Higher education can become more collaborative in course provision – but the onus is on institutions to work out how

One year on from the publication of the government’s post-16 education and skills white paper, and policy interventions to support the government’s regional higher education agenda have not significantly advanced. However, the sector’s interest and engagement in regional collaboration has intensified and there remains an appetite to explore the structures that can support collaboration and work out a way through the legal position around competition law.

The white paper proposed “a much more collaborative system” in which further and higher education providers coordinate to contribute to regional skills development, focusing on key industries and sectors, and collectively support regional economic planning. Speaking to heads of institution at the Universities UK conference earlier this month skills minister Jacqui Smith reinforced the message that a change at the top of government hasn’t altered the plan – if anything the PM’s devolution agenda brings the regional collaboration picture further to the fore:

“The Prime Minister has championed place-based policies that closely consider communities’ circumstances. That means universities, colleges, local leaders and employers working together to understand the opportunities in their area, and giving local people the skills and experience needed to take those opportunities.”

The government’s plans depend on higher education institutions determining their distinctive offer to their regions and then, where possible, negotiating with other providers under the auspices of regional economic plans to work out what the aggregate HE provision should look like. On paper, the principle is sound – especially in light of the increasing number of young people choosing to study close to home, and the wider long term policy proposition of developing a more flexible HE offer that is more closely aligned with local labour market opportunities.

Collaboration offers the prospect of pooling risk and sharing upfront investment costs, and the opportunity to sustain provision in subject areas that might otherwise be vulnerable. The notion of creating pathways or ladders of opportunity for particular industries across schools, FE, and HE is compelling and, in theory at least, should be enabled by the new LLE funding mechanism. And there’s a less tangible but no less worthwhile payoff in binding higher education institutions more closely into their regions, with deeper relationships with mayoral and combined authorities, employers, and communities.

There have been some modest shifts in the landscape since the publication of the white paper – the Competition and Markets Authority (CMA) has issued useful guidance on collaboration in higher education, and recently the Office for Students has published the prototype for a new market monitoring tool that could inform any discussions at regional level. But to move towards the government’s vision for greater expansion and consolidation across the sector to achieve greater collaboration across a system which includes further and higher education, there is still much work to do to establish how to identify, structure and implement the right strategic opportunities.

To build the kind of system the government envisages at scale may ultimately require more active coordination and leadership from mayors and leaders of combined authorities, supported by an infrastructure that brings employers and education organisations to the table to negotiate a framework for collaboration. In the absence of any such framework, it is, however, entirely possible to make progress towards strategic, large-scale collaboration if an opportunity is identified, but it requires some work on the part of institutions to, first, work through the structures of a potential collaboration and, second, navigate key barriers to some of these structures, including competition law.

Put something on the table

There is no settled view yet on how universities should approach effective consolidation and collaboration. There is plenty of talk across the HE and FE sectors about forming "alliances" but much less clarity about how to make them work and add value for the longer term. Our experience is that coming together to pool information, share good practice, or even share some resources, while often useful, is rarely enough to either realise significant savings or deliver significant long standing results. To deliver on the government’s vision, alliances designed to develop the work force and skills of the future need to be different to those we have seen before. And this may involve giving up some autonomy and altering the traditional business model adopted by most autonomous institutions.

To make alliances “stick”, institutions that want to build sustainable collaborations need to have a shared vision and importantly, need to become dependent on each other to implement that vision. The classic examples illustrate this – for example, the University of London federation originally was held together because its members needed its services, most notably the title and the degree awarding powers that came with it. Some might say the University of London alliance has weakened since most of its constituent members have their own university title. The members of KU Leuven's association are incentivised by government funding and initiatives to work together. Funding is a reliable way to lock people in because pulling out means they lose that income. Without that, there may be plenty of things partners could usefully do together, but to keep them attached there needs to be some kind of reliance on each other as well as a penalty or loss to withdrawal from the partnership.

That means that for a grouping to last, it has to be core business rather than a sideline, the kind of commitment that draws institutions in for the long term and justifies putting real energy and resource into it. That means a genuine sacrifice of autonomy, and our sense is that right now very few institutions exploring this are willing to put that on the table. Many are interested in federating, and want the efficiencies, and to do good things for and with their regions. But they are understandably reluctant to invest, reluctant to give up control. Even where there might be voices in favour of pushing forward collaborations, a focus on short term savings and managing risks now can crowd out any prospect of a more ambitious change.

