Universities need more joint ventures but not mergers – report

UK universities need to fundamentally re-evaluate the way they are run and look at adopting a more collaborative and interdependent approach after “losing sight of their public good role” amid increased competition, a report has warned.

The model in which all institutions strive to be seen as “world class” has led to “negative systemic effects” and has drained resources from the wider sector, creating an unequal and hierarchical landscape, says the paper, authored by Edward Venning, founding partner at Six Ravens Consulting, for the Higher Education Policy Institute (Hepi).

It argues that the UK needs to “fundamentally re-evaluate the way universities are run in the UK”, with the new Labour government urged to create an independent commission that considers new business models and greater differentiation between providers.

Collaborative structures and joint ventures should be preferred to mergers and acquisitions, especially in the case of distressed providers, the report adds, with a major transition fund needed to support the changes.

“For too long, merger and acquisition has been the default structural approach in expansion and crisis alike,” the report says. “This is problematic, as it threatens the autonomy, identity and pedagogy of the merged institutions.”

Frances Corner, the warden of report sponsor Goldsmiths, University of London – one of the universities that has suffered from financial difficulties in recent years – said “more, not fewer, graduates” were needed in the era of technology, but “structural reform of our sector is essential”.

The report says that English higher education institutions historically worked together in interdependent networks or group structures or within local government, but “this interdependence has been eroded by the drive for competition”.

“While competition may advance individual choice, ‘unregulated market forces in education tend to fragment the common educational infrastructure – and values – on which everyone depends’. Our atomised educational infrastructure requires stronger, more active leadership and governance, and more dynamic use of our organisational, financial, staffing and academic autonomy,” it adds.

The fight to be recognised as “world class” has created regional and course disparities in which “some institutions become too big and, frankly, too rich to fail, while the rest face fundamental challenges to their business models and liquidity”.

“Along the way, we have abandoned modes of education that are common to professional formation and lifelong learning, such as shorter, less immersive and non-credentialed education,” which is a loss for both the wider education sector and students, it finds.

Mr Venning told Times Higher Education that “we’ve lost sight of the public good argument in higher education”, which had resulted in a narrowing of the diversity of the sector and what it was there to achieve.

“Higher education is broadly a public good. There’s no real way to make it in this system pay for itself. I think the pretence that it can pay for itself is a bit of political misdirection,” he said.

“When you put this idea of competition into the sector, you’re preventing some ways of working together beneficially.”

Other recommendations included in the report are that Universities UK and other sector bodies should collaborate to establish a sector-wide leadership body for higher education; that the Office for Students’ remit is amended to include accountability for the overall health of providers and the sector; and the use of mergers and acquisitions in higher education are reviewed.

“This is a growth argument,” Mr Venning added. “Do we get to growth by cutting back on higher education? Absolutely not. Why would we believe that? Every single indicator we have would suggest that that’s the worst thing we could do.”

juliette.rowsell@timeshighereducation.com