New university finance study reveals contrasting outcomes

Rather than revealing a simple divide between stronger and weaker institutions, the findings point to a range of operating models emerging across the sector, with sharply contrasting approaches to efficiency, scale and financial resilience.

For example, one large research-intensive university is shown to have achieved strong growth, with income rising to more than £1bn. However, the analysis suggests that this scale has not yet translated into stronger operating leverage, with costs rising broadly in line with income and margins remaining relatively constrained.

Another case study in the report, of a recently merged university, demonstrates early efficiency gains following consolidation, with stronger cashflow and improved scale benefits, although integration is still ongoing.

UEL’s own growth is also highlighted in the report as a case study, having undergone a significant financial and institutional transformation, returning to stability after a period of deficit in 2018. Since then, UEL’s income has more than doubled, making it one of the largest universities in London, and it is now one of only 15 UK universities without external borrowing.

Alongside this recovery, the University reports improvements in teaching quality, enterprise activity, rankings and student and research outcomes.

Professor Amanda Broderick, Vice-Chancellor and President of the University of East London, said:

Universities are operating in an environment of profound structural change, but institutions are responding from very different starting points and with very different operating models.

This analysis helps explain why similar levels of institutional growth do not necessarily translate into similar financial outcomes. Scale alone is not enough. Organisational design, operational maturity and the ability to adapt strategically are becoming increasingly important determinants of resilience and long-term sustainability.

We hope the report contributes to a more informed and constructive conversation about how universities evolve to continue delivering opportunity, innovation and public value.”

The report builds on analysis published in a UEL report last month in support of Universities UK’s Transformation and Efficiency Taskforce, which challenged the assumption that increasing student numbers and income will automatically improve financial performance. It concluded that some universities may need to redesign operating models.

The authors argue that greater collaboration (including mergers), shared services, improved use of estates and technology, and closer alignment between staffing and student demand are key to overcoming mounting economic pressure in the sector – as evidenced by the detailed case studies.

Professor Broderick added:

Universities have a responsibility to engage honestly with evidence on performance, productivity and long-term sustainability. Incremental change will not be enough for some institutions. The sector now needs the confidence and courage to explore new models, deeper collaboration and different approaches to delivering value.”

The full report, Advancing Institutional Maturity in Growth, Economies of Scale, Productivity and Efficiency, is available now.