Plans to create the first UK university department that would teach home students while being jointly owned and run by a for-profit firm have fallen through.

After months of discussions, the proposed tie-up between the University of Gloucestershire and INTO University Partnerships has been cancelled.

It is thought that the deal would have seen INTO provide the capital to build a new business school, which would then have been run and owned as a joint venture between the firm and the university.

But on 22 July, Gloucestershire¡¯s vice-chancellor Stephen Marston wrote to business school staff to explain that the deal was no longer going ahead.

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¡°Following lengthy discussions with a potential partner, it has become clear there is not enough common ground in terms of goals and approach, and it is not helpful for the university that the state of uncertainty should continue,¡± he wrote.

When the idea was mooted earlier this year, the University and College Union warned that Gloucestershire was failing to learn from for-profit higher education scandals in the US and was ¡°putting its reputation on the line¡±. One member of the university¡¯s council voted against the idea.

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The university¡¯s local UCU branch welcomed the decision to scrap the proposed partnership.

¡°We are pleased that the university has found a more productive way forwards than INTO for the future of the business school,¡± said Pekka Pitkanen, the branch secretary.

The collapse of the partnership could prove a setback for INTO¡¯s broader plan to move into providing universities with the capital to invest in new buildings.

INTO¡¯s main business offers foundation years for international students to prepare them for degree courses in the UK. It has 11 centres that have specific student progression partnerships with UK universities, including one based at Gloucestershire¡¯s campus.

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But the firm¡¯s chairman, Andrew Colin, warned earlier this year that a ¡°natural plateau¡± for the expansion of this kind of activity in the UK ¡°is not a long way off¡±. In 2013, INTO sold a 25 per cent stake in the business for ?66 million to New York-based Leeds Equity Partners to fund further growth.

The partnership was set to be one element of a ¡°Growth Hub¡± at the university, which aims to help local businesses. When Gloucestershire bid for funding from the Higher Education Funding Council for England to support the new hub, ¡°income from public/private partnerships¡± was listed as one of the sources of its ¡°financial sustainability¡±.

Although the INTO partnership will not proceed, Hefce will still provide a previously agreed ?2.7 million to support the hub, a Gloucestershire spokesman confirmed.

A Hefce spokesman said that the funding ¡°was not predicated on any joint venture initiative¡±.

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The Growth Hub project will also still receive ?12.5 million of funding from the government that was announced at the beginning of July, a spokeswoman for the Department for Business, Innovation and Skills confirmed.

A spokesman for Gloucestershire said that the university was now looking at a ¡°better way¡± to get investment for the business school.

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david.matthews@tsleducation.com