The Future of Universities Depends on Protecting What the Markets Cannot

Institutional Excellence is Essential to Preserving Universities’ Public Mission

UK Universities, more than just about any other industry sector, are being asked to sustain the full breadth of their public mission using a funding model that, frankly, rewards only certain parts of it.

That tension sits at the very heart of the challenge now facing UK higher education.

Universities educate future generations, undertake research whose value may take decades to emerge, preserve cultural and intellectual disciplines, widen opportunity and anchor regional economies. Yet, not every single part of that mission can generate enough income to sustain itself.

Some programmes attract strong demand. Others are expensive to deliver. Some produce returns that can be measured relatively quickly through graduate earnings, research income or commercial innovation. Others create cultural, civic or strategic value that markets are less capable of recognising.

That does not make them less important, but it does make them more difficult to fund.

A spirited debate on LinkedIn this week with two emeritus professors helped refine my thinking on this as, I hope, my position did on theirs. The conversation began with the suggestion that universities might need to operate more like businesses. That framing is too crude. Universities are not conventional businesses, and their purposes, responsibilities and timescales are much broader.

The more useful question is whether the present funding and operating models can continue to sustain everything society expects the future of universities to deliver.

Structural Funding Problems

It would be unfair and, indeed, inaccurate to suggest the sector’s difficulties are simply the result of poor management.

Universities have spent years responding to a dizzying array of market disruptors: frozen tuition fees, rising employment and energy costs, pension liabilities, sector regulation, the Covid-19 pandemic, ever-changing visa policies and ferocious competition for students – especially international students. Many institutions have already restructured, transformed, reduced costs and tasked professional services teams with doing more with less.

The deterioration in the funding position is substantial. Universities UK estimates that real-terms teaching funding per domestic student in England fell by 35% between 2015–16 and 2025–26. Funding per student is now worth only 64% of its level a decade ago.

The Office for Students reports that 35.8% of institutions recorded a deficit in 2024/25 and forecasts that 42.7% could do so in 2025/26 without further mitigating action.

These are not marginal pressures that can be solved through another round of small savings. Nor can universities improve their way out of every structural problem imposed upon them.

There is a strong case for rethinking how higher education is funded, especially where disciplines of cultural, social or national importance cannot attract enough students or external income to remain financially secure.

However, the case for funding reform does not remove the need to examine what institutions themselves can influence.

Indeed, the more constrained the funding environment becomes, the more important institutional excellence becomes.

Institutional Excellence Need Not Be a Euphemism for Cost-Cutting

By institutional excellence, I do not mean commercialisation, centralisation or an endless efficiency drives.

I mean the collective ability of a university to fulfil its mission through effective leadership, governance, communication, student engagement, digital capability, financial stewardship and evidence-informed decision-making.

That definition must recognise the complexity in which universities operate. Many are managing fragmented legacy systems, devolved structures and competing priorities with limited resources. Those structures often exist for sound academic and historical reasons, even when they make institution-wide change difficult.

The question is not whether people should simply work harder. In many cases, they are already running at full stretch.

It is whether the institution gives them the joined-up information, processes and authority needed to work more intelligently.

This is particularly important across recruitment, conversion and retention.

Many Universities have already invested heavily in upgraded websites, AI, digital campaigns, CRM platforms, open days, applicant communications and student support. Yet there can still be gaps between the information held by marketing, admissions, recruitment, academic departments, digital teams and the CRM. The future of UK universities will depend on their ability to appeal to more profitable students in addition to attracting their core cohorts.

A prospective student may repeatedly explore a particular programme, attend an event, return to information about accommodation or visas and signal growing interest or uncertainty. Unless those interactions are connected and understood, the institution may continue to communicate with that student as though little is known about them.

An enlightened use of data is not about treating students as sales opportunities or subjecting them to intrusive surveillance. It is about making communication more relevant, timely and useful.

It means recognising when an offer holder may need reassurance, when an international applicant is repeatedly seeking clarity, or when an enrolled student’s engagement begins to decline before their difficulties become irreversible.

The purpose is not to manipulate a decision. It is to remove avoidable friction from an already complex and consequential journey.

