By Geoffrey Alderman

Universities in Britain have for decades enjoyed a privileged status. They receive financial support from the government, and their degree-awarding powers are granted, virtually in perpetuity with a royal charter or an act of Parliament.

But today they are facing two imminent threats to their near-monopoly of higher education. The first is the expansion of educational providers that exist solely on private support. The second comes from the small but growing efforts of for-profit universities, heavily influenced by commercial education ventures in the United States.

Of the two concerns, the encroachment of for-profit education is by far the more potent. With for-profit colleges in the United States coming under scrutiny by federal lawmakers because of their rapid expansion and their cost, higher-education officials on both sides of the Atlantic should ponder what dangers lurk in this largely unannounced—and largely unplanned—expansion of private educational services in Britain.

To examine the potential upheaval in British higher education, we need some context about how the system works.

All British universities, except the University of Buckingham, rely to a greater or lesser extent on taxpayers' money. This makes them, in practice, part of the "public" sphere, bound to the state by draconian agreements with state-controlled councils, whose diktats impinge very substantially on their institutional autonomy.

Partly to escape these shackles, but also to tap into new revenue streams to make up shortfalls in state financial support, virtually all British "public" universities now operate "private" academic units and activities that are beyond government control. Such efforts run operate on a purely commercial and entrepreneurial basis.

These activities include lucrative master's programs, pre-eminently in business and management, that charge high, market-rate tuition fees; and collaborative agreements with partners in the private sector, both in and outside Britain. Those partnerships are, in effect, licensed to offer degree programs accredited by the partnering (or "awarding") universities.

The University of Bolton, in northwest England, for example, accredits programs in locations as far apart as London and Vietnam.

For the past quarter-century, such ventures have capitalized on the presumed high standards and international image of British degrees, proving to be extremely profitable. That era may be about to close.

New private and for-profit education providers not connected to British universities threaten to skim off cohorts of able students, according to discussions at a conference in London held in March by Universities UK and Guild HE, associations that lobby on behalf of colleges and universities. Speakers at the meeting warned attendees that these emerging competitors are often much better than traditional universities and their partners at focusing on the student as a "customer"; offering popular, career-oriented courses; and providing small-group instruction using state-of-the-art teaching tools, such as Web-based interactive whiteboards and online mentoring services.

The privately run ifs School of Finance, for example, offers a variety of professional-education courses to help graduates get jobs in the financial-services industry. It bridges, as its Web site boasts, "the academic/vocational divide." The student-learning experience it offers is radically different from that of "traditional" universities; it concentrates on a narrow student market and focuses all its energy on serving the needs of people who are enrolled in its classes.

Such a focus is appealing to students even though they have to pay more than they would if they attended a traditional British university, according to a report commissioned by Universities UK and debated at the March conference.

The report looked at ifs and other privately financed institutions in Britain like the University of Buckingham, the College of Law, and Ashridge Business School.

It also looked at the emergence for for-profit institutions like BPP College of Professional Studies. BPP offers an intriguing example and raises questions about the regulation of for-profit colleges in Britain, among other issues.

In September 2007, BPP became the first for-profit company to be allowed to grant British degrees. Two years later it was sold to Apollo Global Inc., which is part of the company that also owns the University of Phoenix, for around $460-million. By any standard that was a bargain, but the takeover raises some concerns.

For-profit higher-education providers ought to ensure that their owners and boards of directors have no say in academic decision-making. There should be an impenetrable fire wall between the two. In the case of BPP, such a fire wall appears to exist, but the company operates under articles of association that can be amended without the government's approval.

Under those articles, BPP needs to give only 24 hours' notice to the government of any change of ownership. And only a minority of the members on the academic council established by those articles are truly independent—a situation that would not be tolerated by any of the regional accrediting commissions in the United States.

In addition, in buying BPP, Apollo has acquired a British degree-granting institution that has considerable freedom in terms of how it can design academic programs.

According to the Universities UK report, the Apollo Group "does not gain any degree-awarding powers in its own name as a result of its acquisition."

Maybe not, but consider this: Accreditation does not operate in Britain as it does in the United States. There are no British equivalents of U.S. regional accrediting agencies.

Universities and colleges are inspected by the Quality Assurance Agency for Higher Education. But the agency cannot revoke degree-granting powers and is not an accrediting body. It merely undertakes academic "audits" and publishes its findings. And as a parliamentary committee pointed out last year, it has no jurisdiction whatever over academic standards.

Therefore, each university and degree-granting college is responsible for its own academic standards, except for professional programs like medicine or law.

So, in principle, BPP can run any bachelor's or master's program it wishes, without seeking permission from anyone. It is foreseeable, then, that Apollo could offer in the United States a fully approved British degree without approval from a U.S. accrediting agency, perhaps via a U.S.-based branch campus of BPP.

Apollo is also free to franchise its British degrees worldwide. I have no doubt that it would do so in a wholly responsible manner. But the fact that it enjoys this freedom underlines the extraordinarily lax regulatory arrangements that exist for for-profit higher education in Britain.

Indeed, other institutions in the United States want to follow the example of Apollo and BPP. A number of U.S. universities have expressed interest in applying to Her Majesty's Privy Council for the necessary authority to award British degrees. The government is currently holding these universities at arms' length, pleading that the Privy Council can consider applications only from those institutions physically based in Britain.

But a senior civil servant admitted to me that if an American university established an office in Britain and then applied from that office for degree-awarding powers, perhaps initially at least to serve online students, the application could not in principle be refused.

If it were accepted, it would allow that university to offer, independently, its own British as well as American degrees, an innovation that would very likely prove very popular with students on both sides of the pond, but which could severely damage the appeal of British universities.

A trans-Atlantic revolution may be in the making.

Geoffrey Alderman is a professor of politics and contemporary history at the University of Buckingham.