The Higher Education Policy Institute has published a report calling for a fundamental re-evaluation of the way universities are run in the UK. Down with the World-Class University: How our business models damage universal higher education (HEPI Debate Paper 38) argues good growth, and an era of universal higher education, can be achieved if we ditch the ‘world-class university’ model in favour of group and collaborative approaches.
The report, which has been kindly sponsored by Goldsmiths, University of London, is the first of its kind to examine the UK university environment through this lens.
It highlights that:
- The UK lags behind other advanced economies in tertiary enrolment rates.
- Current business models fuel the sector’s financial crisis and limit its reach, thanks to over-reliance on the ‘world-class university’ model.
- The sector can learn from emerging non-university competitors how to offer higher education at scale, in partnership and at lower cost.
The report, which has been written for HEPI by Edward Venning, calls for:
- A re-design of the higher education system – to achieve a universal offer, created by an Independent Commission. This should go beyond funding considerations to differentiate types of providers and introduce new business models.
- New credentials and value propositions – to be designed by providers, working with the Office for Students (OfS) and Skills England, as a central part of the universal offer. These should define skills as conceptual and enquiry-based, not just technical.
- A major transition fund – to offer loans to providers to develop new business models, value propositions and organisational structures in line with the new system design.
- Group and federal structures – collaborative structures and joint ventures to be preferred to the use of mergers and acquisition, especially in the case of distressed providers.
- A sector-wide leadership body – responsible on behalf of providers for overseeing the tertiary ecosystem, including resource distribution, scrutinising regulatory burden, and shaping public understanding of higher education’s value.
- Rebalancing the role of the Office for Students – to safeguard the sector, the Secretary of State to direct OfS to have regard to the overall health of providers and the sector, alongside its responsibility to students. This should include managing regulatory burden.
Edward Venning, author of the report and Partner at corporate affairs consultancy Six Ravens, said:
UK universities have stalled in an era of surging demand for advanced education and skills. This is due to reliance on an immersive, high-cost model which works for a few universities but drains resource elsewhere.
As other countries head rapidly towards universal higher education, this report recommends a broader set of business models, while safeguarding the unique characteristics of the sector.
Professor Frances Corner, Warden of Goldsmiths, University of London, said:
In the age of technology, we need more, not fewer, graduates equipped with advanced skills to solve complex problems. Structural reform of our sector is essential. We must innovate within the spirit of our rich educational heritage, equipping more people with the conceptual and practical tools required for growth, progress and social innovation.
Notes for Editors
- HEPI was established in 2002 to influence the higher education debate with evidence. It is UK-wide, independent and non-partisan, and funded by organisations and higher education institutions that want to see vibrant policy discussions.
- Edward Venning is Founding Partner at Six Ravens Consulting LLP, working with knowledge-led institutions on their most important communication, governance and policy challenges. Previous work for HEPI includes Size is Everything (HEPI Report 160), the first full picture of small, specialist and practice-based institutions in higher education. He has served on the executive board of University of the Arts London (UAL), the largest world-class specialist university, and of Southbank Centre. Before that, he was a senior civil servant.
- The report has been sponsored by Goldsmiths, University of London.
The problem lies in categorising HE as a business. Income streams, landholdings and intangible assets such as copyrights & patents dominate and the core of education i.e. learning, knowledge etc., are lost in din of profits, B3 metics and the like. Of course funding is key to keep things afloat and to thrive, but we have drifted to an extreme, not just in the UK but globally and we need to restore balance.
Yes, the UK higher education system needs to change. There is still too much emphasis on ‘reproduction of the British social class system’. But the arrival of the Lifelong Learning Entitlement might help. Also need to keep, and increase, the numbers of international students. And I realise that today’s universities are businesses, but they must remain universities as well!
