Bold reform needed to transform universities facing critical financial pressures

The report, “Towards a New Era of Collaboration” is the result of work initiated by Universities UK and led by independent Chair Sir Nigel Carrington. It calls for a fundamental shift in thinking, with a much greater focus on how universities across the UK can work together, share services and assets, and collaborate in the national interest. It identifies seven opportunities open to the university sector, and the action needed from central government to enable universities to drive such change.  

A cocktail of financial challenges - years of frozen income on teaching and research, high inflation and a drop in international students following government policy changes - have left university finances in serious distress. Universities have had to evolve and adapt, and a recent survey of UUK members showed how universities have been responding individually with significant action to cut costs, through the removal of courses, modules, reduced investment and scaling back on some research activity. 

While such measures have already delivered significant savings, the Taskforce warns that the continued delivery of efficiencies at an institutional level cannot alone solve the financial challenges facing institutions. Innovative partnership working will be needed across the sector, along with a sustainable funding settlement from government. The Taskforce outlines opportunities to begin a bold reform process based on the principles of collaboration. 

Sir Nigel Carrington, Chair of the Taskforce, said: 

The report identifies seven key opportunities for transformation, amongst which is the exploration of novel collaborative structures between institutions. At one end of the spectrum this could extend to mergers, but the report is also clear that this is unlikely to be a workable or desirable solution in most cases. Instead, the Taskforce outlines other options for strategic, proactive collaborations which continue to preserve competition. This could take the form of federations, group structures between aligned or geographically linked institutions, or partnerships on certain functions and disciplines.  

The Taskforce also suggests universities consider shared provision of some teaching, particularly to preserve vulnerable disciplines and avoid ‘cold spots’ - geographical areas where some subjects cannot be accessed at all.  As well as unlocking cost savings, this kind of structural integration which pools universities’ expertise can create opportunities to meet local skills needs, solve research challenges, keep lower demand but strategically important subjects going and align with the ambitions of business and government.  

There are already great examples of such collaboration to meet local needs, including the partnership between the Universities of Bath and Plymouth, with the former delivering its MPharm course both in Bath and at the University of Plymouth, in response to low numbers of Pharmacists in the South West. In Cornwall, which historically has low levels of higher education participation, the Penryn Campus is run as a joint venture by the University of Exeter and Falmouth University, complementing their separate existing campuses. Many facilities including halls of residence, leisure facilities, and some teaching and learning spaces are shared, enabling both universities to offer a diverse range of degree programmes while contributing to regional skills development and retention in Cornwall. 

Beyond calling for more collaborative structures, the Taskforce has set out a series of other opportunities that would help universities drive even greater efficiencies: 

• Sharing more services and infrastructure – a concept supporting by 91% of senior leaders surveyed by the Taskforce
• Using economies of scale and sector buying power
• Supporting digital transformation
• Adopting a common approach to assessing efficiency and benchmarking costs
• Evolving leadership and governance
• Creating the right policy and regulatory environment that helps universities go further, faster 

The report emphasises that universities are ambitious to make this evolution and calls on government to remove the barriers that prevent a truly transformative shift. It identifies a landscape, created by prior UK governments, which has effectively disincentivised collaboration between universities – most particularly English institutions.   

The Taskforce is already taking action to support universities to adopt further partnership working, including developing business cases for shared services and delivering guidance and specific resources from independent experts on transformative change. However, it also identifies policy and regulatory blockers and costs which are constraining the sector’s desire to transform, and where government could act. This includes addressing competition law and removing VAT on shared service provision, while introducing a Transformation Fund to support universities to finance large scale change. It also calls on government to alleviate regulatory cost pressures and address expectations on university to perform unfunded activities. Most of all, ahead of the Comprehensive Spending Review, universities are calling on government to stabilise university finances.  

Sir Nigel continued:  

The Taskforce is clear that success must be a shared endeavour across the sector and with government, and this report is the first of multiple outputs from the Taskforce which will support a long-term commitment to transformation.   

A comprehensive Phase 2 Implementation Plan will ensure ongoing accountability and momentum through: 

• A dedicated oversight group to monitor progress against agreed actions
• Continuing to catalyse immediate change through advice, guidance and sector resources
• Regular public reporting on sector progress and achievements
• Building consensus and momentum for transformation across the sector
• Working collaboratively with government to define a long-term vision for UK higher education 

Science, Research and Innovation Minister, Lord Vallance, said: 

Skills Minister Jacqui Smith said:

Notes to editors

• Universities UK’s (UUK) Transformation and Efficiency Taskforce was established in response to significant financial pressure on the university sector in all four nations of the UK. Its aim is to grip the challenges the sector faces, support individual university efforts to achieve greater efficiency, and seek opportunities for collective action to help our universities go further and faster than they can alone.  
• As the first output from the Taskforce, this report marks the first step in pursuing both individual university efficiency, and sector-wide transformation. Subsequent outputs will include supporting guidance from partner organisations. 
• The full report is available from 00:01 on 2 June at Transformation and Efficiency Taskforce: Our findings and next steps 
• KPMG and Mills & Reeve’s report on ‘Radical Collaboration’ moves the conversation on collaboration in higher education forward; from the theoretical to the practical. It details the many structural possibilities open to higher education providers - using case-studies and examples to illustrate models and their outcomes. The report emphasises the need for a clear vision for higher education regulation and policy – and how this renewed environment could help promote greater choice, innovation and therefore more sustainable outcomes for higher education providers. 
• The Competition and Markets Authority published a blog last week setting out how they’re working with higher education providers to help them understand when collaboration is allowed under competition law: Supporting higher education providers through beneficial collaborations – Competition and Markets Authority