Funding cuts will bring some down but not all will ride into valley of death, v-cs predict

Some universities will "fail or disappear" within the next three years, according to three-quarters of UK vice-chancellors questioned about the outlook for higher education.

Asked about the impact of funding and policy changes, 74 per cent of respondents to the PA Consulting survey say it is "very likely" or "probable" that institutions will fail.

The survey results, published on 5 August, also highlight a widening gulf between senior management and staff, with 60 per cent of vice-chancellors citing their "inability to move or change intransigent staff" among their three greatest internal constraints.

One says: "Our major challenge is taking the whole academic body on to the next phase of the journey, where the skill set, skill mix and working requirements will be very different from those in the past. Some won't be able to make the journey."

The sector is adjusting to the changed landscape brought about by £1.3 billion of government funding cuts and the prospect of even grimmer news in October's Comprehensive Spending Review.

PA Consulting undertook its online survey in June and July this year, inviting 155 institution heads to take part and receiving 43 responses. The results are detailed in a report, A Passing Storm, or Permanent Climate Change? Vice-chancellors' Views on the Outlook for Universities.

Given four options on the likely impact of funding and policy changes, vice-chancellors are most certain about the "failure and disappearance of some institutions". Thirty-one per cent say this is "very likely", while 43 per cent say it is "probable".

The next highest degree of certainty regards "new entrants (for example, private providers) becoming significant competitors in the UK". Some 26 per cent say this is "very likely", while 45 per cent say it is "probable".

Vice-chancellors who have met David Willetts, the Conservative universities and science minister, feel his attitude to institutional failure is markedly different to that of the Labour government, which sought to sustain struggling institutions.

Mr Willetts is said to favour private providers taking over failing institutions.

However, despite some pessimism, 75 per cent of the vice-chancellors surveyed say they expect that in five years' time, their own institutions will be much the same as they are now.

The report also notes: "Two-thirds of respondents felt it very probable or very likely that teaching and research offers will be cut back in the face of reduced funding, although a further third thought this was unlikely."

Asked about their priorities in response to changes in funding, vice-chancellors say that "leading changes in staff culture and working practices" is particularly important. But only three out of the 43 respondents say they are restructuring their top management.

In conclusion, the authors describe a sector that is "apprehensive" but "mostly confident that it will be able to adapt to the new climate".

"There was little reflection here of the predictions of imminent disaster made recently by some sector leaders," they add, a reference to comments made by, among others, Steve Smith, president of Universities UK, who has likened the sector's prospects to a "valley of death".

However, PA Consulting does warn about the sector's reliance on income from non-European Union students, who pay higher fees.

Vice-chancellors say "developing an international presence" is the top priority for responding to funding challenges, and identify "international campuses and partnerships" as the most promising opportunities for the future.

Paul Woodgates, a higher education specialist at PA Consulting and co-author of the report, said prioritising overseas income was "fine at the institutional level, but when you add it up and see that all of those institutions view internationalisation as a top priority, there is a question about whether the market is potentially big enough to sustain that".

Mike Boxall, another higher education specialist and the report's other author, asked whether universities had properly analysed the relative costs and benefits from home and overseas students, with the latter entailing higher recruitment and support costs.

Their comments coincided with the announcement this week of another government review of the student-visa system, after figures showed that the number coming to the UK from non-EU countries rose by a third to 300,000 this year.

john.morgan@tsleducation.com

Read the report in full at www.paconsulting.com/education.