Mergers and acquisitions will not be a ¡°magic bullet¡± to save struggling universities despite increased focus on such collaborations, a new report has warned.?

The published by the Higher Education Policy Institute identifies?six ways in which universities are increasingly ¡°boxed in¡±, including growing regulatory pressures, rising costs, and declines in international student recruitment.

They say the situation is limiting leaders¡¯ options and leaving institutions fighting ¡°for?increasingly scarce resources¡± while different groups within universities also ¡°struggle over a shrinking pie¡±.?

¡°The results are progressively more destructive patterns of behaviour that risk fundamentally undermining the sector,¡± the report says.

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Authors?Diana Beech and Andr¨¦ Spicer go on to identify the specific solutions institutions are exploring in response to?financial challenges, including reducing ¡°the number of players¡± in the market.

¡°When resources become scarcer, and competitive pressures become harsher, a typical response in many industries is consolidation,¡± the report says. ¡°This happens through weaker players being driven out of existence, some players merging to tackle the situation together and other larger players taking over smaller entities.¡±

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While this could create a ¡°less competitive¡± and more efficient landscape, ¡°the road to get there can be difficult¡±, it says.?

The authors, who both work at the?recently merged?City St George¡¯s, University of London, argue that mergers are only ¡°worth considering if they change?the business model of the new amalgamated university in some way¡±.

If mergers and acquisitions happen ¡°because the underlying financial position of some institutions is not sound then it is unlikely that cutting back, downsizing or rescaling will be the magic bullet to transform the overall health of the sector¡±, they say.?

Beech and Spicer also warn against learning ¡°to live in the box¡±.?¡°Another response to an increasingly competitive landscape is to design universities so they are able to live within new constraints,¡± they say, including making operations more efficient, reducing activities that are not core to their mission and changing the workforce.?

Thousands of jobs are being?axed across the sector?in response to growing deficits, while Universities UK (UUK) has?launched a task force?focused on making institutions more efficient.

While this approach ¡°can lead to lower costs in the long term¡±, it is ¡°less clear whether it necessarily leads to expanded revenue,¡± Beech and Spicer say.?

Another option universities are turning to is exploring new income streams, including the?incoming Lifelong Learning Entitlement (LLE)?and possibilities of more research funding for projects connected to Labour¡¯s key ¡°missions¡±.

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However, ¡°while creating extra revenue can be attractive and seem exciting, there is?nevertheless a danger that it often requires significant effort and additional?infrastructure, itself entailing extra cost, and it may not have high payoffs,¡± they say.

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Although all the options may seem ¡°difficult¡± after a period of growth, the challenges are ¡°far from unique¡±, the report says.?

¡°Many other industries have been through painful moments of significant disruption which have required substantial strategic renewal¡±, including retail, music and cars.

¡°Unboxing UK higher education will require bold and uncomfortable decisions? ¨C both from universities and the governments and administrations that oversee them,¡± the report says.?

It suggests policymakers incentivise ¡°strategic consolidation and collaboration¡±, including through additional funding.

UUK has?called on the government?to provide a transformation fund to help the sector improve efficiencies.?

The report also recommends that the government supports universities¡¯ efforts to diversify income by providing seed funding for ventures such as lifelong learning, transnational education and commercial activities.

Another recommendation?concerns reunited?research and higher education under a single ministerial portfolio ¡°in a business-focused department¡±.

¡°The ¡¯HE box¡¯ is real but it is not inevitable,¡± Beech and Spicer say. ¡°With vision, courage and policy innovation, the sector can move not just to survive, but to thrive, and reinstate its place as a driver of growth and opportunity right across the country.¡±

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helen.packer@timeshighereducation.com