The indisputable success of the UK’s universities over recent decades has been built on four bulwarks: steady growth in student demand, relatively generous funding arrangements, protective and supportive regulation and sustained public and political goodwill. But all of those bulwarks are being seriously eroded by political and market currents.
Since 2006, total UK university revenues increased from £21 billion to more than £34 billion, on the back of 30 per cent growth in full-time home students and more than 40 per cent growth in international recruitment. But the latest data show that enrolments in 60 per cent of UK universities have fallen in recent years, with more than 30 mostly teaching-led institutions seeing reductions of more than 10 per cent. And the predictions are that almost all segments of student recruitment will continue to flatline at best.
The financial impacts of this have been exacerbated by the falling real-terms value of capped tuition fees, with ominous indications of actual cuts in prospect after the recently announced funding review. The benevolent English regulatory regime overseen by the Higher Education Funding Council for England is being replaced by the adversarial tone of the new Office for Students. No established providers have yet “exited the market”, but the OfS is under no obligation to prevent that from happening in the future. And the public and political narrative around universities has swung from celebrations of excellence to litanies of criticisms.
PA’s latest sector survey of heads of higher education institutions, published earlier this year, suggests that university leaders recognise this new, harsher reality. Unsurprisingly, almost all vice-chancellors cited securing their institution’s financial viability and resilience as their top strategic priority for coming years.
Approaches being pursued include modernising internal operations; enhancing and extending e-learning services; consolidating provision around dependable core revenue sources; seeking greater shares of current markets through enhanced student experiences, financial inducements and more flexible entry requirements; diversifying into transnational ventures, work-based learning or employer services (including apprenticeships); and sharing costs and risks with academic and commercial partners, through a range of joint ventures and outsourced operations.
But while these are all rational and sensible responses, they may not be enough to ensure a stable long-term balance between provision and demand for institution-centred higher education.
In other sectors, such defensive measures would be accompanied by a wave of provider rationalisation through closures, mergers and takeovers. This has been widely predicted but not yet seen in higher education. Instead, we are witnessing a quiet “shrink to fit” across almost every institution, characterised by staffing reductions and course and campus closures.
At the end of this hunkering down, most vice-chancellors expect their own institutions to emerge largely unchanged – although many are much less optimistic about the outlook for their peers. But this optimism may simply be a symptom of universities’ notorious insularity. Sector leaders would do well to consider the experiences of other sectors, such as print media, high street shops, airlines and financial services, which have all seen demand for the core service continue to grow, but shift away from established providers towards new entrants with alternative, often technologically enabled business models.
While the historic growth in traditional patterns of “going to uni” may have topped out, there will probably always be niche demand for the extended boarding-school model of higher education provision. But the real growth, and the opportunities for a rejuvenated system, will lie elsewhere and university leaders must develop imaginative visions in light of this new reality.
They must think beyond educational “products” and address how to ensure continued institutional involvement with the applications of knowledge and learning in the lives and work of individuals, organisations and communities. They must stop fixating on securing deficit funding to cover the costs of teaching and research and work out how to share in the far greater returns created from the outputs of those activities in business, public services and daily lives. And they must rise above the interests of their own stand-alone institutions to grow the roles of universities within interdependent systems of learning providers, businesses, public agencies and communities, working together to resolve shared needs and problems.
The implications of re-imagining higher education and universities in these ways are profound and difficult, but far from outlandish. They offer a vision for tomorrow’s universities as leaders and orchestrators in a variety of multi-partner “learning ecosystems” – ranging from local community development programmes to national growth strategies to global programmes to address “grand challenges”, such as climate change or food security.
Many examples of this kind of engagement can be seen around the world, but they are mostly on the fringes. This must change. The future health of the mainstream higher education system may depend on universities becoming as ubiquitous to 21st-century public life as Google, Amazon and Apple have become in our private lives.
Mike Boxall is a higher education expert at PA Consulting Group.