Supporting world-class universities

The HE sector is perfectly poised to grow and drive the UK’s economic prosperity says Professor Shamit Saggar at UPP

By Professor Shamit Saggar, Non-Executive Chairman of UPP

This is a time of great change for the HE sector. The impact of changes to funding continues to emerge and institutions are in an ever more volatile and competitive market place. However, the sector is also perfectly poised to grow, develop and drive the UK’s economic prosperity and our international reputation as a knowledge-led economy.

This future will require world-class university infrastructure and facilities. This is a key moment of opportunity for universities to take control of, and redefine, their future.

Institutions are faced with a set of difficult decisions: 

  • what services they provide – addressing the question of what counts as core and non-core provision;
  • how they deliver these services – be it in-house or with a partner;
  • how they respond strategically to student preferences – reinventing, where necessary, what it is that a university does and how it delivers the best experience for students
  • how they fund these activities – by exploiting existing income streams, by generating new income streams and by accessing the most cost effective borrowing available.

By diversifying how they fund and deliver their own services, UK universities will be able to operate more effectively and efficiently.

Academic facilities will underpin the delivery of core services. At present between 20-25% in proportional terms (7.0 million m2 in real terms) of UK HE estate is in need of either complete refurbishment or replacement. This is an historic problem and is composed of an existing backlog maintenance requirement of around £5bn. A recent report from BIGGAR Economics identifies an investment agenda of £9bn on capital projects over the next five years in Russell Group universities alone.

Looking ahead, successful universities will have to make wise strategic partnerships to deliver on this front. They will also have to manage significant issues in modernising their academic teaching offer, in meeting the expectations of graduate employers, in harnessing new technology as a tool of learning, and in making themselves relevant to the needs of a knowledge-led national and international economy. Running fast to stand still will be a new norm.

Taking this opportunity will involve partnerships with the commercial sector. A good partnership between HE and specialist commercial providers depends on developing a robust, long-term business model.Reading medium and long-term demand – and affecting a strategic response – is now an integral part of a successful university. The HE sector will require access to investment that is cost effective, long-term and, crucially, aligns the interests of universities with their commercial partners if it is to realise this unprecedented opportunity.

Universities are in an enviable position in terms of their capacity to attract investment. The risk profile and longevity of university business models allows for capital markets borrowing which may be used for a variety of purposes – typically, infrastructure transactions and, potentially, even student loan facilities. Opportunities to work with universities are now actively sought after by investors in global markets.

The sector faces a period of change but also unprecedented opportunity. At this time universities need to be bold in asserting their strategies and far-sighted in the decisions they make as to what constitutes core and non-core provision. They will also need to be open to establishing partnerships with other institutions and specialist providers. Such partnerships can help them ring-fence the future risks they face, deliver their services more effectively, generate new and more valuable income streams, and above all, free institutions to deliver world-class academic excellence.

 

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