WEEKEND READING: More than a market: what the financial crisis reveals about UK higher education

This blog was authored by Dr Andra le Roux-Kemp, Associate Professor in Law at the University of Lincoln and a DBA Higher Education Management student at the University of Bath.

In the UK higher education sector, the prospect of a higher education provider failing is no longer hypothetical. Universities are making difficult decisions about staffing, course portfolios and long-term sustainability, while policy makers and sector leaders have begun discussing mergers, strategic collaboration and the possibility that some providers may simply not survive in their current form.

Yet, amid these debates, one reality has become increasingly difficult to ignore: although universities are routinely described as competitors in a higher education market, few would seriously argue that every university occupies the same position in the sector or would be regarded in the same way were its future threatened. It is instead widely accepted that UK higher education providers are unlikely to converge on a single institutional model and that common funding arrangements, shared evaluation frameworks for teaching and research and standardised performance metrics have created an appearance of homogeneity, rather than a level competitive field. These observations reveal the limits of the market narrative that has dominated higher education policy for more than two decades. They suggest that the UK higher education sector is shaped as much by long-standing institutional relationships and differences between universities as by market competition.

Competitive markets are generally understood to reward performance rather than pre-existing position. Competitors may differ in size and resources, but they are assumed to compete on broadly equal terms, with success depending on how well they perform rather than where they stand in the market. The UK higher education sector, however, has never fully conformed to such a market model. Higher education providers differ not only in their missions, student populations, and research strengths, but also in their histories, reputations, the institutional networks to which they belong and their standing in the sector. These characteristics shape how providers are perceived across the sector, and influence opportunities for collaboration, access to resources, and the roles different universities are expected to perform. Competition therefore undoubtedly exists, but universities compete within a sector where long-standing differences already shape the opportunities that are available to them, long before they compete for students, research funding, philanthropic investment, academic talent, strategic partnerships, reputation and influence.

These long-standing differences between universities have developed over decades through institutional histories, missions, research strengths, professional relationships, and the ways in which higher education providers have come to recognise one another’s standing in the sector. They are neither random nor explained solely by how well universities perform. In my research, I use the concept of clubs and clans to describe communities of higher education providers that share history, mission, prestige or purpose (clubs), and the relationships of recognition, trust, and affiliation that develop between those communities (clans). The Russell Group provides an obvious example of a formal club. Yet, many of the relationships that shape the UK higher education sector are far less visible because they have developed informally over time rather than through formal membership. Universities with similar histories, missions, or disciplinary strengths often collaborate, benchmark themselves against one another, recruit from similar pools of staff and students, and look to one another as peers. It is these overlapping and often informal relationships that I describe as clans. What the idea of clubs and clans therefore captures, is that universities do not simply compete; they also belong.

Viewed from this perspective, the current financial crisis affecting the UK higher education sector is more than an economic challenge; it brings into sharper focus how the sector is organised. For example, when higher education providers experience financial distress, the discussion rarely centres on financial performance alone. Instead, debates tend to invoke questions of civic importance, research capacity, regional impact, international reputation, specialist expertise, and strategic value. We ask questions about: What knowledge would be lost? Which professions would lose a training provider? What would happen to the local community? What research capability would disappear? These are entirely legitimate questions to ask, but they also reveal something important: we value universities by much more than their financial position. Instead, we also ask what different universities contribute to the higher education sector and to society more broadly. These are not simply market considerations; they are judgements about institutional value and significance. As Simon Marginson has argued, higher education is characterised by positional competition, in which institutional value depends not simply on absolute performance but on relative standing. Periods of financial constraint make these positional distinctions more visible because they shift attention from institutional performance to institutional significance; from what universities achieve to what they (can) contribute, represent, and sustain. Financial crises therefore do not create differentiated institutional positions; they reveal the way in which the sector is already organised.   

Recognising that competition takes place within an already differentiated higher education sector does not require abandoning competition as a principle of higher education policy, nor does it imply that the differences in institutional standing are inherently undesirable. Diversity of mission, expertise, and institutional identity are among the sector’s greatest strengths. It does, however, suggest that policies based on the assumption of a level competitive field overlook an important reality: universities compete in a higher education sector already shaped by history, reputation, and long-established institutional relationships. Financial sustainability, regulation and sector reform therefore cannot be understood through market logic alone. They must also recognise the long-standing relationships that shape how universities compete, collaborate, and are valued in the sector. Sir Chris Husbands’ recent HEPI report New Choices argues that the English higher education sector has reached a point where long-established assumptions about the sector can no longer be sustained, and difficult decisions about its future can no longer be avoided. Those decisions are undoubtedly necessary. But before deciding what kind of higher education sector the UK needs, we should first be clear about the kind of sector we already have.

For more than two decades, higher education policy has been framed largely through the language of markets. The current financial crisis suggests that this language captures only part of the story. Universities do compete, but they also belong to enduring communities of institutions with shared histories, missions, and relationships that continue to shape their opportunities, networks, and standing in the sector. If the current crisis reveals anything, it is that UK higher education has always been more than a market.