Planning a market exit

In 2023, Writtle University College (WUC) celebrated its 130-year anniversary. During this time it developed from the Essex “county laboratories” to a specialist further and higher education provider with its own degree awarding powers. Alumni include successful agriculturalists, renowned landscape gardeners and ministers of state.

The following year, on 29 February 2024, Writtle University College was dissolved by order of the Secretary of State, with all assets and undertakings transferred to Anglia Ruskin University (ARU). WUC’s FE activity and FE teaching staff were transferred to Writtle College, a newly established further education college and wholly-owned subsidiary of ARU. WUC’s higher education activity continues on the Writtle campus, now known as ARU Writtle.

Writtle University College was not the first higher education provider to exit the market and it was not a large institution. However, it is one of very few established HEIs, with its own degree awarding powers and the right to use university in its title, that has been forced to merge with another provider to avoid institutional failure.

The current funding crisis in UK higher education means that more are likely to follow, with the interim chair of the Office for Students David Behan recently commenting that some providers must explore merger or partnership arrangements to avoid bankruptcy.

For those inside WUC, the dissolution of the university college and merger with ARU prompted mixed feelings: a profound sadness that a such a longstanding, well-regarded and deeply cherished institution could no longer stand on its own two feet – mixed with relief that a long-term plan to protect its specialist and regionally important FE and HE provision had been identified.

The WUC-ARU merger demonstrates how two institutions were able to come together to safeguard the student interest, and provides an example of a carefully planned and well-managed market exit .

Small, specialist… and unsustainable

A genuinely tertiary institution, the university college taught students from aged 16 years old, across FHEQ levels 2 to 7. Its research-active staff also supervised dozens of PhD completions through agreements with research degree awarding HEIs. Though it was known as an agricultural college, in more recent years its expertise was concentrated in the area of animal science, with a sector-leading programme in veterinary physiotherapy. The student body was predominantly regional, mostly young and female, and over 30 per cent of students declared a disability.

Though the student body was small (around 2,000 in total), the physical estate and teaching facilities were extensive. Resources across the 170 hectare green estate included a dedicated equine campus with 70 horses stabled at any one point, a working farm with a commercial 80 sow farrow-to-finish pig production unit and a small animal unit with over 250 species, in addition to wide-ranging plant and tree collections, allotments, research greenhouses, specialist sports equipment and scientific laboratories.

Consequently it is not difficult to see why Writtle University College could not cover its costs. The struggles of small and specialist institutions have been expertly set out by Edward Venning’s recent paper for HEPI, and WUC typified most of them. Its high-cost, practice-based science courses could not be fully funded by an ever-diminishing unit of resource, and nor could they be sufficiently cross-subsidised by lower-cost subjects or international tuition fees.

Meanwhile the ever-increasing regulatory burden meant that administrative overheads could only be cut so far, an issue which was exacerbated in WUC’s case by the need to satisfy both FE and HE requirements, working across entirely separate and disconnected funding and regulatory bodies. Hindsight tells us that WUC’s inability to secure HEFCE specialist institution funding in the 2000s would create a financial vulnerability that proved to be irrecoverable.

Avoiding wishful thinking

Among the senior team that led WUC into the merger with ARU, it was always clear to us that the university college’s future depended upon some form of partnership. This aspect of WUC’s strategy was made transparent to staff and wider stakeholders. The university college was repeatedly posting deficits and unrestricted cash reserves were significantly depleted by the effects of the Covid-19 pandemic. Efficiency savings were found wherever they could be, but staff were constantly being asked to do more with less, with consequences for the institution’s ability to innovate and develop (and therefore to grow). The cash position was routinely propped up by tactical asset sales, an approach which was clearly not sustainable.

A potential merger with a local FE college was considered and rejected in 2019 over concerns that it could not deliver the financial security needed to protect WUC’s specialist provision. Attention turned to developing the academic portfolio and physical estate so that all unnecessary costs were removed and WUC’s strengths and assets were leveraged. It was important that the university college was made as attractive as possible to potential collaborators or acquiring partners, thereby increasing the chances of a positive outcome.

By autumn 2022 we were facing further financial pressures. A dip in student retention amongst the “Covid cohort” had combined with spiralling energy costs and other inflationary pressures to diminish cash reserves to concerning levels. At this point it was critical that we did not apply wishful thinking regarding our capacity to grow our way out of the problem. Though we had achieved some success with growing student intake numbers, we also knew that we were trapped in a vicious circle of disinvestment and poor competitiveness.

