Expected spending cuts prompt a rethink

MBA students are often thought of as private-sector types. But they're not all like that. For decades, prompted by governments which wanted to see more hard-nosed, innovative thinking in Whitehall and elsewhere, large numbers of public employees have taken MBA courses.

They tend to be older than other students, since below a certain level of seniority they cannot get funding. Their motivation is also different. Not for them dramatic salary increases – an MBA is a useful rung on the civic career ladder.

Now these business students are facing public sector cuts of up to 40 per cent in the comprehensive spending review on 20 October. What effect will it have? Business schools, for a start, are expecting public sector applications from the UK and EU to drop considerably. Funding will become very hard to find. The increasing internationalism of the intake among many schools, however, will soften the blow. "We're seeing more applications from overseas," says Chris Saunders, director of the full-time MBA programme at Lancaster University Management School.

But even here there is a change. Where Indian students, for example, once studied in the UK in the hope of a British job, now many are looking to work in India. At Lancaster, 36 public sector employees are taking executive MBAs. "They got in before the cuts," says Saunders. The mood among them, he detects, is one of resigned resilience.

"They're seeing colleagues disappearing. For those who are left, the workloads will go up. They need to have different ways of understanding what they deliver, while maintaining the levels of service as best they can." The core MBA courses, he says, become important in this environment, particularly operations, accounting and marketing.

An alternative to the MBA is the MPA (Master of Public Administration), originally an American idea that evolved in response to demand for a tailored public sector course.

Professor Jean Hartley teaches governance and public management on the MPA at Warwick Business School. "We're really well placed in the UK to offer good programmes to international students," she says, "because we've gone through so many different waves of public service reform."

With its associated diplomas, the Warwick MPA has about 500 students. Core modules include leadership and public value; markets, public service and new forms of delivery and organisation; managing people and change; public finance; and strategic advantage.

Absent from this, however, and most other MPAs, are core MBA subjects such as accounting and marketing. The London School of Economics, which runs four MPAs, does have compulsory quantitative modules – but the LSE failed to appear this year on the Government's "preferred supplier" list of six MPA institutions. This suggests that for the Government the unaccredited part-time London South Bank University MPA, at about £7,000 for two years, represents better value for its civil servants than the full-time LSE course at £34,944.

The MPA has not proved popular everywhere. It was quietly dropped at Lancaster and at the School of Management, Henley Business School. But at The University of Liverpool Management School, it has run for 21 years. Professor Laura McAllister, who teaches on it, says the cuts will affect the curriculum. "My colleagues are already mapping out case studies that reflect what we suspect will be the public funding climate in 2011-12.

"For example, most Whitehall departments have already introduced a freeze on marketing and communications budgets and that's working through to devolved institutions."

At Warwick, Hartley accepts that people in local government are worried. "These are big cuts. But they're also thinking about how to deal with them pro-actively." Innovation, she points out, flourishes during economic downturns. Job cuts, she adds, need to be managed carefully. "In the Eighties, staff were cut, and within a year many of them were hired back as consultants, so the predicted savings did not happen."

Professor Graeme Currie, from Nottingham University Business School, is a staunch defender of executive MBAs tailored for the public sector. "An MBA develops critical management practitioners who can reflect on public services practice, which is necessarily very complex, and who can manage and lead across organisational and professional boundaries."

Joe Sanderson, from Birmingham Business School, agrees. For 18 years, he has run an executive MBA in strategy and procurement management. It attracts candidates from the NHS, the Ministry of Defence and the Home Office. "People in the public sector will have to persuade the private sector to work with them innovatively to save money over the longer term," he says.

"So much is done by external providers. There are massive contracts out there, full of loopholes, that pose huge challenges."

For some public servants, the cuts might even act as a spur. "People study an MBA to leapfrog up the career ladder or to switch industries and sectors," says Chris Brady, dean of BPP Business School in London. "An MBA is the perfect tool for making the switch to the private sector."

'You need people who can make more use of less resources'

Peter Roddis, 48, is service head of human resources at Nottinghamshire County Council. He has just finished an executive MBA at Nottingham University Business School, specialising in the public sector.

"I had 20 years' experience as a manager, but no formal training in it. My route had been through professional qualifications. But I felt I needed to be more effective as a manager and, I guess, more employable. I could see the security that used to be there wouldn't last.

The MBA took about three and a half years. It was a lot harder than I expected, and there was a lot of pressure. Going back to exams was a big issue for me, but I got through that, and it was worthwhile. Most of the assignments I did were about the work I do, and that was very useful back in the workplace.

The cuts? We're all a bit nervous. But at a time like this you need people who can make more use of fewer resources, people who can manage people and change more effectively. That's what the MBA has given me."