Three observations. First, in the era of fees and students morphed into customers, my response to students adopting that identity was, and is, that a customer is an income stream to be exploited to the full. That definition is based on my prior experience in business. Second, the idea of World Class is a nonsense. It could have meaning only if there was another world as a comparison. In any case, if all universities could achieve the status, however defined, it would confer no advantage and so have no competitive advantage. Third, the single biggest weakness in the UK HE sector is the ego and power of VC’s and associated lack of proper governance of a public good to, among other things, rein in vanity projects. Talk of business models will not help solve that problem.
I agree, John. One of my main interviewees described the policies around lifelong learning as among the most powerful tools of change in the sector. The challenge is setting ourselves up to take advantage of them, or they may be removed. She also said that they were misunderstood and underexploited by institutions.
I have considerable sympathy for this view. But I believe the problem of drift is caused by forgetting that the main benefit of universities is as a public good.
In other words, their biggest impact lies beyond their direct area of control. For example, longitudinal studies consistently show that the regional impact of a university relates very strongly to the region’s ability to hold onto the graduates and resulting businesses… not to the educational and research activities.
There are various ways to deliver public good outcomes, some of which are better achieved by business means. For this reason, the binary of university/business isn’t always illuminating. Universities may sometimes achieve greater “core” impact in education and research by behaving like a business. At other times, a more traditional approach is best.
Respectfully disagree that pursuit of a corporate group structure (subsidiarisation and/or the modular partnerships model) is the solution, having witnessed it go badly wrong through incompetence, poor governance, and perverse interests. It’s actually very easy to transform a government-subsidised educational charity into highly profitable business model, if you know the right corporate structures to exploit. Is it right to promote this as a solution for NPISH organisations? Or are we stretching our ethics too far? What should be done with the profits? Who benefits in this system?
The problem for Universities is their leaders. Fake CEO clowns who have been granted the autonomy to manage their institutions into the ground, whilst not taking on any personal financial risk from doing so. It’s made worse from the lack of regulation from the so-called regulators.
Where future m&a activity is concerned, division into corporate units ready for sale will be an essential fact of the matter.
Don’t agree that government should support this activity through a restructuring fund either. If universities want to behave like businesses, they should be treated like businesses too. Taxpayers shouldn’t have to fund risky business ventures taken on by inept VCs (who are in the large part, not businesspeople).
If we are going to respect institutional autonomy, let VCs (as accountable officers) pool their own personal wealth towards a rescue fund. They’ve gained enough over the past ten years of cashing in on foreign student fees, while using taxpayers money to subsidise spending on shiny new buildings. Their professional indemnity insurers should also be prepared to cough up.
Lots to love here, Cynical. Corporate group structure is only one answer, and I agree it’s not necessarily right for all circumstances. What we need — in the spirit of your comment — is a much more collaborative approach among universities. This is the way to rebuild institutional capacity and improve academic collaboration, with efficient professional services.
I don’t buy into your analysis of leadership, though. Institutional growth has put huge systemic strain on standard models of leadership, academic delivery and finance. It’s just too pat to blame these structural problems on individual V-Cs. Universities enjoyed a very brief period of plenty between 2010 and 2016, but have otherwise been starved of resources, with a structural deficit of £1 billion annual loss on Home students and £5 billion loss on research. Specialist law and finance HEIs (partly the subject of my last HEPI report and usually private providers) can make a smart profit. But overall, the sector simply doesn’t have a highly profitable business model, which is one reason why we haven’t seen any major new universities.
What has grown very rapidly is “shadow” tertiary — truly market-based interventions, but operating in ways and areas of adult education that aren’t regulated or quality assured. (They’d probably be captured under the definition of higher education in the States, but not in England.) This provision hasn’t yet fully undermined university hegemony, but is already a much more credible threat to your ethics/profit concerns than the NPISH side of things.
Thank you for a thought provoking paper and thank you particularly for responding to comments.
I strongly support the UK transitioning to universal participation in higher education, and agree that this will probably need substantial changes. However, Australia and Canada are transitioning to universal participation in higher education without the radical programmatic and structural changes proposed in the paper.
