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Oligarchs, innovators and zombies

Article by Mike Boxall, HE specialist at PA Consulting

First published in Research Professional and reproduced with kind permission

26 June, 2013


Less money, fewer students and more competition may produce three new classes of university.


The grant funding on which universities have long depended has been all but eliminated through successive government spending reviews over recent years. However, in parallel with the cuts to direct funding, undergraduate tuition fee levels have been raised backed by subsidised student loans, enabling ministers to argue that the total level of public funding devoted to higher education has actually increased over the period.
The windfall effect of higher income per student has led to universities experiencing their best ever financial results, recording average surpluses of nearly 4.5 per cent and banking nearly £8 billion of cash reserves. But none expect this to last. Sector leaders foresee a ‘triple whammy’ from the combination of further funding cuts, falling student demand and greatly increased competition from new entrants and technology-enabled alternatives to conventional campus study.
The profound implications of these trends are recognised by many (but not all) vice-chancellors and sector leaders. PA recently published a report on its latest annual survey of vice-chancellors and other leaders of UK higher education providers. Whereas previous surveys have shown guarded optimism for institutional wellbeing, shored by confidence in continued government sponsorship and student demand, this year’s survey revealed a marked shift in leadership sentiment.

In particular, the survey revealed there are real worries that not all universities will survive the coming changes. More than 55 per cent of vice-chancellors thought it ‘very or quite likely’ that there would be a significant number of institutional failures; some ventured to suggest that 20 to 30 institutions could disappear over the next decade. We think this scenario is actually quite unlikely, not least because of the substantial legal, economic and political constraints to closing down a university. But, we do see evidence of significant rationalisation and restructuring within institutions, which can be expected to continue over coming years.
The new order
If a mass shake-out of institutions does not occur, what might higher education look like after 2015?  We envisage that universities will fall into three very different categories: the oligarchs, the innovators and the zombies.

  • The oligarchs, a small super league of large, research-intensive universities such as Cambridge, Oxford, Imperial, UCL and Manchester operating on a global level

  • The innovators, those institutions that are developing enterprising ways of doing business and engaging with students, employers and other client groups, and hence will be able to grow new sources of revenues 

  • The zombies, those institutions that are unable or unwilling to invest in change and hence risk finding themselves in a spiral of decline, characterised by continuous cost-cutting and retrenchment.

While the outlook for the zombie institutions is not good, the future for students is actually very bright. There will be no shortage of innovative, enterprising providers, offering a multiplicity of learning opportunities tailored to the diversity of individual learning needs.    

To receive a full copy of the Oligarchs, innovators and zombies article, please contact us now and follow @MikeBoxall1 PA higher education expert for comment. 

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