2016/17 Higher Education Finance Directors Survey
Investing to compete
Deloitte, in partnership with Universities UK, have surveyed senior finance leaders across the sector to produce our latest report, Investing to Compete.
The UK higher education landscape is constantly changing, influenced by legislative reform, new entrants as well as innovative new technologies and delivery models. As a result we are seeing a continued decline in optimism amongst university finance leaders. However the good news is that the sector remains strongly committed to growing student numbers and investing in the learning experience.
Key findings and trends
In a time of uncertainty, it’s more important than ever for institutions to have:
- Plans in place to respond to a range of potential outcomes
- Develop strategies to deliver the best possible student experience
- Compete successfully in the domestic and global market for students
- Manage their finances effectively.
A challenging climate
In last year’s report, we highlighted that the sector appeared to be more uncertain and risk averse than in the last two years
The four major emerging risks for the next 12 months:
- Consequences of Brexit
- Reductions in overseas students, as a result of future policies on immigration
- Regulatory environment changes
- Pension liabilities
However 69% of HEIs affirmed that their investment priorities have remain unchanged, with a strong commitment to investing in the student experience.
Is now the time for increasing risk?
62% of HEIs feel that now is not a good time to be taking greater risk onto their balance sheet, with research-intensive HEIs more risk-averse than others.
Responses showed that those HEIs who had invested in previous years, and taken on more risk onto their balance sheets over the past 12 months, were less likely to want to take on more risk going forwards. Those institutions that did say they were looking to take on greater risk in the next 12 months, felt that investing in digital teaching and learning technology was a particular priority.
62% of HEI's are now less optimistic about their financial prospects than they were 12 months ago
Investing to compete
Our survey shows that growth remains firmly on the agenda. Increasing domestic and global competition for academics and students has created a sense of dynamism - Universities must invest to compete and to thrive.
What are your key priorities for investment over the next 12 months?
Every HEI identified ‘Estates and physical assets’ and ‘Technology and systems’ as priority investments over the next 12 months, with 80% and 51% quoting them as strong priorities respectively.
These priorities tie in with the highest priority outcomes. Enhancing the student’s teaching and learning experience was ranked the strongest priority (65%), with a better student experience and facilities naturally enabling greater opportunities to attract new students, as well as increase research activity.
For research-intensive HEIs, the use of investments in reducing costs was a strong priority, with 39% of institutions, compared to 13% for teaching-intensive HEIs.
Varying ability to invest
Legislative reform has underpinned the UK Government’s commitment to achieving a level regulatory playing field, however, not all institutions will have the same ability to access credit and invest. Institutions who can more easily access credit are able to invest more effectively to secure a competitive edge.
There is uncertainty over key medium-to-longer funding streams. Will planned investments in people and infrastructure still be tenable?
Are teaching focused HEIs being left behind?
54% of HEIs expect their demand for credit to increase, as the pressure of investing to compete increases, yet we are seeing a split between larger researched focused institutions and their teaching focused counterparts in terms of cost and accessibility to credit.
About the survey
In partnership with Universities UK, this report examine the responses to the 2016 Higher Education Finance directors’ survey, collated between October and November 2016.