Benchmarking insights help Welsh HEIs protect their financial sustainability

Posted by Katie Scarborough

In recent years, and even prior to the pandemic, applications to Welsh universities have been falling. This is coupled with the fact that Welsh universities have less income per student FTE, the result of fee and funding differentials. Whilst it is not ‘new news’ that Welsh universities have less income than their English counterparts, new financial benchmarking analysis has confirmed the extent of the difference. With a significantly lower teaching income per taught student FTE than their competitors (both domestic and international), increasing student recruitment whilst lowering the institution’s cost base is a growing national challenge for Welsh HEIs as they also navigate:

  • Loss of international and domestic tuition fees due to pandemic,
  • Pensions re-evaluations,
  • Loss of EU contributions,
  • Pressure to diversify income streams, and the
  • Decline in the number of 18 year olds.

As protecting the financial sustainability of Welsh universities by ‘shrinking the deficit’ is now a red hot topic and has never been more of a priority for Welsh HE leaders, it stands to reason that we are seeing a heightened interest in Tribal’s granular financial benchmarking analyses which compare a university’s cost base with direct competitors, and that the Welsh benchmark is as strong as it has ever been. It’s not only helping participating universities to develop the right structures to increase their financial sustainability and support their diversification strategies - but because it’s such a current dataset, it’s also helping to navigate the immediate financial issues that are specific to HEIs in Wales. For example, a key benchmarking insight is that Welsh universities tend to have higher overseas student acquisition costs than their competitors, and a lower income per overseas student FTE – they are investing more for less return. Welsh universities also tend to have a leaner overall professional services spend than their competitors (relative to core income).

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By digging into the detail of the university structure and comparing it to other, similar, Welsh universities, as well as UK-wide comparators, benchmarking reveals operational improvement opportunities, highlights options for diversifying income, and pinpoints where and how to scale profitable activities. Done right, at a granular level, benchmarking can also provide powerful ‘what if’ analysis to examine the impact of proposed changes on the institution’s financial health.

“Controlling costs is as important as ever, and benchmarking will always highlight opportunities to become more financially sustainable. As well as providing evidence for what a university already thinks to be the case, benchmarking projects always throw up surprises. HEIs in Wales are looking for real opportunities for financial sustainability and Tribal’s approach can help with that”.
- Katie Scarborough (Senior Benchmarking Consultant)

Context is, of course, vitally important when considering benchmarking data. And Tribal fully believes in putting benchmarked data outputs into context to help leaders understand their cost per student, or income per student, and how that compares to other Welsh universities. Offering a strong Welsh benchmark for comparator purposes and providing a specifically Welsh context for objective financial analyses is a big step forward for HEIs in Wales.

Previous hesitancy to embark on benchmarking projects has typically been because of the investment required, in terms of finances, resources and time. However, Tribal’s proven methodology has changed all that. Participating universities are not expected to manually code their data to the benchmarking model (which could result in inconsistencies which skew the analysis). Instead, they simply share a set of accounts and a staff list, and Tribal will take care of the rest; applying income and costs according to the model, to ensure our analysis is repeatable, robust and consistent, for every institution. The university leadership team is then presented with a detailed, accurate, benchmarked data set on which to base decisions and ensure the university’s finances are on an optimum trajectory.

It’s why more Welsh universities are now engaging in Tribal’s financial benchmarking analysis to aid decision-making and make the most of available opportunities to help institutions stay competitive in both the UK and international markets. Indeed, with enough Welsh universities taking part, HE leaders will be better equipped to share their data and insights in ways that influence Welsh policy-makers and help shape strategies to improve funding and the long-term financial outlook for the higher education sector in Wales.

To understand what more a financial benchmarking project could do for your specific institution in Wales, get in touch with the Tribal HE Benchmarking team today. Typically, projects take just 2-4 months, start to finish, and identify savings equivalent to 3% of the university’s income.


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