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The UK has 100-plus university-based business schools. When the first were set up in the 1960s – to improve the quality of British management – there was a debate about whether they should be freestanding, or perhaps linked to local business organisations as in France, rather than lodged in universities. This debate should be revisited.

Business schools teach about 15 per cent of all higher education students – and a larger proportion of overseas and post-graduate students. At one level they are a success, bringing in big money from UK-based students, and from overseas partnerships and franchises. But they could be very much better.

Critics charge that schools are too detached from business, overly concerned with theory rather than practice. Staff have inadequate experience in the private sector: they are excessively interested in esoteric research for the Research Excellence Framework, rather than working with businesses. They teach too little and students do not rate their teaching particularly highly. Pedagogical innovation is limited and there are few sanctions for persistently poor teachers.

Employers continue to report dissatisfaction with many students they interview. This may be related to low admission requirements, as vice-chancellors insist that business schools expand recruitment to cross-subsidise other subjects. Indeed, the overcharging of business students to keep history or arts departments open is a hidden national scandal.

Business lectures are overcrowded and students receive too little personal attention and support.

Are these criticisms unfair? Some institutions perform better than others and several leading schools compare favourably with international rivals.

But isn’t there fundamentally something wrong in many of our schools having little direct input from business and often only sporadic links with employers? Locating business schools within a university culture of excessive regulation, heavy and backward-looking unionisation, anachronistic contracts and a quasi-medieval calendar does nothing to promote excellence.

It is time for change. As the Higher Education Funding Council for England’s public funding for business under-graduates disappears – such funding for postgraduates has never featured significantly – and the cost of their education falls increasingly on students themselves, there is less and less reason to stay in the sector. Let universities sell their business schools – to for-profit or not-for-profit corporations, management buyouts, charities or local chambers of commerce.

Over time, business schools will reshape to meet the imperatives of a proper marketplace. Ownership will change and organisational innovation will occur. Liberated schools will be free to compete properly to serve young people, older people wanting to improve their qualifications through part-time study, managers in search of updates, and businesses seeking new ideas.

There will be a one-off gain to universities and the public purse at a difficult time. The rest of the higher-education sector will profit from the example.

And let’s shed some of the regulatory baggage. We need more reliance on quality assessments (such as AACSB, Equis and the various professional bodies) that exist independently of state regulation, rather than the dead hand of the Quality Assurance Agency.

Business schools should create a private student-loan system in conjunction with the financial sector. The MBA/career-development loan model could be extended. Moreover, direct links between business schools and banks would reduce the moral hazard inherent in the present undergraduate loan system – where universities are not penalised significantly for recruiting weak students and producing unemployable graduates.

Let’s take business schools out of universities. Teaching students about business is a business itself and our institutions should reflect this.

Len Shackleton is a professor of economics at the University of Buckingham, UK.

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