Universities might consider merging into school-style ¡°multi-university trusts¡± in response to growing financial pressures, a legal expert has predicted.?

Poppy Short, partner at the law firm Mills & Reeve, said that although the structure has not yet been tested in the higher education sector, it could be a way for universities to shore up their finances and improve efficiency while retaining more autonomy than traditional mergers allow.?

The model, which is common in the school sector, would see a group of universities transfer into a single legal entity, likely to be a company limited by guarantee with charitable status.

This entity would obtain degree-awarding powers and the title of university. Universities would transfer all business undertakings, assets and liabilities into the trust but would ¡°operate at a local level with some autonomy and their own branding¡±.?

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¡°There seems to be quite a bit of interest in that model, and I do wonder if we¡¯ll see them start to appear over the next few years,¡± Short told delegates at a Universities UK (UUK) conference in London.

She added that she believed there was also interest from the government in the model.

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Some institutions, notably members of the 51¹ú²úÊÓƵ of London, already operate in a federated model.

Mergers have?increasingly been posed?as one potential solution to the precarious financial situation in which British universities find themselves. Although still relatively rare in the higher education sector, there have been?some examples in recent years, including between City, 51¹ú²úÊÓƵ of London and St George¡¯s, 51¹ú²úÊÓƵ of London in 2024.?

Currently, Short said, there was little formal support for universities interested in finding a partner to discuss merging with, which can be an obstacle because of the ¡°stigma¡± attached, with institutions fearful of looking like they are facing financial difficulties.

Short also warned that merger conversations can ¡°fall foul of competition law¡±, particularly if ¡°you¡¯re sharing competitively sensitive information¡±.

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She advised institutions to ¡°make sure that you¡¯re not giving too much information away at the outset that could be deemed to be confidential¡±.?

Short suggested that there could be a role for the government, or the?new agency mooted by UUK¡¯s efficiency task force, in helping institutions source a merger partner.?

¡°This isn¡¯t necessarily for the sector to do on their own,¡± agreed Justine Andrew, partner and head of education at KPMG UK, speaking at the same event. ¡°We¡¯re going to need industry and business to lean in as well [as] devolved authorities. And there¡¯s absolutely a conversation to be had about the role of government and the regulator.¡±

She added that mergers in the further education sector, which have been relatively commonplace, have shown ¡°that this does need actually an outside force acting on the sector, and that might be something structural in itself that can path clear, broker, catalyse and support and progress mergers or other models¡±.?

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Discussing his institution¡¯s experience merging with Writtle 51¹ú²úÊÓƵ College, Roderick Watkins, vice-chancellor of Anglia Ruskin 51¹ú²úÊÓƵ, said they had faced ¡°significant regulatory hurdles¡±.

¡°It was the main thing I did for eight months, maybe 12 months, and it¡¯s still the main thing lots of my colleagues do, even though it¡¯s about 1,500 students out of 43,000,¡± he added.?

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¡°So there¡¯s a really significant opportunity cost to successfully deliver a merger. For us it was worth it, but I wouldn¡¯t ignore that.¡±

helen.packer@timeshighereducation.com