Four ways universities could restructure to power UK economy
A new study from Nous Group has highlighted how UK universities might survive their current financial difficulties. Cooperation, specialised research, industry-links and diversity could help them to weather the present storms, and come out stronger for it.
The marketisation of higher education in the UK is a process which has been unfolding gradually for 25 years, now. Initially, the move was argued as offering universities a route to reducing government spending on higher education – with less than half of the population availing themselves of it – while opening up new revenue streams for universities to boost innovation.
However, the loans that the UK state brought in to allow students to pay for courses upfront is largely unpaid. Meanwhile, the flow of international students – initially identified as a cash-cow for the sector, as their fees were not subject to the same caps as domestic students – has been disrupted by the Covid-19 pandemic, geopolitical tensions, and the rising academic prestige of other higher education markets like China.
As finances stretch thinner and thinner in the sector, the Office for Students (OfS) has warned that as many as 72% of UK universities could be operating at a deficit by the 2025-26 academic year. With September’s first semester just around the corner, some institutions might face cash flow constraints so severe that they may only have enough funds to cover one month’s worth of expenses, including staff salaries. Meanwhile, as the financial situation worsens, the OfS has suggested that course closures and even mergers between universities may become commonplace, in order to achieve financial stability.
Amid this, a new study from higher education consultancy Nous Group has identified four potential paradigms for the future. Outlining these, the authors claim each path could enable UK universities to “continue to deliver transformational benefits to the UK and the world”.
Four paradigms
Regional Coopetition
Nous predicts universities in this ‘paradigm’ will be able to succeed by focusing on delivering greater prosperity across its region, and reducing inequities through sharing of resources. Universities will address funding gaps by collaborating with the wider skills and education ecosystem – even with traditional competitors such as other universities – while being embedded in local priorities and systems.
Pointing to an example of this in action, Nous noted the Brighton and Sussex Medical School (BSMS) – an equal partnership between the universities of Brighton and Sussex, admitting approximately 200 undergraduate students annually. This arrangement “ensures each university avoids unnecessary duplication” – sharing teaching and research infrastructure across both universities’ Falmer campuses, allowing each to avoid building the same facilities across their campuses. Similarly, the curriculum was co-created by both institutions, allowing each to distribute degree development costs.
Knowledge Superpower
The second ‘paradigm’ of Nous Group is that universities will position themselves to “lead the world in innovation and impact”. This will constitute a concentration on “research specialisms and bolstering investment in areas of excellence”.
Nous used Imperial College London as an example of what this might look like. One of the few universities which has not made headlines for a cuts programme, most of Imperial’s research was already focused primarily on science, engineering, medicine, and business – aligned to a purpose as a science and technology university. Meanwhile, unlike other comprehensive universities, Imperial only conducts limited pure humanities research – meaning it was better-positioned for marketisation, as it both was able to sell on its developments to industry, and demonstrably funnel talent into the business ecosystem. This is helped by the fact it had the eighth highest research quality score in the 2024 Times Higher Education (THE) rankings.
Industry 5.0
Nous Group predicts that another ‘paradigm’ may see universities increasingly focusing on delivering a talent pipeline that “industries of tomorrow” find attractive. Meanwhile, focusing on research with clear routes to monetisation will help to build deeper partnerships with business and government, “developing new models of education and training, and accelerating translational research”.
At the heart of this is the University of Sheffield. In October 2024, reports noted departments in range of severances included civil engineering, materials engineering, journalism, and many more. The university has previously also jeopardised its more marketable STEM lines too – including suggesting 100 jobs in the nuclear research centre could be cut.
However, Nous asserts that the University of Sheffield is also finding opportunities to lead elsewhere. Its Advanced Manufacturing Centre boasts a network of 70 universities and more than 1,000 companies of all sizes, and is home to 500 researchers and engineers working on the manufacturing needs of the future. Forged through “a deep and enduring collaboration between leading researchers and industry”, Nous praised the centre’s work to “translate academic research for tangible, real world impact – and do so faster”.
The success of this precinct has reinforced the university’s commercialisation areas of focus, embedded through its ways of working and talent development structures. This has included redesigning a promotion system to reward entrepreneurship and accessing venture capital funding with other leading universities with complementing research capabilities.
Inclusive Communities
Finally, Nous points to inclusivity as a way universities might boost their prospects. Finding ways to appeal to formerly marginalised students advances social mobility, while also improving ties with local organisations, who are also looking to diversify their workforce. According to Nous, this could see a university focus on “empowering students to maximise their potential”, while also addressing long-standing social inequality, by establishing a new compact with learners of diverse backgrounds and championing inclusion through teaching, research, and engagement.
Nous considers the University of West England a key case study for this. UWE has standardised flexible study arrangements across its courses, and UWE runs multiple intakes for select subjects to improve the accessibility of these courses. For instance, the university runs six-to-eight intakes a year for policing and four-to-six intakes for nursing. Similarly, UWE has implemented a standard part-time course architecture across its courses to allow students to better balance work commitments, with lectures and tutorials for each module are held on the same day each week, minimising the number of days students spend away from the workplace. This is particularly critical for UWE given many of their students work while studying.
As summarised by UWE Vice-Chancellor, Steve West, “the concept of a full-time student is not real [at UWE]. The vast majority are working 20 hours a week. Many are working 30 plus hours a week.”
Paradigm shift
Nous’ researchers made it clear that none of the ‘paradigms’ were mutually exclusive. Instead, they consider them complementary, as though some universities may feel “more inclined to pursuing one direction over others”, embracing the opportunities of each could mean “universities can establish a strong foundation for social impact and change across the UK and beyond”.
As more universities pivot toward offerings which they find more profitable, and less strenuous on their bottom-lines, this may provide an opportunity for a deepening of STEM knowledge in the UK, something which businesses and the government have long decried as too shallow to staff the future digitalisation and decarbonisation of the economy. However, some observers of the higher education space are concerned it could also lead to a narrowing of subjects available to all students.
Looking at the University of the West of England, again, the institution does offer a different route into higher education from the traditional university path. With courses designed around flexibility, working class single-parents and adult learners – who might not be able to afford studying without working alongside – can find an alternative path to a university degree that might otherwise have been denied them. But while courses designed to funnel them into conventional roles such as nursing or police work will be available to them, other interests have become decidedly off-limits.
A long-standing fear among critics of university marketisation is that certain disciplines will fall by the wayside, or become the preserve of the most elite, expensive universities – because they do not demonstrate “industry-relevant education”. Pre-dating the current crunch, the University of East Anglia made headlines in 2011, when it announced it would be cutting its famous music school – while it was investing in an increasing focus on its business and science output, that it perceived as more sustainable in terms of profit. More than a decade later, the university is now contending with an enlarged deficit – which according to union representatives there, saw 31 of 36 initially planned cuts aimed at the arts and humanities department.
