UK HE sector faces unprecedented challenges

 

The UK HE sector is facing a number of external challenges including a reduction in student numbers, the enactment of the Higher Education and Research Act and introduction of the Teaching Excellence Framework.

 

The 2015/16 HEFCE report into the financial health of the sector reported last year that significant variations in the financial performances of individual institutions continue to increase, with the main financial strength remaining in a small number of institutions. Forecast data from July 2016 shows that the sector is projecting a significant rise in overseas income, to reach £4.8 billion by 2018-19, although increasing competition from other countries and proposed changes to student immigration rules suggest these projections may be difficult to achieve. This would have a significant adverse impact on the sector's surplus projections and ability to borrow.

 

Student numbers are declining and UCAS application data for the 2017-18 cycle highlights a 5 per cent decline in UK applications and a 7 per cent decline in EU applications, relative to the same point in the previous year. Whilst the HE sector has shown itself to be adaptable to a more competitive and uncertain environment there are significant challenges ahead and the growing uncertainties faced by the sector will inevitably lead to  a greater focus from investors on the underlying financial strength of individual HEIs.

 

Risks are also growing in relation to EU, international and home recruitment and in relation to inflationary cost pressures such as rising construction costs. Pension liabilities also look set to rise across the sector following outcomes of triennial reviews of two of the sector's major pension schemes: USS and LGPS. The sector faces some significant uncertainties arising from Britain's forthcoming exit from the European Union, the full impact of which is not yet known.

 

It is in this context that many HE organisations need to address key issues in its financial planning and management, including:

 

· Income has fallen as a result of student numbers falling

· Costs have not fallen in line with this, resulting in a financial deficit which is not sustainable

· General volatility in the sector e.g. the HEFCE report states that universities' growth plans across the sector exceed the likely number of available students and they have concerns around financial sustainability in the sector.

 

These are undoubtedly uncertain times for the sector but whilst cost cutting may be required in the short term, it is important to ensure that at the end of a redundancy programme there remains a sustainable organisation with enough flexibility and expertise in the workforce to cope with fluctuations in demand and will be able to identify and handle new opportunities when they present themselves.

 

About Clifton HR and its work in Higher Education

 

There are incredibly difficult challenges facing the sector and this will undoubtedly continue with an unstable political climate and Brexit looming. Clifton HR has built up a portfolio of working with Higher Education organisations to deliver change programmes to prepare for the future.

 

If you would like any further information about us or would like to discuss challenges your organisation is facing then please get in contact with us.

 

Contact us

 

If you would like to discuss how we can help your organisation please contact us on 01892 531110 or mail@cliftonhr.co.uk