- Mark Taylor is Chief Finance Officer at GuildHE.
The concept of shared services in higher education is far from novel. In my early career, back in 1992, I witnessed the ambitious yet ultimately unsuccessful Management and Administrative Computing (MAC) Initiative. This early experience highlighted the deep-seated challenges the sector faces when attempting to collaborate. The MAC Initiative failed due to a ‘we are different’ culture which hindered standardisation, and possessed a lack of strong leadership and absence of clear governance, which allowed institutional size to dictate priorities, overshadowing mutual respect and trust. These factors still hinder collaboration in higher education, as confirmed by the recent Jisc/KPMG report.
However, the current climate leaves institutions with no choice but to explore innovative solutions, focusing on collaboration and efficient spending, as highlighted by Jacqui Smith’s emphasis on these two areas:
‘These are difficult times for government finances, and there won’t be a large injection of public money. Therefore, there will need to be strong sector collaboration and much more effective spending’ – Jacqui Smith, Monday 20th January 2025
Collaboration opportunities are, however, varied and each model has different governance implications and efficiency and risk/reward outcomes. Institutions must define their objectives, either simply cost reduction or a more strategic shift towards greater collaboration, and look at why and what they can change to find the best legal model to suit their needs.
This blog delves into the complexities of collaboration and cost-sharing, examining the current obstacles and proposing potential pathways forward. It draws upon insights from sector stakeholders, whose perspectives illuminate the challenges and opportunities ahead.
Does collaboration save money?
The initial financial hurdles in collaborative cost-sharing arrangements are often significant. Management time and upfront costs for due diligence and legal fees are substantial. The VAT implications of shared services are frequently misunderstood, adding another layer of complexity, especially when budgets are tight. The relevant legislation focuses on cost-sharing between exempt bodies, not the provision of services from one entity to another. By operating on a non-profit basis and charging members only for expenses incurred, cost-sharing groups can effectively navigate VAT concerns. The BUFDG CSR submission proposes an amendment to allow universities to recharge costs ‘at cost,’ without VAT, recognising these as non-business activities.
Joint procurement initiatives through sector bodies have been successful, as shown by Jisc regional consortia like the Southern Universities Purchasing Consortium (SUPC). Our GuildHE Research consortium demonstrates the tangible benefits of collective purchasing by providing services such as an open-access research repository and HIVE tracker which smaller institutions would otherwise be unable to afford individually. However, the power of monopoly suppliers is a challenge, and procurement alone may not be enough for long-term financial resilience.
Protecting institutional identity
The risk of losing institutional identity through more formal collaborative approaches remains a significant concern, particularly for smaller providers. Structural change is also probably one of the most challenging things for Boards. Boards often take a position around defending the independence of an institution rather than taking a broader view of how collaborative structures could create different futures which need to be evaluated on the basis of student provision and choice rather than out-and-out independence. GuildHE does not believe that a homogenised sector is in the interests of the public, students or industry and will continue to advocate for a wide range of institutional types to be protected within the system.
Group structures are an alternative to mergers, allowing institutions to retain their brand and identity while sharing resources. However, the OfS registration process demonstrates the difficulties in maintaining collaborative structures. Due to inflexible accountability requirements for providers in group structures, the long-standing Conservatoire for Dance and Drama consortium was forced to disband in order to join the register. To alleviate Governing Body concerns, a flexible approach to data and metrics is also required to accommodate short-term risks that may arise from merging two institutions with differing metrics. Regulatory reform is therefore needed to remove barriers to collaboration and innovation.
Learning from Examples: Success Stories and Ongoing Initiatives
Falmouth Exeter Plus, a joint venture between Falmouth University and the University of Exeter, demonstrates the potential of cost-sharing groups, particularly where campus assets are shared, such as library services. In another example, the Luminate Group is a tertiary structure encompassing FE colleges and Leeds Conservatoire. Brand identities have been firmly retained whilst allowing for real cost savings and synergies from integrated operations and leadership. A number of other GuildHE institutions also sit within much larger group structures, whilst retaining their own brand and identity. At a national level, the Advanced Procurement for Universities & Colleges (APUC) in Scotland is providing a model for shared service optimisation. Universities Wales is exploring deeper collaboration, recognising common challenges but potential benefits.
These examples illustrate savings in overheads and cost efficiencies from shared assets and operations within collaborations and group structures. These are more complex and nuanced than traditional straight mergers, but ultimately retain the benefits of specialisation and variation in mission to maintain student choice.
Charting a Collaborative Future: Recommendations
Collaboration is essential for the sector’s sustainability. GuildHE has just launched a series of roundtables and a new development programme for our community to help foster the types of discussions and initial explorations needed to determine how to take first steps towards greater collaboration, including joint procurement channels. There are undoubtedly other organisations in the sector offering similar help and support, which we’d be keen to hear from in our own efforts to role-model greater collaboration.
To ensure a more sustainable future for all institutions, the DfE and the OfS should reform regulatory structures to incentivise collaboration. This will help secure a more stable foundation for institutions and ensure that smaller-scale, specialist, and non-traditional institutions are not overlooked during the deepening financial crisis, which is most acutely affecting larger-scale, multi-faculty institutions. Furthermore, a culture of mutual trust and respect needs to be fostered between institutions and their governing bodies.
As Walt Disney famously said, ‘The best way to get started? Quit talking and start doing.’