Downsizing was not an option; cutting apparently non-viable courses is often a red herring for a small institution because, while some direct operating costs might be removed, administrative overheads and central services cannot be reduced commensurately. Meanwhile our ratio of staff costs to income, at around 70 per cent, was symptomatic of low income and poor margins rather than high staff costs.

In this context, Writtle University College’s trustees faced some very difficult decisions about how best to protect the student interest. They recognised that this was not the same thing as protecting the institution. The board of governors resolved that all further steps taken to extend liquidity must be for the express purpose of providing the time to identify and secure an acquiring partner (within a sensible limit). In the meantime, cashflow risks must not be mitigated at the direct expense of the student experience, for example through cuts to core student services. And tactical asset sales to support ongoing operations must be balanced against potential de-valuation of the WUC estate, which could undermine merger efforts.

WUC’s primary objective was no longer to continue surviving as an independent institution, because to do so would unacceptably diminish the quality of the student experience – and ultimately increase the risk of a disorderly market exit, which everyone agreed was the worst possible outcome for students and staff.

This was student protection planning in action, and it bore little resemblance to the published student protection plan we had agreed with the Office for Students back in 2018–19. Instead, we kept the OfS informed about our partnership plans and our cashflow position through regular meetings and proactive sharing of financial information.

Choosing a partner

The WUC board of governors established a small but important set of “red lines” to guide this process, consistent with the mission and charitable objects of the institution. All options were otherwise kept open, as we believed it was in the best interests of WUC’s stakeholders to entertain all credible routes to financial sustainability. The merger project became the single most important project for the senior team – though with no additional resources to call upon, it had to be “fitted in” around the essential day-to-day management of the university college.

We approached a small number of UK universities to discuss their potential involvement. Meanwhile we worked with a broker to explore options amongst the private higher education market in the UK (and beyond).

We were thankful for the general support and encouragement offered by the universities we approached, but found that there was limited appetite amongst established universities to entertain such a complex and risky project whilst they tried to weather their own financial challenges. The need to accommodate both WUC’s higher education and further education provision (one of the aforementioned red lines) was a sticking point for most institutions.

The interest garnered amongst private HE providers was immediate and wide-ranging. This wasn’t surprising, given the obvious value of WUC’s degree awarding powers and its large freehold estate close to London. We scrutinised and evaluated these proposals in great detail to weed out those organisations that were not genuinely interested in sustaining WUC’s land-based teaching and research. Some potentially exciting routes were seriously considered, but the transaction structure with a private limited company was unavoidably more complex. In particular, the matter of WUC’s Local Government Pension Scheme (LGPS) liability seemed at times to be an insurmountable problem.

A range of serious proposals were whittled down to a handful of credible options. The application of a structured, competitive process helped to secure the best possible offers from all involved. Writtle’s trustees ultimately decided that Anglia Ruskin University provided the all-round best option for sustaining and enhancing WUC’s specialist land-based provision over the long-term. There was very little overlap between WUC’s HE courses and ARU’s portfolio, but a great deal of complementarity. The capacity for ARU to enhance opportunities for students and staff alike was clear. And having been Chelmsford neighbours for many decades, we also knew that we could trust ARU’s commitment to WUC’s student body and regional stakeholders.

The wider picture

As the WUC-ARU merger is embedded, two other such partnerships have recently completed between St George’s and City (now to be known as City St George’s, University of London) and University College of Osteopathy (UCO) and Health Sciences University.

To some extent, the disappearance of smaller institutions such as WUC, St George’s and UCO go unnoticed as media attention is instead focussed on the potential collapse and/or forced merger of a large university. Outsiders might wonder why it’s a problem to let a few providers fail when there seem to be so many to begin with. But this would be to miss the point about the value that the current diversity of providers bring to the sector and to the industries and regions that they serve.

At Writtle it’s fair to say that we spent some time lamenting the situation. Ultimately, though, we had to find the serenity to accept the things that we weren’t able to change – and the courage to change the things that we could.

A realistic assessment of our situation, good planning and a transparent approach with regulators meant that were we were well positioned to avoid the worst-case scenario. With Anglia Ruskin University we were lucky to find a partner institution that shared our values and purpose and recognised WUC’s potential as well as its heritage. While it is a great shame that Writtle University College was not able to survive for another 130 years, the best possible home has been found to continue delivering its mission and purpose.

Other institutions forced into this position may not be so fortunate, even with the best of planning – which is something we should all be worried about.