Analysis: The age of 'strategic alliances'

Bids for funding for new collaborations are growing faster than the funds. Claire Sanders reports.

In a footnote to the government's announcement on widening participation in September, an extra £15 million was announced for "restructuring and collaboration".

This roughly doubled what the Higher Education Funding Council for England has been putting into its restructuring and collaboration fund since it was established in 1997.

Hefce chief executive, Sir Brian Fender, went out of his way to plug the fund when he spoke at the council's annual conference last April. This touched a raw nerve with some vice-chancellors.

Diana Green, vice-chancellor of Sheffield Hallam University, was alarmed. "Does the funding council have a behind-the-scenes agenda to encourage rationalisation and mergers?" she asked.

With Birmingham and Aston universities in merger talks, Leeds Metropolitan and Bradford forging a strategic alliance, proposals being discussed to reduce the number of Welsh universities by almost half through mergers and a number of initiatives in Scotland, cooperation and collaboration have replaced competition as the way forward.

In a rallying call in March 1999, Sir Howard Newby, then president-elect of the Committee of Vice-Chancellors and Principals, pointed to the globalisation of higher education and the changing missions of universities against a background of financial restraint.

"One cannot help making the observation that the structure of British higher education is now considerably out of line with its newly acquired functions and purpose," he wrote in a paper delivered to the residential meeting of the CVCP. He warned: "The cumbersome, somewhat chaotic and certainly ad hoc plethora of collaborations, corporations and partnerships is probably moving too slowly to meet the challenges which lie ahead."

He pointed to a future model in which mergers and collaborations were assisted, but not driven, by the funding councils - a pattern adopted in Scotland and the English further education sector.

That model seems to be developing - although there are fears that the government may be seizing the initiative. Professor Green said: "The clear implication, I hope, of Professor Fender's speech was that Hefce should be supporting rather than managing or leading any structural change in the sector."

In a bid to ensure that universities and colleges stay in the driving seat, the CVCP will hold a conference on cooperation and collaboration next month. Chief executive Baroness Warwick said: "It is clear that a whole range of proposals and plans on different forms of strategic cooperation are being developed. The CVCP is keen to take a fresh strategic snapshot of the issues at stake and lead this debate through the conference in the new year."

Sir David Watson, director of the University of Brighton and chair of the CVCP's longer-term strategy group, added that although there are good examples, "the sector also faces a number of challenges and difficulties". He identified autonomy and economic survival as two of them.

So what are the funding councils doing to promote this change? Hefce's burgeoning restructuring and collaboration fund was set up to support structural change in universities where such change was needed but could not be achieved without funding council support. At the time, this meant major changes in either the academic portfolio or constitution - particularly mergers.

The criteria have since been revised twice. Support has been extended to collaborative arrangements between higher education institutions and specifically for administrative support underpinning consortium arrangements between universities and colleges.

Sir Brian said in April that the fund was there to help manage change in the shape and size of universities and colleges. He stressed that collaboration in many forms - up to and including merger - was becoming more important and that strategic alliances were the most common form of collaboration.

He said that he expected the fund to increase in size as universities not only became more familiar with it but as rationalisation and restructuring became increasingly inevitable. The Scottish Higher Education Funding Council has a similar fund representing 2 per cent of its budget, and Sir Brian said he expected the Hefce fund to approach this.

Stephen Marston, director for institutions at Hefce, pointed out that the funding is currently nowhere near this. "We put £15 million into this fund in 1999-2000 out of a budget of around £4 billion. This year we have allocated £20 million. There has certainly been accelerated demand for the fund," he said.

By the end of 1999, 50 projects had been approved for funding of £34 million. Hefce does not currently invite competitive bids, but is reviewing the situation as demand grows.

Mr Marston said that the extra £15 million announced in September would accelerate change.

Steve Passmore, a member of the higher education funding policy team at the Department for Education and Employment, said: "This £15 million is on top of the money Hefce already allocates and is allocated for the next three years - that is three lots of £15 million. This money is to aid the restructuring of research departments in particular, leaving Hefce free to fund the restructuring of teaching."

Each approved project has to show that it represents value for money, in particular that it is able to make a positive return on capital expenditure in keeping with Treasury guidelines.

So do the funding council and the DFEE have an agenda to encourage mergers? "Mergers are not the issue here. Clearly collaboration is one of the main objectives of the fund, but underpinning that is a desire to see a more efficient and more effective use of resources, not an agenda on mergers," Mr Passmore said.

Mr Marston said: "Certainly we want to facilitate major restructuring where it is necessary. But we have no agenda to encourage mergers as such. We want universities to think broadly about their identities - to think about restructuring for academic as well as financial reasons."

Mr Marston said England is not going down the Scottish or Welsh routes, where the councils have taken a more pro-active role. In a document setting out Hefce's approach to mergers, first published in May 1999, the council explicitly said: "We do not, as a matter of general policy, consider mergers involving higher education institutions to be either desirable or undesirable... It is for individual HEIs themselves in the first instance to consider whether or not merger is a suitable option in their particular circumstances."

But the funding council does like proposals to come through its regional consultants or higher education advisers. "The regional consultants make sure that we can look at the bids in the light of other developments. There has to be a coherent regional approach."

In September last year, the Higher Education Funding Council for Wales submitted a report to the National Assembly for Wales entitled The Scope for Institutional Mergers at the Higher Education Level . Earlier in the year, the secretary of state, noting the smallness of Welsh institutions compared with those elsewhere in the UK, asked the council to identify scope for institutional mergers and to draw up a report for the assembly. The paper concluded: "The council believes there is a case for seeing some five or six general, multi-mission institutions in Wales as an aim. Today, there are 11 such institutions in Wales (setting aside two specialist ones)."