>80% of Australian (Ostwald and colleagues, 2018) and Canadian university students commute to campus, including to elite universities. This is of course much cheaper than relocating to study which as the paper notes on pages 8, 19, and 29 is more common in the UK.
In 2022 some 41% of Canadian 25-64 year olds had as their highest higher education qualification a diploma or associate degree (‘short-cycle tertiary’), mostly gained at a college, compared with 24% in Australia and 18% in the UK (Oecd, 2023, table A1.1, p. 50).
I suggest that more commuting and more participation in ‘short-cycle tertiary’ programs offer opportunities for the UK to increase its participation in higher education at modest cost without radical structural or programmatic change.
Oecd. (2023). Education at a glance 2023. Oecd, https://www.oecd.org/education/education-at-a-glance/
Ostwald, C., Stuart, A., Chitale, C., Demaine, L., Laird, J. U., & Blyth, C. (2018). Regional student accommodation analysis report final. Department of Education and Training, https://www.education.gov.au/quality-schools-package/resources/regional-student-accommodation-analysis-report-final
The notions of ‘one-size fits all’ and ‘a level playing field’ have always been nonsense ever since HE moved from an elite to a mass system. While the current model is certainly not fit for purpose – unless the purpose is to diminish Higher Education particularly in England – I’m not sure whether another ‘one size fits all’ model’ will work. The sheer diversity of our HE ecology should be one of its strengths, but that diversity requires customised models to ensure each part of that ecology is able to thrive and maximise its potential.
Gavin, thanks — useful insights and I’d agree that these are good ways to increase access in other systems.
Would they work here?
In the UK, unlike in Canada and Australia, short-cycle and commuter study are strongly associated with lower status education.
Wonkhe recently noted that “those who commute to access their learning have a poorer experience throughout the student lifecycle”. And I came across interesting research correlating exclusion from university with cold spots in the UK public transport network which grew organically during the Industrial Revolution compared to more planned approaches in other countries.
Short-cycle tertiary has much more potential (or at least, is much more straightforward to address than UK public transport) to achieve change. Here, however, there are major brand, product and credit-ladder issues to overcome — none of them insoluble, but requiring significant, step-change investment (hence my recommendation on transition). And although I was tactful in my paper, this investment isn’t in the interests of the status quo, as these products would significantly disrupt the current approach.
As you suggest, the primary mechanism to increase participation remains “via college” with the majority of the effect (including in Canada?) achieved through young adult participation. I believe we need to change both these aspects if we are to increase older adult participation, which is crucial to GTER.
Paul, I agree that education should be seen as an ecology and am certainly against one-size approaches.
As I argued in my previous HEPI report, however, UK higher education is not at all diverse. It is mainly theory-based with oligopolistic advantages to a handful of players. There is minimal involvement from the private sector (as compared to the States, for example) and whole-of-education approaches found in other systems (such as practice education) are regarded as specialist and marginalised.
My thesis is that higher education in England is painting itself into a corner i.e. it is diminishing itself. The current system is an awkward attempt to deliver a mass system delivered in elite format. We are well beyond the 15% mark which Martin Trow predicted major shifts in approach, cost and delivery… but have failed to adjust or acknowledge it. This puts at risk elite provision, reduces confidence in mass provision, and makes universal provision unviable except via non-university, non-regulated means.
I wholeheartedly support this vision for a universal education system that is accessible for everyone. When we start from where people are, not where we want them to be, and build a road map which offers clear destinations, this is a route to economic recovery and personal freedom. The challenge with this concept will be to somehow provide the holistic, enriching experiences which underpin language development, critical thinking and creativity whilst not relying on the three year residential model. The important studies which have been done recently on the benefits of student ambassador experiences encapsulate this. With this in mind, I am hopeful that Venning’s architectural sketch becomes a reality.