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Dear Vice-Chancellor or Principal

1.   This letter is to inform you about a HEFCE project that will consider the lessons learned from collaborations, alliances and mergers in higher education (HE), formulate policy in this area, and develop practical advice for institutions that are considering such activity. The work will update and extend the 2004 guidance 'Mergers in the higher education sector: A guide to good practice' (HEFCE 2004/09). There is an opportunity to comment at this stage if you wish.

2.   There has been significant media and political interest in the efficiency of the HE sector. Some commentators consider mergers to be one response to the financial challenges currently facing the sector, while others emphasise the cost and risk involved. Further arguments in the HE sector in favour of mergers include securing or rationalising academic provision, and developing critical mass in research. There is practical experience but little documented evidence from HE on which to assess outcomes and develop guidance for the future. The new project aims to fill this gap.

3.   There are three anticipated outputs from this project:

  1. A report, aimed at both the sector and HEFCE that captures the lessons learned from past collaborations, alliances and mergers, and their costs, benefits, risks and opportunities.
  2. A policy statement that will state HEFCE's response to the issues and outline HEFCE's stance towards collaborations, alliances and mergers, including principles of respecting institutional autonomy and protecting studentsas well as past investments in the sector.
  3. In-depth practical guidance for institutions on key issues surrounding collaborations, alliances and mergers. This would aim to enable institutions' senior management teams and governors to weigh the costs of such partnerships against the benefits and help them to make better informed decisions for their particular circumstances.

4.   The project is not a mechanism for us to identify potential mergers and restructure the HE sector nor is it a response to a constrained funding environment. We endorse the importance of institutional autonomy in these matters, and through this project seek to support institutions in considering a spectrum of possible action that may involve collaborations, alliances or mergers.

5.   The recent 'Independent review of higher education funding and student finance' by Lord Browne also emphasises the autonomy of institutions, but recognises the potential need for intervention where student interests or the sustainability of the institution are threatened. The report mentions the possibility of mergers with other providers, in order to ensure that students benefit from increased competition within the HE sector. These issues will be considered by the project.

6.   Further, the recent announcements of the Spending Review 2010 emphasise the potential for collaborative activity to deliver efficiencies while preserving frontline services in the future, with many government departments considering shared services approaches. The risks and benefits of such an approach in higher education will be considered by the project.

7.   The project will also consider evidence from inside and outside the HE sector, the private and public sectors, the UK and other countries. It will take quantitative and qualitative approaches (semi-structured interviews, working groups, case studies) to define the key issues and to identify practical solutions.

8.   The project is still at an early stage. A desk-based literature review has been carried out to inform the scope of the project and to identify key issues and existing knowledge gaps. A steering group for the project has been set up, chaired by Anil Ruia (HEFCE Board member and Chair of the University of Manchester's board of governors); membership of the steering group is as Annex A. All members have direct and relevant experience of collaborations, alliances and mergers.

9.   We aim to consult with the HE sector and key stakeholders on the emerging findings and issues in spring 2011, before publishing the lessons learned and policy-related reports in autumn 2011. Guidance to institutions will be developed over a longer timescale, as the sector's specific needs become clearer.

10.   If you have any advice or comments on the above, please contact Jacqui Brasted (tel 0117 931 7389, e-mail j.brasted@hefce.ac.uk).

Yours sincerely

Sir Alan Langlands
Chief Executive


Annex A Membership of the HE CAM steering group

Anil Ruia (Chair) HEFCE Board member and University of Manchester Chair, board of governors
Clive Bane Head of Human Resources, University of the Arts, London
Mark Bery Finance Director, St George's, University of London
Professor Mark Cleary Vice-Chancellor, University of Bradford
Steve Egan Deputy Chief Executive, HEFCE
Professor John Goddard Emeritus Professor, Newcastle University
Professor Lauritz B Holm-Nielsen Rector, Aarhus University, Denmark and Chair of Universities Denmark
Greg Melly Corporate Services Director, University of Surrey
Professor Peter Scott Vice-Chancellor, Kingston University
Professor Elaine Thomas Vice-Chancellor, University for the Creative Arts
Professor Alistair Ulph Dean, Faculty of Humanities, University of Manchester
Professor Marijk van der Wende Professor in Higher Education, VU University Amsterdam / Dean Amsterdam University College (also Visiting Professor, Centre for Higher Education Policy Studies, University of Twente, Netherlands)
Professor Andrew Wathey Vice-Chancellor, Northumbria University

Date: 26 October 2010

Ref: CL 26/2010

To: Heads of HEFCE-funded further education colleges, Heads of HEFCE-funded higher education institutions, Heads of universities in Northern Ireland

Enquiries should be directed to:

Jacqui Brasted, project manager, tel 0117 931 7389, e-mail j.brasted@hefce.ac.uk