The council has a fund through which it can help institutions work together.

In September, the Welsh Assembly announced its own review of higher education. Institutions were asked to comment on the scope of the review by the end of this month, in particular "the scope for collaboration and integration".

The assembly is also conducting a Cubie-style independent review of student financial support. It does not have the power to change the basics of higher education funding but it can look at hardship and access funds. This will feed into the overall review, with a consultation document expected for the spring.

The Heads of Higher Education, Wales, is finalising its submission, but in a joint statement with the CVCP, it has already warned it will resist the merger plans put forward by the Welsh funding council, and will propose an alternative course of action.

In Scotland, the funding council uses its strategic change grant to ensure that universities can compete globally, widen access, support internationally competitive research capacity and encourage strategic development.

"Our approach is very much bottom-up," said Laurence Howells, director of strategy and corporate affairs at the council. "There was a feeling at one time that the council was going to plan the sector, but we see it as our role to ask questions of the sector and then to help facilitate change. Institutions need to feel they own any changes that do happen."

In the mid-1990s, the Scottish funding council's chief executive, John Sizer, met heads of institutions to look at how they could better collaborate both within Scotland as a whole and within different regions.

"We saw very early on that there were economies of scale to be made and that we could deliver a better academic quality by working together," said Mr Howells. "These initiatives turned into the strategic change grant."

He pointed to three initiatives that the council has funded: the synergy strategy (the pooling of research expertise between Strathclyde and Glasgow universities); the Crichton partnership (the establishment of a "hub of learning" in Dumfries by the universities of Glasgow and Paisley and Dumfries and Galloway College); and a new strategic alliance between the universities of St Andrews and Dundee.

Mr Howells also pointed to collaborative initiatives that the universities have established themselves without funding council cash, such as Scottish Knowledge, which exports university and college expertise in education and training.

Why should institutions collaborate more?

Stephen Marston , director for institutions at the Higher Education Funding Council for England: "It is a question of the long-term viability of institutions. Some institutions have concluded that their long-term interests are best secured by merger. There is also the question of economies of scale.

"Bradford University and Bradford College are collaborating on a number of fronts for sound financial and academic reasons. They are two institutions on adjacent sites offering a full set of support and service arrangements. And there may be sound reasons for aggregating teaching and research. In teaching, this can offer students a wider range of experiences and in research it can encourage interdisciplinary work."

The Higher Education Funding Council for Wales has identified a number of pressures on Welsh institutions to merge, including: tighter finances; the introduction of student fees and competition for students; the need for institutions to be versatile in the way they deliver teaching; technological development reducing the need for a traditional campus; and pressure to promote lifelong learning and widen access.

Sir David Watson , director of Brighton University and chair of the CVCP longer-term strategy group, pointed to the "ines- capable high-level mission statements for all universities", outlined by the education and employment secretary David Blunkett at the end of his Greenwich speech in February. "(He) defined elements of mission statements that all institutions... need to consider."

These ranged from wider participation to improved links with the business community. "Institutions would be well-advised to work together to avoid unhelpful competition," said Sir David.

He pointed to the challenges presented by the National Health Service plan announced in July. "Clearly universities offering nursing and professions allied to medicine, for example, need to work together to offer interprofessional training," he said.

Leslie Wagner , vice-chancellor of Leeds Metropolitan University, said that the alliance being developed with Bradford has not yet had funding from Hefce, although a proposal is being put forward. Nevertheless, he identified encouragement by external agencies to work as consortia in, for example, delivering foundation degrees, as a pressure towards collaboration.

Patricia Ambrose , chief executive of the Standing Conference of Principals, said: "We have moved away from a period of intense competition to a better appreciation of the way in which universities can work together. Scop is very interested in looking at the benefits of collaboration between specialist institutions. But we need to bear in mind that we do not necessarily need just bigger institutions - smaller ones can be more flexible and responsive to student demands and to the market."

Where Hefce money is going

By the end of last year, the Higher Education Funding Council for England's restructuring and collaboration fund had approved funding for the following: Mergers - both those between two higher education institutions and between a university or college and an institution from outside the sector - include: Hull University and North Riding College; Leeds Metropolitan University and Harrogate College; Loughborough University and Loughborough College of Art and Design; Southampton University and La Sainte Union College. Further mergers are in the pipeline.

Restructuring of subject departments help institutions to restructure departments, often involving staff restructuring and refurbishment and re-equipping of premises, or to develop new programmes. Examples include: medicine at Manchester; and physics, materials science and sports science at Coventry.

Projects can also involve the transfer of provision, for example, physics from Birkbeck College to University College London.

Development of academic provision projects include Thames Valley University's learning resource centre and multi-media facilities at the University of East London.

The regional development of higher education fund is used to support the development of higher education in under-provided localities through financing studies to assess demand and then through funding growth projects.

Expansion of medical intakes , in line with the government's objective of increasing the supply of doctors, has supported business plans for new medical schools at the universities of Exeter and Plymouth.

Sector-wide collaborative projects include the setting up of the Institute for Learning and Teaching and the new web portal "Higher Education and Research Opportunities".

• "Cooperation and Collaboration - Promoting Strategic Alliances in Higher Education" is held on January 23 at the New Connaught Rooms in London.