Universities have spent years being asked to prove their value. Minister Jacqui Smith’s recent speech to the Universities UK conference suggests the terms of that argument are shifting again.

Her message was strongly economic. Universities, she argued, should act as “anchor institutions” in their communities, supporting jobs, innovation, skills and local growth. She described them as a network of “economic engines” and called for closer partnerships with employers, colleges and local government to ensure provision reflects the needs of local economies.

This sits squarely within the Government’s wider focus on reindustrialisation, skills and regional growth. Universities are increasingly being discussed not only as places of teaching and research, but as part of the infrastructure needed to deliver economic renewal.

There is, however, an uncomfortable backdrop to this ambition.

The financial model underpinning much of UK higher education is under considerable strain. International students have become an important source of income for universities, particularly as domestic tuition fee income has struggled to keep pace with costs. Student visa applications were down 11 per cent by July this year, with sector leaders warning of further falls in enrolment.

The consequences are now highly visible.

At the University of Nottingham, proposals have threatened courses including music and modern languages, while restructuring has led to a strike dispute with staff. At Sussex, staff have voted for strike action over proposed job cuts. Brighton, meanwhile, is considering closing its Falmer campus and consolidating its estate by 2030.

None of these institutions are alone. Course closures, redundancies, restructuring and industrial disputes have become an increasingly familiar feature of the higher education landscape.

For communications teams, the significance goes beyond another round of difficult headlines. Financial problems that might once have remained largely internal are becoming much more visible to students, staff, prospective applicants and local communities. Restructuring can lead to industrial action; industrial action can disrupt teaching and attract national coverage; uncertainty over courses and jobs can then feed into perceptions of an institution among the very people it needs to recruit.

There is a risk of a self-reinforcing cycle: weaker recruitment puts pressure on finances, restructuring damages morale and reputation, and further uncertainty makes recruitment and retention harder.

That sits awkwardly alongside a government agenda asking universities to present themselves as stable, long-term anchors for their regions.

The answer cannot simply be better messaging around cuts. Universities going through significant change need a credible account of what they are building towards: which areas they will continue to invest in, where they have genuine strengths and how their decisions support a longer-term role in their local economy.

This points to a wider question about the model universities are trying to sustain. A recent HEPI report argued that the sector’s pursuit of a broadly similar “world-class university” model has contributed to financial pressures, and made the case for a more differentiated system in which institutions are clearer about their particular role and strengths.

Smith’s speech makes that question of differentiation more immediate. If every university responds by talking about skills, innovation, inclusive growth and its role as an “anchor institution”, they will quickly start to sound indistinguishable.

The strongest institutions will be able to point to something more concrete: the employers that depend on their graduates, industries – both local and national – that draw on their research, businesses created from their intellectual property or investment attracted to their region.

A university embedded in an advanced manufacturing cluster has a different story from one central to NHS workforce training, life sciences or a regional creative economy. Those distinctions should be doing much more of the work.

Financial pressure makes this differentiation more important, not less. Institutions cannot communicate every course, research specialism and partnership with equal weight while also expecting audiences to understand what makes them distinctive. Nor can every institution credibly present itself as pursuing the same version of university success.

For universities, the communications task is becoming less about promoting everything they do and more about deciding what they want to be known for – then making sure their partnerships, investment decisions and public narrative reinforce it.

The Government may want a nationwide network of economic engines. The challenge for each university is explaining what, exactly, its engine powers.

The key lessons for universities and higher education communications teams are that:

• The institutions best positioned to navigate financial pressure will be those that can clearly define what makes them distinctive: the industries they support, the skills they provide, the research strengths they possess and the role they play in their local and regional economies.
• Becoming an effective “anchor institution” requires more than adopting the language of skills, innovation and regional growth. Universities need tangible partnerships, investment and outcomes that demonstrate how they contribute to jobs, employers and economic growth.
• Financial pressures make strategic communications and differentiation more important, not less. Universities undergoing restructuring need a credible long-term narrative that connects difficult decisions today with what the institution intends to become – and gives students, staff, partners and local communities a reason to believe in that direction.

To learn more about DRD’s work with universities and education organisations, visit our Schools & Universities page.