Recruitment Helps Protect Academic Breadth

This brings us to the central proposition:

Every student unnecessarily lost across recruitment, conversion and retention reduces a university’s ability to sustain the parts of its mission that markets alone can never protect.

This is not an argument for eliminating all attrition. Students have multiple choices. They change direction, encounter personal difficulties or decide that another institution is better suited to them. Some losses are inevitable and entirely legitimate.

The issue is unnecessary loss: a suitable student who might have enrolled or continued but did not because communications were poorly timed, information was difficult to find, systems were disconnected or warning signals were not visible to the people able to respond.

That loss is not confined to a recruitment target.

It affects the financial headroom available to preserve subject breadth, maintain specialist teaching, support research, widen participation and sustain programmes whose importance cannot be judged solely by application numbers.

This changes how recruitment should be understood at the executive level.

Recruitment is not simply an administrative process that fills available places. Conversion is not merely a marketing metric. Retention is not solely a student services responsibility.

Together, they form a part of the university’s capacity to preserve academic breadth.

That does not mean every programme must be justified by its immediate financial return. Quite the reverse. The argument for stronger recruitment, conversion and retention is partly that they can help protect activities that should never be judged on financial return alone.

Screaming Excellence From The VC’s Office Outwards

There is another area within the sector’s influence: how confidently British universities communicate their value.

The UK possesses many genuinely world-class institutions, departments and researchers. Yet British culture can be wary of making bold claims, while international competitors, particularly in the United States, are often more energetic in explaining what makes them exceptional.

Excellence does not always speak for itself, especially to an international applicant comparing institutions, countries, visa regimes, career prospects and costs from thousands of miles away.

Universities need to explain more confidently why their programmes matter, what makes their academic communities distinctive, how students benefit and what contribution the institution makes beyond its campus.

This isn’t an empty promotion. It’s part of stewardship, essential for the resilient future of universities.

International recruitment also matters far beyond the university balance sheet. Research published by HEPI and Kaplan estimates that the 2024–25 cohort of international students will generate a net economic benefit of £40.4 billion for the UK over the course of their studies. The same analysis estimates that the fall in international student numbers since 2022–23 reduced the potential economic impact of the 2024–25 cohort by £2.9 billion.

When the UK fails to attract a qualified international student, the consequences are therefore not confined to one institution. Local businesses, employers, research ecosystems and regional economies all lose part of the potential benefit.

Universities as Regional Productivity Hubs

Agglomeration is not simply about placing good organisations near one another, as with the N8 cluster of Universities. Its value comes from connection: people, institutions, capital, transport, research, and markets becoming more productive because they operate as part of a functioning system.

Universities sit at the centre of that system. They attract talent, create knowledge, support innovation, generate spin-outs, work with employers and give regions an international profile.

But mere presence alone does not automatically create agglomeration.

A Collection of Excellent Institutions Does Not Necessarily Mean an Excellent “System”.

The additional value emerges when universities connect more deliberately with one another, with further education, employers, investors, local government and regional leadership. This reflects the productivity and connectivity thinking associated with Lord O’Neill’s Cities Growth Commission and the development of the Northern Powerhouse proposition.

The N8 universities, for example, represent an extraordinary concentration of research and talent. Their research, knowledge exchange activities, and institutional expenditure were estimated to generate £18.8 billion in economic impact in 2021–22.

Their larger potential lies not only in each institution becoming stronger independently, but in those assets operating more effectively as a connected productivity platform.

That requires institutional strength. A university preoccupied with short-term financial survival has less capacity to collaborate, take risks, build long-term partnerships or contribute fully to regional transformation.

Recruitment resilience, academic breadth and regional productivity are therefore not separate conversations. They are connected parts of the same operating system.

A New Contract for a Future Higher Education Landscape

The government cannot reasonably expect universities to preserve every dimension of their public mission while relying upon a funding model that recognises only some of its value. Equally, the future of Universities cannot be controlled by funding policy, visa rules, demographic change or every decision made by prospective students.

They can continue to strengthen the areas within their influence: how clearly they communicate their value, how intelligently they use data, how effectively their teams work together and how quickly they recognise when a student needs better information or support.

That is not commercialisation.

It is stewardship.

Marvel@salesmarvel.co.uk