A new Universities UK survey shows universities are increasingly turning to collaboration, cost-cutting and potential mergers to remain financially sustainable amid rising costs and policy pressures.

Two in five universities are considering closer collaboration with other institutions, including mergers or ‘multi-academy trust’-style models, as they respond to sustained financial pressure, according to a new survey by Universities UK (UUK).

The survey, conducted between March and April 2026 with responses from more than 140 universities, examined where institutions have already made savings and what further measures they may take to remain financially sustainable while continuing to deliver high-quality education and research.

According to the findings, 81% of universities are considering digital transformation, 71% are open to shared procurement, and 65% are exploring collaborative structures such as federations or alliances. While only a small number have pursued mergers to date, two in five institutions said they are open to or actively considering mergers or acquisitions in the future.

However, universities report significant barriers to large-scale change, including limited internal capacity and expertise. Respondents called for greater flexibility around VAT rules and for government support through a dedicated Transformation Fund to help meet the upfront costs of major collaborative projects. UUK is supporting institutions through its transformation and efficiency programme by sharing best practice and providing access to specialist legal and financial advice.

Cost-cutting measures remain widespread. Over the past three years, 79% of universities have pursued voluntary redundancies and the same proportion have implemented recruitment freezes. Cuts to student support have increased, with 27% reducing bursaries and scholarships and 13% cutting hardship funding. Almost a third of institutions have reduced academic research activity, and changes to course provision are common, with many reporting consolidation or closures.

Despite recent increases to the undergraduate tuition fee cap, 92% of English and Welsh universities said this would not fully offset wider financial pressures, including rising employer national insurance contributions, changes to international student recruitment and ongoing cost inflation.

Chief Executive of Universities UK Vivienne Stern MBE said:

‘Universities are grasping the nettle to respond to the severe financial pressures they are facing. Many have had to make significant cuts, but the survey also shows how the sector is finding creative, collaborative solutions to become more efficient and ensure it can continue to deliver the world-class education the UK is known for.

‘However, there are clearly barriers to what universities can do on their own. We are extremely grateful to the government for the tough decision to uplift fees in line with inflation in England and Wales, but as the survey results show, it just doesn’t go far enough. Course closures, staff redundancies and reduced research, which ultimately hit students, local economies and national prospects for growth cannot continue to be the only solution to the sector’s financial challenges.

‘If the government is serious about driving growth and ensuring that the opportunities that universities create for people all over the UK remain in place, we need smart investment into higher education.’

Further details are available at the Universities UK website.