Autonomy is not enough: a hard truth for UK higher education

Developed with partners Shakespeare Martineau and Barclays, the report analyses publicly available data from 160 UK institutions. It advances a clear proposition that institutional resilience and long-term sustainability depend on how well an institution is run and governed across four key areas: sustainable growth, economies of scale, productivity, and efficiency.

What emerges is a picture of a sector increasingly divided. Too often, these key areas are pursued in isolation rather than in alignment. Some institutions reduce costs without improving productivity. Others increase activity without achieving economies of scale. Still others grow without strengthening their underlying financial position. The issue is not effort - it’s coherence. Without coherence, even well‑intentioned activity struggles to deliver the outcomes that students, partners and the public rightly expect from universities.

This is why a practical framework for an institution’s operating model matters. It offers leaders a clearer way to review how their institutions operate and to move beyond short-term structural interventions towards sustained transformation, helping universities play their full role in the country’s future prosperity. Crucially, it also reinforces a wider point: waiting for external reform is not a strategy. While changes in regulation may offer some protection for students and institutions, universities have never flourished by deferring action. The conditions we face today demand leadership within constraints, not hope for relief.

Encouragingly, there are already initiatives in this area emerging across the sector. The work of the Universities UK Transformation and Efficiency Taskforce reflected growing recognition that institutions must rethink how they operate and collaborate. Our report was stimulated by the work of the Taskforce, the focus and outputs of which helped frame the questions we explored and provided a catalyst for broader discussion.

Such discussion is vital, as the solutions of the past are no longer sufficient. Across the UK, universities now operate in a materially different environment. Real-terms regulated funding per student has fallen for more than a decade. Costs continue to rise across staffing, estates, digital infrastructure and student support. International student markets have become more volatile. And regulatory requirements are increasingly complex and costly.

But we must also be candid: not all pressures are external. Our analysis of sector data between 2020 and 2025 highlights recurring internal challenges:

• Shrinking financial margin is widespread, as income erosion outpaces efficiency gains. In many cases, growth has been accompanied by rising marginal costs rather than improved productivity. 
• Cost bases remain rigid, with structurally high staffing costs limiting agility in volatile conditions. 
• There is significant variation in productivity and efficiency across institutions, suggesting that leadership and organisational choices - not just structural constraints - are driving outcomes. 
• Institutions relying on repeated restructuring programmes are seeing diminishing returns and growing signs of organisational fatigue.

Taken together, these patterns point to a deeper issue: the limits of traditional institutional autonomy when exercised without strategic coordination.

Collaboration, therefore, must move from being a tactical option to a strategic choice. This does not mean uniformity or loss of identity. Rather, it means making deliberate decisions about where shared approaches - whether in services, infrastructure, academic provision or partnerships – can unlock economies of scale, improve productivity, strengthen resilience and, most importantly, create added value.

The institutions best positioned for the future are those already treating transformation as continuous, not short-term. They understand their cost structures in detail. They manage growth deliberately. They make disciplined choices about what they do – and what they do not do.

There are strong examples of leadership and collaboration already taking place across the sector, many of which are detailed in UUK’s Transformation and Efficiency: Towards a new era of collaboration report. But the variation remains striking, and the pace of change uneven. The University of East London will be publishing a second report to explore this variation further, including detailed sector quartiles and case studies, in late April. 

The next phase of UK higher education will require greater institutional courage: to innovate, collaborate more deeply, and rethink operating models that no longer serve us. Higher education remains one of the United Kingdom’s most important national assets. Protecting and strengthening that asset will require renewal driven from within. The future of the sector will depend not simply on how much universities grow, but on how intentionally – and how collaboratively – they are led.