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As the dust settles… thoughts on the Browne Review…

January 17, 2011

Universities have survived some of the most fundamental changes of any industry, and have done so largely intact, demonstrating a great capacity to absorb the impact of really quite major shifts in policy, funding and demand. However, the proposed changes following the Browne Review are different. The cuts in the HE budget and the transfer of funding the cost of funding undergraduate education will bring about a different order of change and some universities will be less able to respond to the challenge.  In essence,

  • Lessons from the past will provide complacency rather than a roadmap.  Universities will face unprecedented challenges, in supply, demand, competition and in their cost base.
  • In the past Universities have responded to change through market expansion, this is set to become more difficult as they will face for the first time in the UK, genuine and unprecedented competition from private providers. For those universities most vulnerable to competition, there will need to either successfully diversify their income bases or restructure their cost base, or both.
  • This change will happen relatively quickly for a sector used to longer-term planning and positioning. The nature of the change will take some institutions by surprise.  Universities will find it more difficult to predict and plan for demand, and unpredictability will destabilize their core income streams against a high and often rigid cost base.
  • Most universities will set fees close or near to £9000, which on the surface will benefit universities by £2600 per student[1]. However, the concept of price and return on investment will permeate choice in the sector. Price competition in the form of discounts will become a factor in student recruitment. Turbulence will lead to discounting among those universities with a higher dependence on teaching, affecting margin.
  • The overall market for undergraduate education will remain stable,[2] but there will be more e scrutiny on the value of universities provision. Reputation will become more precious and jealously cultivated. However, scrutiny is likely to be partial, with universities with high reputational value more immune to potential brand damage.
  • Demand will be more varied and universities will be more likely to respond by changing delivery modes, in part being forced to provide more flexibility than exists in their current provision.


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