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UK Universities - What lies ahead

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Here, HSBC UK’s new Head of Education and Not for Profits Leo Jones, considers some of the key challenges facing the higher education sector now and in the future.

Demand – Domestic and International

We are now firmly in the decade of domestic 18-year-old growth. Attracting and accommodating this surge in numbers will see a huge battle among a number of universities. Those that simply wait for students to turn up will fall behind those that take a more proactive approach. There is also the play off to consider between domestic growth and financial benefit as inflation will continue to eat away at the real terms income that domestic students generate. Likewise, the drive to increase international cohorts especially from growth countries such as India has begun.

ESG

Driving ESG benefits across estates, course content and civic duties will better equip graduates heading into the workplace whilst leveraging the outstanding research capabilities of our universities will help the global effort in finding long term sustainable solutions. Our universities, are going to be fundamental to the global effort to protect the environment.

Funding these changes will be vital and sustainable finance is a key discussion point with our clients. As energy bills continually increase with inflation, the move away from fossil fuels towards green solutions becomes increasingly affordable. We are already seeing societal attitudes change as sustainability moves from been a nice to have to green as an affordable option for all.

Financial Sustainability

Ongoing financial sustainability sees a battle between investing in growth and managing the rising cost of teaching, salaries, pensions and building materials. This is especially true given inflation and a fixed domestic undergraduate fee continues to see real terms decreases in the income of universities. The fee reductions off the back of the Augar review are increasingly unlikely, as are increases to fee levels. Delivery will continue to be entwined in this fee level as the government moves away from the arts, yet the lower cost to deliver makes these courses increasingly attractive to universities.

Pensions

Defined benefit schemes need to see an overhaul as a balance should be found between benefits to members but affordability to the employers to create ongoing sustainability of these often generous schemes.

Safeguarding

Sexual harassment, rape culture and mental health concerns are increasingly prevalent and of utmost importance to ensure students and staff are kept safe, have a safe route to raise concerns and have the correct and appropriate actions or support in place should such instances occur. Universities can be in a tough position when their 18yo+ students raise concerns, and there becomes a blur between compliance and culture. However, it is the responsibility of institutions to protect and create a safe environment for their students.

The Future of Learning

Covid has driven short term changes, some of which will turn into permanent fixtures across the educational landscape. The move to digital will form a long-lasting element of teaching however the blend between in person and digital will continue to evolve. How digital is enhanced through the gamification of learning, the interactivity and the quality will become an ongoing theme as some strive for economies of scale and global reach whereas others will stick to doing what they do so well already and invest in their physical proposition.

Student retention

Making sure students have the correct abilities for their courses and the ongoing support to ensure they can complete these studies is going to be increasingly in focus. The challenge that Covid and teacher assessed grades brought alongside digital learning and a different student experience is the increased risk of students failing to complete their studies. This is likely to be first seen in January dropout rates, and may result in an investment in student support systems as the impact on OfS metrics and finances of universities can be significant. Of course, it is also important that these students receive the right support to keep them safe throughout their time at university without the additional stress that these challenges may bring.

Government Policy

Fee levels, student number caps, grant funding, entry criteria and a raft of legislative impacts could come into play. However, there continues to be a drive to quality and ensuring graduates are equipped with the skills needed to drive the economy. This was seen in the latest consultation launched by the OfS. It may at times go in circles, but will also evolve and our sector is agile enough to deal with this and continue to thrive. The UK Higher education sector is a flagship export and one the government will strive to protect. There is also the politically sensitive nature of student voters to consider and the need to protect our higher education quality and global position remains a key priority.

Course rationalisation

As inflation and a fixed fee strikes at the financial resilience of an institution it’s important to focus on the balance between the offering an institution provides and the financial sense it makes. Where some courses don’t deliver financial results there needs to be a decision as to the growth or even the retention of such a course. For those that are profitable and in demand, actively growing expertise and these cohorts are sensible options when looking at rationalisation and streamlining.

Widening participation

Higher education isn’t just for those that can afford it and ensuring fair access and financial support for those who need it will continue to be important. Fair access to all demographics across society irrespective of background creates a diverse student population and subsequently a diverse workforce which brings new ideas, new skills and growth going forward.

As short term challenges play out and strategies evolve to include the ever changing medium and longer term themes, leadership teams will be keeping a close eye on some of the topics detailed here along with keeping a huge number of other plates spinning. It will continue to be interesting to see how each of these play out and how our agile institutions evolve with them.

I look forward to speaking to you on these topics and others.

Leo Jones | Sector Head | Education and Not for Profits | HSBC UK

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