Expansion can worsen financial pressures on higher education institutions, according to a new report, which also warns that the economic divide among universities��across the UK is widening.��

The report, produced by the University of East London (UEL) in support of Universities UK’s (UUK) Transformation and Efficiency Taskforce, examined 160 higher education institutions and found that some universities were recording surpluses of up to 37 per cent while others were running deficits of up to 28 per cent.����

Some universities��increased their income by��more than 60��per cent between 2024 and 2025,��while others saw revenues fall by as much as 30��per cent,��the report found.��

While universities with incomes above £1 billion had grown the fastest, adding an average of £452m to their annual income between 2020 and 2025, the report says scale alone does not guarantee long-term resilience without effective management and infrastructure.��

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While many institutions have looked to growth to shore up their finances, the report notes that increasing student numbers and income does not automatically improve universities’ sustainability.

It notes that additional revenue is often accompanied by disproportionately higher expenditure, which can worsen financial pressure as costs rise faster than income.��

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The authors also identified a “widening productivity gap” between universities across the country. “Top-performing institutions generate more than £127,000 income per staff member (up to £526,000 in one case), compared with less than £100,000 in lower-performing institutions,” it says.

It adds that wide variation in productivity and efficiency indicators across the sector suggests that “managerial and organisational choices, rather than structural constraints alone, are driving performance differences”.

The report also looked at institution resilience, finding that financially weaker universities relied heavily on one or two sources of income, while stronger��ones had more diversified revenue bases, making them better at withstanding market shocks.��

“We observe a growing divergence between institutions that are building resilience, and those that remain exposed,” the report notes. “Higher-resilience institutions are characterised by continuous optimisation. They tell a narrative of value creation, not simply cost reduction.”

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Although many universities have turned to staff and course cuts to reduce their costs, the report warns that universities that rely on repeated restructuring programmes are seeing “diminishing returns and growing signs of organisational fatigue”.����

It concludes that performance is “driven less by institutional size, age or historical reputation, and more by leadership decisions”.

“Growth is not rescuing the sector��–��in some cases, it is actively making things worse,” said Amanda Broderick, vice-chancellor and president of UEL.

“The idea that universities can expand their way to success is fundamentally flawed. Rather, growth can be a proxy for increased reach and significance of charitable objects, but must be addressed in partnership with operating model evolution.”

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Broderick added that waiting for policy change is a “high-risk strategy”.

“The opportunity is to act early and build resilience by design,” she continued. “University leaders should not just be responding to external conditions��– we should be taking decisions that actively shape the future.”

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seher.asaf@timeshighereducation.com��