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UK Higher Education is in very rude health, how can estates and facilities teams help keep it there? Part 1

With four of the worlds top ten universities, the UK is batting way, way above its size as a nation. No matter how you look at it, all measures suggest that UK Higher Education is in very good health.

HE Performance 2017-18
2.34 million students studied at UK Higher Education Institutions (HEIs), with 0.14 million from the EU and 0.32m from outside the EU, 2nd only to US for attracting international students
90% of graduates were in further work or study after 6 months and 83% said they were satisfied with the quality of their course
76% of research submitted is rated as “world leading” or “internationally excellent”
– The sector employs 429,560 staff, supports 940,000 jobs in the UK and contributes £21.5 billion to GDP, representing 1.2% of the UK’s entire output
                                                                                                                                                                                           Source: Universities UK

However, there are several storm clouds on the horizon which HEIs will need to respond to, if they are to maintain this success.

There is evidence of an increasing trend of students treating education as a commodity consumer service. With the higher cost of education, students are becoming more discerning where they go and more demanding of the service they get. Now that employment and earning outcomes for HEI graduates and student experience metrics are more visible, students can see much more clearly just what they are getting for their money.

Profit margins in the sector are tightening, but inflation remains. This creates the challenge of managing inflationary pressure on high fixed cost items, such as staff, buildings, utilities and equipment, while income has been capped by Government.

With over 5% of HE graduates currently not securing graduate jobs, competition to a HE education is increasing. For example, modern apprenticeships are becoming a much more attractive option, particularly when they do not attract the average £30,000 plus of student debt for attending a university.

And the dreaded B word… Brexit will introduce uncertainty in all sorts of predictable and unpredictable ways. For example; “what will happen to EU staff and students in terms of visa requirements?”, “will UK HEI’s be able to work on EU funded research projects?” On and on the questions will go.

With an average surplus of £1bn (which is 3% of total income) income and costs wouldn’t have to move too far out of line to push the sector financial sustainability to a position of serious threat.

HE Income and Expenditure 2017-18
In 2017-18 total HE sector income was £38.2 billion, as shown in this graph. Total operating income was £37.2 billion, leaving a £1 billion surplus. 
                                                                                                                                                                                           Source: Universities UK

Consequently, HE estates and facilities functions and teams will be under increasing pressure to justify their existence, deliver better value for money and improve the impact of HE investment in real estate and Facilities Management services.

Now, how do we do this?

This blog is based on the keynote presentation that John gave at the University Estates and Facilities Conference at the University of Salford on Wednesday 26 June 2019. Click here for a link to the slides. In his next blog, John will describe our views on how estates and facilities teams in HE can help HEIs respond to these challenges and maintain their current success.

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John O'Brien

John O'Brien

Founder and Managing Director at LCMB Building Performance Ltd

Founder and MD of LCMB. John is an engineer with strong project and general management experience in construction and FM. John has held responsibility for annual FM budgets of up to £80m, and managed projects with values of up to £150m.

Email: john@lcmb.co.uk

Telephone: 01295 722823

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