WEEKEND READING: Can’t cut, can’t grow: what does resilience look like?

This blog was kindly authored by Susie Hills, Education and Research Consulting Senior Director at Huron.

Across UK higher education, ‘transformation’ is now one of those words that appears everywhere and means almost anything. Institutions are restructuring, redesigning services, reviewing portfolios and revisiting assumptions that would have felt settled not long ago. But amid the financial pressure and regulatory scrutiny, one question still matters more than most: what actually counts as transformation, and what is just reaction dressed up in better language?

This is not a short-term wobble or one bad cycle. It is a structural problem, and it is becoming harder to pretend otherwise.

The latest Financial sustainability of higher education providers in England 2026 from the Office for Students shows that 35.8 per cent of providers reported a deficit in 2024–25. That is slightly better than expected, but it is hardly reassuring. More striking is the extent to which the regulator is now saying openly what much of the sector has been reluctant to say to itself: too many institutions are still relying on optimistic assumptions about future growth, and that may be getting in the way of the harder changes that are needed.

The recruitment numbers show why. UK entrants rose by 3.5 per cent in 2024–25, but still came in 8.6 per cent below forecast. Non-UK entrants fell by 7.7 per cent, 9.0 per cent below forecast. And yet the sector is still projecting growth of 19.9 per cent in UK entrants and 22.5 per cent in non-UK entrants by 2028–29. The OfS modelling makes clear how exposed that leaves providers. In a ‘no growth’ scenario, 163 providers – 58.4 per cent of the sector – would be in deficit by 2028–29. In the most severe scenario, that rises to 196 providers, or 70.3 per cent. This is not just a problem of individual providers overreaching. It reflects a sector with little room for error, where unrealistic growth assumptions now carry much greater consequences. For some institutions, the harder question is whether growth assumptions are still doing too much of the strategic heavy lifting.

Nor is that concern confined to the sector itself now. The House of Commons Education Committee warned in May 2026 that higher education faces a real risk of institutional closure, and criticised the lack of any clear government strategy for handling provider failure. That matters because the consequences are not contained within one balance sheet or one campus. Universities are employers, partners, anchors in local economies and public institutions in their own right. When they become unstable, the effects spread well beyond the institution itself.

In response, many universities have done what was immediately available: cut costs, restructure teams, pause investment, reduce activity, or a combination. In some cases, that is unavoidable. But cutting is not a strategy in itself, and it should not be mistaken for transformation. Universities know how to cut. The question is whether they are prepared to redesign.

As Professor David Maguire has put it, making deep and repeated cuts is really difficult. Those decisions may buy time, but they also narrow capacity, unsettle staff, and make the next round of choices even harder. That is not renewal. It is erosion.

Universities cannot cut their way out of structural challenge. But neither can they simply hope, recruit, or diversify their way out of it without confronting some more difficult choices. Higher education is an interconnected system. What looks like a saving in one part of the institution has a habit of turning up elsewhere as cost, risk, or underperformance. Cutting student support may reduce costs quickly, but even a small drop in continuation, completion, or satisfaction can quickly outweigh the apparent saving. Reducing academic or professional capacity may steady one year’s budget while increasing next year’s regulatory, delivery, or recruitment risk.

Part of the reason this keeps happening is that the underlying model is under so much strain.

In England, the real-terms value of undergraduate fee income has fallen sharply since 2012–13, while staff costs, estates pressures, pension obligations and digital infrastructure demands have continued to rise. The OfS figures show operating cash flow improving to 5.4 per cent of income in 2024–25, but dipping back to 5.1 per cent in 2025–26, while liquidity remains tight. Restructuring costs rose by 20.7 per cent to £218.2 million. None of that points to a sector with spare headroom.

What often gets missed is how much sits behind the core teaching offer. Careers support, wellbeing services, libraries, digital platforms, compliance, estates, and student administration all sit behind the teaching offer. Universities have carried those costs for years through cross-subsidy, efficiency, and in many cases, international fee income. That space is narrowing.

So, the question is no longer just where to cut next, but what an institution needs to keep doing well if it is to remain viable and credible.

That means confronting questions many institutions have been able to postpone. What capabilities will matter in three to five years’ time? Which activities genuinely support student success, financial sustainability, and regulatory confidence? Where are resources spread too thinly to make enough difference? What should stop? What should be protected? And what needs to be reimagined and rebuilt rather than salami-sliced again?

One of the habits the sector has not quite shaken is short-term realism followed by longer-term optimism. The OfS points to the familiar pattern: caution in the near term, then increasingly ambitious assumptions in later years. If those assumptions do not materialise, the problem does not disappear – it simply arrives later, often in worse shape.

Cost control still matters. Of course it does. But resilience will not come from cost reduction alone. Institutions need to widen the range of responses they are willing to consider: revenue diversification, targeted investment, deliberate reallocation of resource and much more serious thinking about collaboration. That includes more sustainable forms of growth, such as transnational education and international partnerships. But these are not straightforward answers either. TNE can diversify income and extend reach, but it also brings long lead-in times, partner dependence, regulatory and tax complexity, and uneven returns. It is not a plug-in replacement for a weak domestic model.

Shared services, joint infrastructure, deeper partnerships, and in some cases, mergers have too often been treated as exceptional or unpalatable. That position is becoming harder to sustain. Universities UK has already started making that case more directly. For some institutions, resilience is now likely to depend on a greater willingness to share, combine, or redesign parts of the institutional model that were previously treated as fixed.

Professor Chris Day put the point clearly when he said that reserves might help absorb short-term shocks, but cannot remove the need to restore balance between costs and income over the longer term. That is the issue now. Not how to get through one more cycle, but how to restore a model that is viable enough to sustain mission, quality, and public trust.

None of this is easy. But ‘hard’ is not a reason to keep postponing choices. Every decision comes with costs, and some choices will be unpopular, however well argued they are. But resilience is not usually undermined by imperfect decisions. More often, it is undermined by avoided ones, delayed ones, or ones simply taken so late that they leave room for nothing other than emergency action.

The hard part is not spotting the problem. It is acting quickly enough to do something more impactful than another round of cuts. For many institutions, that means being much clearer about what they are trying to protect, what they can still do well, and what has become harder to justify. It means testing assumptions properly, being more realistic about growth (or shrinkage), and being willing to radically rethink parts of the operating model before the room for manoeuvre narrows further.  It means building a comprehensive set of choices. Not easy choices, and not always comfortable ones, but choices focused on long-term resilience.

These complex choices can be about a range of things. Sometimes that is about redesigning operating models or portfolios. Sometimes it is about planning, assumptions, governance or collaboration. But the underlying question is constant: if universities can no longer simply cut or grow their way out of this period, what would leave them stronger, clearer and better able to cope with what comes next?  What would make them resilient for the future?