British universities face a period of unprecedented turmoil, which many will not survive and which will result in a substantially smaller higher education sector. That is the message from over half of the higher education leaders responding to PA Consulting’s latest survey.
While understandable, such pessimism is overdone. In practice, less dramatic but more sustainable developments are shaping a more open higher education system with entrepreneurial universities at its heart.
Our survey reveals a big shift in higher education leaders’ expectations about the future sources of their business and revenues, and a sea-change in their strategic priorities. After years of reliable growth in student demand and public funding, sector leaders are almost all deeply worried about declining government grants, falling student numbers (both home and international) and diminished research funding. They are dubious about finding sufficient new revenues to offset the loss of these traditional cash cows. They anticipate ever fiercer competition for a shrinking pool of students from new providers, online services and work-based alternatives to conventional study. Nor are they expecting any help from government; after years of looking to government for their strategic lead, higher education leaders today rate official policies as the biggest single hindrance to their plans for growth.
Over half of institution leaders foresee all this leading to a shrunken higher education sector in the future, with some predicting as many as 20 to 30 institutional failures and most expecting significant rationalisation of providers through mergers and take-overs.
But, as yet, there are few signs of this happening. Indeed, the outward signs suggest a sector in rude health: many institutions reported their best ever financial results last year, a wave of established and new providers have gained university status, and there is a building boom on campuses across the country. So are the doomsayers wrong? Or, is the structural upheaval they predict actually happening, but in different ways?
There is already significant rationalisation taking place across the sector but within, rather than across, providers. Our survey reveals a clear trend for universities to narrow the breadth of their academic activities and to focus on their areas of perceived strength. Over 20,000 fewer undergraduate courses were offered through UCAS in 2012 than in 2006, a 27 per cent reduction. In addition, many institutions have been quietly closing and merging loss-making academic departments in the face of falling and shifting student demand. Coupled with extensive rationalisation of back office and supporting functions, the short term impact of these measures has been relative financial comfort seen across the sector in the last two years - although few expect this to last.
More positively, and potentially much more importantly, we are seeing major shifts in providers’ strategies for attracting students through targeted and innovative provision. Over 90 per cent of leaders responding to our survey rated enhanced student experiences among their top three strategic priorities, and many commented that success on this front was crucial to their institution’s survival. Many are designing programmes around the needs and circumstances of different student groups, often in collaborations and partnerships with employers and other providers, creating new models of student-centred provision that cut across institutional and sector boundaries.
As in almost every other area of economic life, web-based technologies are at the heart of this revolution, but not in the apocalyptic ways predicted by some commentators. Higher education leaders strongly refute over-hyped suggestions that cheap online provision will sweep away traditional providers. Instead they expect the blending of new technologies with conventional pedagogies to foster a more flexible and open learning system, giving students much greater choice over where, when and how they study. In particular, some 60 per cent of sector leaders foresee much less distinction between face-to-face and technology-enhanced learning, and significant growth in mixed-mode and employment-based study. Historical distinctions between “public” and “private” providers are expected to blur into irrelevance as partnerships, alliances and delivery networks supplement institution-centred provision.
These changes can already be seen in practice across the higher education system. We are witnessing the emergence of a pluralist system of student-centred learning pathways in which change is driven through innovative responses to the diverse needs and choices of learners and employers.
We do not expect the demise of mainstream university provision any time soon. Instead, we foresee the emergence of an open learning system in which university-based study sits within many alternative pathways. In such a system, traditional academic structures and quality processes will provide the stable core around which new forms of educational experience are offered in different ways to different learner groups. The balance of academic traditionalism and entrepreneurial innovation will inevitably create tensions, but the sustainability of the system will require both.
Mike Boxall and Paul Woodgates are higher education experts at PA Consulting Group
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