Will 2018 be Armageddon for some British universities?

It’s been coming for a while. The HEA. Higher Education Armageddon. Forecasters have been saying for years that the UK has far too many universities but growth in student numbers fuelled their survival, and the doom-mongers slunk back into their holes. 

Now, we have the perfect storm. Lower-ranked universities continue to see their applicant numbers plundered by those further up the tables. Nervous universities are making unconditional offers to shore up their tuition fee income. And many high- ranking universities have gone into Clearing for extended periods, softening their tariffs for short-term volume, despite the longer-term consequences. Then, in the very same year that we voted to make ourselves a less attractive place to study for EU students, the long-awaited demographic contraction has well and truly kicked in. 

UCAS applications for 2018 entry will likely be almost 250,000 down on 2016, and over 100,000 down on last year. The golden years have come to an abrupt end, culminating in 2017, the sector’s annus horribilis, with public controversy about tuition fees, Vice-Chancellors’ pay, higher education value for money and the level of student debt. Not that you’d ever have guessed if you’d been reading the press releases from the Russell Group or UUK.

British universities have used the last decade to grow their numbers, grow their infrastructure and grow their debt, without any thought to the old stock market adage that what goes up, must come down. Money was cheap, growth seemed unstoppable, and hubris infected the entire sector. In short, they have been over-trading, and now that the market is in decline, many are in trouble.

With 70% plus of their income now coming from tuition fees, and with little or nothing in their piggy banks, many Vice-Chancellors must now either be contemplating corporate contraction, early retirement or both in 18/19. What goes in, goes out - they’re running on empty. It’s going to be a tough few years, especially for the 20 institutions that HEFCE have apparently got on watch, though even some highly-ranked, highly-geared universities must be looking askance at a much hairier future.

With the about to be launched Office for Students claiming that they’re not going to bail out failing institutions, it seems likely to me that what happens in the private sector will begin to happen in the higher education sector. The strong will take over the weak. The confident will absorb the nervous. And if we’re not very careful, the survivors of the Titanic will be picked up by the Hindenburg. (Apologies to Chris Wilkins).

Having grown up in a collaborative world, British universities have only had half a decade to learn how to compete. But since academic status is driven by research rather than teaching, it is hardly surprising that so many medium and lower ranked universities continue to bang on about their research as if they were founder members of the Russell Group, when the truth is that their teaching income is 50 times greater than their research income.

If you play to your competitor’s strengths, you lose. And that is why so many universities are in trouble. They’re playing the Russell Group game, when their real strengths lie in teaching and vocational provision. What they need to understand is that all students are not the same. That there is a huge number out there who want high quality vocationally-driven courses, delivered by institutions with close links to their local communities and businesses. The sort of courses that research-driven universities neglect, because traditional academic courses are snobbily accorded higher status than vocational. 

The sector has been suckered by the Rankings merchants, and in the Rankings game, there will always be more losers than winners. 

Better to understand your particular student market. All students are not the same. What do yours really value? What do they want from tertiary education? Where do they want to be in ten years? How can you deliver a differentiated experience, relevant to their needs? What is your competitive advantage? In three words, why should they choose you over competition? All this comes down to is that you should compete on your own ground, rather than pretend that you’re something that you’re not. 

When was the last time you talked to your prospective customers? Not with quantitative surveys but by going into schools and talking to Year 11s and 12s, individually and in groups. Employing professional qualitative researchers to deliver an objective un-rose-tinted view, then listening to what they say. 

If you want to compete and prosper, the first step is to understand your customers better than your competition. Then deliver the programmes and experience that they will really value. 

Hush, but this is ABC ‘marketing’. The winners will be those that get it. The losers will be those who carry on as if the world hasn’t changed. For them, Armageddon beckons.