Reform of university employment contracts, pensions and taxation is needed if the higher education sector is to find efficiency savings in the age of austerity, a mission group report has warned.

The University Alliance says its institutions could help deliver “radical reforms” such as partnerships with private providers and mergers, but only if the government plays its part by loosening regulation.

The study, Efficiency, Leadership and Partnership: An Approach that Delivers Shared Economic Priorities, uses a series of case studies to argue that the mission group’s members are driving the search for efficiency.

Among the examples cited is Manchester Metropolitan University’s £350 million programme to move from seven campus sites to two, reducing its physical estate by 460,000sq m.

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The report adds that the group’s members have a long history of successful mergers and acquisitions.

It gives the example of Oxford Brookes University, which has incorporated a teacher-training college as well as schools of nursing and occupational therapy over the past 40 years.

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It concludes that Alliance institutions have the “experience and the management capability” needed to offer radical solutions, but says that any attempt to provide them “within the existing funding and regulatory framework…would be to the detriment of the sector”.

The document says that employment contracts in higher education, often a hangover from the academy’s old links to local authorities, and “restrictive” pension regulations must be reviewed.

It also calls on the government to give “greater priority” to considering the VAT framework for universities and removing the tax disincentive that currently exists for institutions wanting to share services such as payroll.

Libby Aston, the Alliance’s director, said: “We want to work with the new government to see how the regulatory environment around employment, pension and tax regulations could all be re-examined to enable universities to operate on a more level playing field with private providers.

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“As both public and private bodies, it is right that universities are accountable for public funds. However, we believe that it is universities that are best placed to identify and drive efficiency – responding flexibly and innovatively in a way that allows us to focus resources on our strengths.”

simon.baker@tsleducation.com