Most vice-chancellors (58%) regard the domestic market for higher education as a shrinking or static game and 43% think it is likely that there will be significant numbers of institutional failures. Despite this, vice-chancellors mostly don’t see risks to their own institutions, according to PA Consulting’s survey of higher education leaders.
In a shrinking market, any growth must be won at the expense of others and over 76% of vice-chancellors predict significant rationalisation of provision through consolidation, transfers and course closures.
The opportunities that do exist for growth are shifting from conventional campus-based study to work-based models of learning such as apprenticeships or online learning as well as transnational provision for overseas students studying at home. Some 70% of vice-chancellors forecast growth of up to 50% in demand for work-based learning, with two-thirds planning to develop new services to address those markets.
Competition will however be fierce as institutions grapple for a share of a shrinking market; 25% of vice-chancellors are concerned over the responsiveness of their institution to aggressive pricing and innovative offers from competitors. Some 56% expect new providers such as Pearson College and BPP University to take a sizeable share of the market. By taking profitable business from established universities, the challengers are reducing the ability of established universities to cross-subsidise loss-making research or more expensive teaching.
Vice chancellors are also deeply worried about the unintended and underlying consequences of changing government policies, including Brexit, visa restrictions, regulatory reforms, the Teaching Excellence Framework (TEF) and changes to research funding. About a half (54%) feel that the TEF will have a beneficial impact but the majority feel that Brexit (70%) and more stringent visa controls (79%) will have an adverse impact on their institution.
Paul Woodgates, who leads PA Consulting’s higher education consulting services says: “An unprecedented barrage of game-changing policy developments has emerged during 2016 which is reshaping the market for Britain’s higher education providers.
There will be winners and losers in this new marketised world and it is clear that the rules of the game are now different – Paul Woodgates, PA Consulting
“In a shrinking market, universities know they cannot rely on government policies to protect their future and are developing their individual strategies for sustainability. However, there will be winners and losers in this new marketised world and it is clear that the rules of the game are now different. Only those universities who take advantage of the opportunities that exist – in overseas recruitment, work-based learning and providing online services – will survive.”
Mike Boxall, higher education expert at PA Consulting, says: “The underlying structure of the higher education sector is changing quietly, but radically. The big debate ahead is about how to secure financial sustainability as making one-off cuts will not be sufficient.
“Universities must rediscover their relevance and value to the things that matter to future students, employers and funders.”