Bold moves: Three ways UK universities can overcome their financial challenges

It is striking how the pressures facing universities in all regions have changed and intensified. Virtually no institution in the UK, Australia, New Zealand, or Canada is immune from the need to act in ways that, even a year ago, would have felt extreme. This raises the pressing question: what does a sufficient response look like? 

The situation in the UK isn’t necessarily worse than elsewhere, but it remains incredibly difficult. The government’s Higher Education regulator the Office for Students recently estimated that the combined impact of over-reliance on overseas students and an increase in employers’ national insurance contributions would push nearly three-quarters of universities into the red. News stories abound of individual institutions facing the need to save ten, thirty or even fifty million pounds from their budgets in-year.

The mid-term outlook isn’t entirely bleak, and it’s fair to say new opportunities are opening up. In the UK, the national government has indicated a willingness to see fees for domestic students rise for the first time in more than a decade and is showing commitment to supporting the sector in new ways. In return, the government expects significant institutional and sector-wide reform, calling on universities to “act boldly”. But is significant progress on the stickiest of changes to an institution’s business and operating model really achievable? If so, what should be the focus? 

The latest findings from the global UniForum benchmarking and insights programme make interesting and even provocative reading for UK universities. The results simultaneously indicate the scale of the challenge, as well as the fact that institutions in the UK and globally really can make progress on the hardest cost reduction and improvement goals. In this article we share three ways in which university leaders can and should react more boldly in response to the intensified sector landscape. 

Be more ambitious around tackling inefficiency of routine, repeating services.

Analysis of the latest UniForum results shows that universities have achieved real efficiencies and reduction in spend on a fairly narrow range of big-ticket items. These savings have been made in safe activity areas like PA/EA/Reception support, financial processing, and travel administration. On average, UK universities have achieved between 3.5 per cent and 0.5 per cent reduction in spend on these activities every year since 2019, accounting for inflation. 

 

But the data also point to several similarly transactional activities that are crying out for attention. Payroll processing, events management, and many elements of teaching administration are areas of routine, repeating activity where spend could be reduced without compromising service standards.

To take another example, staff recruitment is one area where more advanced UniForum member institutions have achieved sustained efficiencies. The key here is to build in efficient scalability, such that when the institution needs to bring in more professional service and/or academic staff as it grows, the solution needn’t involve increasing the total number of staff working behind the scenes on the process.

What does achieving that kind of scalability look like in practice, for staff recruitment? UniForum members have demonstrated that a business partnering approach where people partners aren’t bogged down in low level issues, combined with a model of enhanced self-service and an appropriately resourced training programme, can lead to a streamlined service with minimal hand-offs and better user experience. Similar lessons apply across many of the other top target services for efficiency improvements.

Tackle the knock-on impact of excessive academic complexity for professional services

The severity of the pressures facing UK universities means that merely looking at core corporate professional services won’t be enough to reduce costs as much as they need to be. Instead, universities will need to look to support services that are closest to each university’s core academic mission, which is to say teaching and research.

These activities tend to be the most complex and challenging to tackle, not least because of their proximity to the core work of the institution. Analysis conducted by NousCubane earlier in 2024 revealed that, in the UK, six of the top ten highest priorities for improvement (from a service user perspective) were in the categories of teaching, student support, or research support services. And yet none of these services were under-resourced, and in fact many of them had 50% or more resourcing than average for the global sector.

Part of the answer is to address the root causes of unnecessary complexity. In the case of academic programme administration, for example, an unhelpful and ultimately unwarranted growth of teaching portfolios not only fails to serve students – Nous’s Balancing Mission and Markets report found that students want far less choice than is normally assumed – but also significantly adds to costs in terms of course materials and administration. Likewise, there is scope to reduce the complexity of research administration where it is driven by a narrow reading of compliance requirements and ways of working that have calcified over time, year-on-year, rather than reflecting true academic priorities.

Be willing to make tough choices around discretionary spend

As well as highlighting opportunities to improve efficiency, UniForum also allows universities to get a much fuller and more realistic picture of where and how much they’re investing relative to their peers (adjusting for scale and research intensity).  

What’s striking here is that, across all the activities in this category, (things that have real potential to boost institutional outcomes), spend has only increased: whether on student support, HR, finance, marketing, management, spend is up. And yet, to take the example of student support, the evidence suggests that satisfaction with these services has actually decreased over the same period that spend has increased. For example, there has been an 11 per cent year-on-year increase in university spend on support around student discipline, and yet virtually no university reports good levels of user satisfaction with this or related services. 

The solution has several dimensions, beginning with the ability of the university’s leadership team to have a mature dialogue, based on reliable evidence, about where to invest while reducing service levels elsewhere. Tough choices will be required. Should activities cease entirely, on the grounds that they don’t fit with the university’s core mission or top priorities? Or should the focus be on simplifying and standardising processes and policies to support leaner services with technology? In addition to this service-level analysis, leadership teams need to be willing to pare back strategic projects in order to focus on those that are truly essential for helping the university navigate the next year or two.

Those who want to remain competitive will act now

While the outlook for UK universities is more challenging than it has been for some time – which is saying something given the past decade of steadily-intensifying systemic pressures – the ability to act on the basis of a truly end-to-end, institution-wide picture of one’s resourcing, in combination with access to cutting-edge insights from UK and global peers, can give universities an indispensable edge.

Get in touch to explore how access to UniForum benchmarking and analytics can provide you with exactly this kind of platform for real progress.