The point at which a group starts to coordinate its offer to students, strategically and as a group, is where real foundations might take hold. Institutions could work together to build their offer around areas like the green economy, advanced manufacturing, AI or defence – or around arts and culture, and the humanities. Alliances could be structured to deliver meaningful strategic benefit over time to students and employers in a region, by protecting some provision and working together to open up new funding streams. Many universities are not on the edge financially but know they need to grow, act strategically, and use their reputation to offset the challenges ahead. For them, this kind of alliance may be of interest. There are legal risks to work through and overcome in setting up alliances, including breaching competition law – though these risks are not necessarily as significant as may be assumed.

Working through competition law

The competition law regime has not changed since the government announced it wants higher education to be more collaborative. But the Competition and Markets Authority, as a regulator, has some discretion in how it chooses to enforce those rules and what its priorities are, and to some extent these are informed by government policy.

That doesn’t mean that institutions can safely ignore any possible risks around competition law, but it should not necessarily be an insurmountable barrier either. The key is to be aware of the issues early. Some collaborations, as the CMA has indicated, carry no competition risk at all. But when it comes to changing provision you need to think through the implications. Anything that looks like carving up the market between competing institutions and depriving students of choice would be difficult to justify – and financial distress is not an excuse that offers a justification in law for that kind of activity.

However, for any given market, there’s always lots of variables to consider that can help build an evidence base to demonstrate that a particular collaboration would create benefits for students. Joint provision of courses, for example, may be acceptable if students still have plenty of choice. The difficulty is that the reason to collaborate or coordinate is usually to preserve provision, or to create new provision, in places where choice is already thin. That raises a question about how student choice is defined. Is it about what is available locally, or could any provider in the country count as a reasonable alternative? And what dimension of choice should be the most critical factor: the component parts of a course, the subject itself, qualification, institution, or some other dimension? The answers to these questions are not settled and will vary depending on context.

Joint provision is also different from coordinated provision. As things stand, coordination between competing institutions about which institution offers which modern languages courses, for example, would be unlawful. For other forms of coordination, there is always the possibility of an individual exemption, where the benefits outweigh the harm to competition, but there are four specific criteria to meet and you would need to be legally satisfied that you meet all four and, moreover, that you would be able to provide the evidence demonstrating this is the case. In practice, it is also worth asking who would actually bring a challenge in a world where provision is shrinking, and where government policy is actively encouraging the development of these kinds of relationships for the benefit of students and society at large. The sector may need a test case to work through how this could play out in practice, but if the alternative is that everyone reduces provision and courses may be lost, that is not a good outcome for society.

What the CMA doesn’t offer right now is the opportunity for any given arrangement to be signed off in advance; it is still incumbent on institutions to carry out their own self-assessment of whether a collaboration might harm competition and if so, whether an individual exemption may be available. Institutions can, however, talk informally to the CMA and get its view after they have carried out a risk assessment. The bigger obstacle may be the sector's own risk aversion. Institutions worry about reputational damage, about attracting regulatory attention, and about how resource intensive a robust risk assessment and dialogue with the CMA would be. Much of this activity sits at the margins of the market, untested and without a clear path to delivery. Even approaching the CMA feels risky. Even so, if you have thought through the benefits to students and have an evidence base showing that the benefits outweigh the harm to competition, the chances of the CMA frowning on well-founded thinking may be fairly low.

The problem may be that institutions do not know how to build that evidence. They may expect the CMA to set out its expectations, as the Office for Students might, when in fact the CMA expects institutions to work through the details themselves, given they will know their markets better than the CMA. A sector-led worked example, or a steer on the kinds of evidence that could show benefit to students, would help, but it would take time to produce and would require the CMA to decide that this sector is a bigger priority that some other – arguably higher risk – markets.

In sum, if government wants to see widespread and well organised collaboration it needs to give some further thought to the conditions in which institutions are operating, and realise that simple urging will not make it strategically worthwhile for many to take forward. On the other hand, where institutions do see strategic potential – especially those facing existential questions about their long term future – there is a nettle to be grasped, for those who are ambitious and prepared to go all in.

This article is published as part of a partnership with Mills & Reeve. Sign up for HE Counsel, our specialist newsletter focusing on higher education law and regulation, powered by Mills & Reeve.

On 3 November Wonkhe will host The Collaboration Question, a one day event in London to explore the policies, legal context, strategic outlook and capabilities required to support collaboration in HE. Find out more and sign up here.