not saying they can't finesse this point, but it's going to be be an interesting moment when they start (re)defining this ratio. Perhaps they're counting on the fact that by then the 'early adopters' will have sunk so much into the experience that they'll work out that screaming 'foul' will undermine the social positioning value of their degree...


I am now wondering whether, along the lines of public schools and resort holidays, the real money is in the selling of ancillary services or "extras". After all, someone who is a big enough sucker to pay £54K for a little bit of an advantage might be a big enough sucker to pay an extra £10k for a little bit of an advantage over their fellow line-jumpers.


Bang on Dsquared- at least if the President of the International Society for Intellectual History is our guide to these matters:

"....the marketisation of the higher education sector stimulates not one but two separate developments which run directly counter to government expectations. On the one hand, genuine market competition between elite universities drives up average tuition fees across the sector. On the other, the marketing of the ‘student experience’ places an ever increasing portion of university budgets in the hands of student ‘customers’. The first of these mechanisms drives up price, while the second drives down academic value for money, since the inflated fees are squandered on luxuries. To judge from the American experience, comfortable accommodation, a rich programme of social events and state of the art athletic facilities are what most 18-year-olds want when they choose their ‘student experience’; and when student choice becomes the engine for driving up standards, these are the standards that are going to be driven up."


an already dubious 'correspondence course' brand

Ah. Oh. Er.

Perhaps I should say that when I think 'distance learning' I'm thinking of the kind of thing my old gaff (and, I believe, Liverpool) sell into China, in what I'm sure is a calculated trade-off between overseas student fees and gradual erosion of their own brand value. This would then be an exercise in bringing the overseas-student experience home, analogous to Willetts' bright idea the other week. But I really don't think of the OU as 'distance learning' (or as a correspondence course) - more as the WEA plus electrification.

Chris B - 100 hours between 14 people? If that's the case then we've all been had, because the big names are basically irrelevant - they aren't teaching staff in any sense of the word. Grayling's just hired Martin Amis 14 times over.


By the way, can anyone tell me which world head of state did his degree by distance learning and is absolutely evangelical about the Open University model, hired a central bank governor who also had a distance learning degree, etc?

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