What governing bodies owe students in straitened times
The Office for Students’ latest financial sustainability bulletin indicates that, without mitigating measures, 45 per cent of English higher education providers could face deficits by the end of this financial year. That figure has understandably captured attention. However, the more one considers what it demands of institutional leadership, the more the discussion shifts from balance sheets to boardrooms and to what effective governance entails when the financial climate becomes harsh.
The Office for Students’ latest financial sustainability bulletin suggests that, absent mitigating action, 45 per cent of English higher education providers could be operating in deficit by the end of this financial year. That figure has understandably commanded attention. Yet the more one reflects on what it asks of institutional leadership, the more the conversation shifts from balance sheets to boardrooms and to what effective governance means when the financial weather turns unforgiving.
The OfS has been explicit in linking financial sustainability to governance. Its draft strategy for 2025-30 identifies ‘sector resilience, which encompasses financial sustainability and effective governance’ as one of three strategic priorities. The regulator has signalled that it will focus monitoring and compliance activity where ‘management and governance risks are most acute.’ This is not subtle. Governing bodies are being told, in no uncertain terms, that their capacity to steward institutions through financial difficulty is now a regulatory concern.
What, then, does good governance look like in these circumstances? The answers seem less clear than they might once have appeared. But the questions that matter are perhaps coming into sharper focus.
Keeping quality visible when attention is elsewhere
Financial pressure has a way of consuming institutional attention. When recruitment falls short of forecast, when emergency savings programmes are initiated, when difficult conversations about staffing become unavoidable, it is entirely natural for executive teams and governing bodies alike to focus on the immediate crisis. The risk is that quality education, the thing the institution exists to deliver, becomes something monitored in the margins rather than scrutinised at the centre.
The OfS has expressed concern about precisely this dynamic. Its recent communications note the risks of deferred estates maintenance, suspended infrastructure investments and cost-reduction measures that may have longer-term consequences for the student experience. These are not abstract anxieties. They describe decisions that governing bodies are approving, explicitly or by acquiescence, in institutions across the sector.
The early warning signs are often indirect. A rising trend in student complaints that nobody quite joins up. Module evaluation scores that drift downward without triggering formal concern. Staff survey results that suggest declining morale in teaching-facing roles. External examiner comments that become slightly more pointed. Individually, none of these crosses a threshold. Collectively, they may indicate an institution consuming its capacity to deliver quality in order to sustain present operations.
The governance question is whether boards have visibility of these signals and whether they are creating space to discuss them when the agenda is dominated by financial survival. Receiving assurance that quality metrics remain within tolerance may not be sufficient. Governing bodies might need to ask what is not being measured, what trends are emerging beneath the threshold and what the cumulative effect of successive ‘manageable’ compromises might prove to be.
The student interest in the room
The OfS exists, as it regularly reminds us, to regulate in students’ interests. When governing bodies make decisions about restructuring, programme closures, or reductions in staffing, they are making decisions that affect real students; people who enrolled in good faith, expecting to receive what they were promised. The regulatory framework requires institutions to have student protection plans, but the deeper question is how student interests are weighed in the room when difficult choices are being made.
This is genuinely hard. An institution facing serious financial difficulty may conclude that its survival and thus its capacity to serve future students requires decisions that disadvantage current ones. Programme closures may be unavoidable. Staff who have built relationships with students may leave. The resources available to support learning may diminish. There is no framework that makes these trade-offs easy and anyone who suggests otherwise has probably not sat in the meetings where they are made.
What governance might do, however, is create the conditions for student interests to be explicitly considered rather than assumed. When a paper proposes cost reductions, does it articulate the anticipated impact on students currently enrolled? When restructuring affects academic programmes, has the institution genuinely consulted with affected students or merely informed them? When staff roles are removed, has anyone mapped the consequences for student support, supervision, or access to expertise?
Some governing bodies do this well, insisting on student impact assessments, inviting student governors to speak to proposals before decisions are taken and asking executive teams to explain how they have weighed present students against future sustainability. Others invoke student interest rhetorically without substantively examining it. The difference is not always visible in the minutes, but it shapes the character of the institution.
Managing crisis or reshaping for the future
Susan Lapworth, the OfS Chief Executive, recently observed that some universities continue to base their forecasts on unrealistic growth expectations, while others are taking short-term measures rather than tackling the transformational changes needed to right-size their businesses. The distinction between short-term measures and transformational change is worth pausing on. It points to a governance question that many boards may be deferring.
Short-term measures: recruitment freezes, voluntary severance schemes, paused capital projects and renegotiated covenants are the tools institutions reach for when finances tighten. They are often necessary. They buy time. But they do not, in themselves, address the structural mismatch between an institution’s cost base and its likely income over the medium term. If the underlying business model is not sustainable, successive rounds of short-term measures may simply delay a reckoning whilst depleting the capacity to respond when it comes.
Transformational change is different in kind. It might involve a fundamental rethinking of the academic portfolio. Genuine collaboration or merger with other institutions. Wholesale reimagining of how education is delivered. These are not decisions that executive teams can easily take alone. Indeed, they seem to require governing bodies willing to engage with strategic questions that are uncomfortable, contested and uncertain. They require boards to ask whether the institution they are stewarding will exist in recognisable form in ten years, and whether the decisions being taken today are shaping that future or merely postponing its arrival.
What one observes across the sector suggests that many governing bodies remain in management mode rather than transformation mode. This is understandable. Managing what is in front of you is demanding enough. But the OfS’s language suggests the regulator expects more. Boards that confine themselves to overseeing successive rounds of cost reduction, without engaging with deeper questions of institutional shape and purpose, may eventually face questions about whether their governance met the moment. These are all questions that are easier to pose from the outside than to answer from the inside.
What distinguishes institutions that emerge stronger
There is no formula for this. Anyone claiming certainty about what separates institutions that weather financial difficulty from those that do not is probably oversimplifying. Context matters enormously; geography, mission, market position, legacy infrastructure and sheer luck all play their part.
But it is worth wondering whether governance is a variable in that equation. Whether institutions with governing bodies that maintain a focus on quality whilst addressing finance, that centre student interests in difficult decisions and that engage with transformation rather than deferring it are more likely to emerge from this period in a position of strength. Whether the character of boardroom conversation, the quality of challenge, the willingness to confront uncomfortable truths and the capacity to hold both present difficulty and future possibility shape institutional trajectory in ways that are difficult to measure and perhaps impossible to prove.
These are genuine uncertainties rather than rhetorical questions. The financial pressures facing the sector are not necessarily of governing bodies’ making and there are no decisions that avoid all harm. But how institutions govern themselves in the face of difficulty may prove as consequential as the difficulty itself.
For those sitting around governing body tables this winter, that is perhaps the question worth holding: not merely whether the institution will survive, but what kind of institution it will be when the winter weather clears.