UK Education

The UK education sector and its real estate is vast, running from children’s day nurseries through to universities, with an array of diverse and expansive campuses. The sector has been in the spotlight, with frequent headlines covering everything from Government changes impacting independent schools, through to financial challenges faced by higher education (HE) institutions. Below, we provide a ‘snapshot’ of the sector, the current trends and challenges, and how they are affecting its real estate.

In the private schools sector, the impacts of the imposition of the removal of business rates relief on schools with charitable status and VAT on school fees are much debated and not yet fully understood, but have added to existing financial challenges, such as increasing operational costs and rising staff salaries and pension contributions. The cumulative impact has seen various announcements of private school closures, most often among the smaller scale institutions.

Consequently, several of our clients are undertaking strategic reviews of their estates, to fully understand their workings and explore opportunities to reduce operational costs. These have included identifying opportunities to increase the efficiency and utilisation of their existing assets, and reviewing how they function: do spaces support their intended uses, or are they being used for functions beyond what was envisaged? As a result, many are considering the repurposing of some property assets – either for different school uses, and/or to generate additional income from other sources – and in some cases dispose of those deemed surplus to requirements.

In the public sector, there will be some hope that, following the absorption of the Education and Skills Funding Agency into the Department for Education, there will be new sources of funding to enable the refurbishment or replacement of the post-war facilities that many schools and further education colleges still occupy. However, the first round of Private Finance Initiative contracts are also coming to an end, which means that the projects they funded are in many cases ready for - at least – a refurbishment, at a time when the terminal costs of the contract will also have to be met. For those not in receipt of transformational funding, publicly-funded institutions are exploring alternative solutions.

Cost and Carbon Emission Savings

Here are some of the most obvious areas for savings in cost and carbon emissions, which will come with wider benefits for staff and student well-being and outcomes associated with occupying modern, fit-for purpose facilities. This includes looking at their estate operations and exploring opportunities for surplus land release to help fund their property plans to improve/ expand the core estate, such as upgrading existing or providing new buildings.

The HE landscape is also experiencing financial challenges, with funding under threat, rising costs (including changes to National Insurance contributions which have affected the full spectrum of our education client base) and demand profiles altering. Many institutions are confronted by a need to juggle their long-term objectives with short-term, immediate pressures.

Improving Efficiency

Against this challenging backdrop, our HE clients are inevitably looking at their estates with a need to increase efficiency, and build in greater resilience and adaptability into their long-term planning. Checking estate size requirements may reduce costs, identify areas for repurposing (including areas that could generate additional income) and free capital for reinvestment elsewhere. Working to reduce operational costs can also contribute towards achieving net zero objectives and enhance attractiveness in a competitive market. New ways of working, travelling or delivering education are always possible and can have a positive impact on institutions of all scales, as well as their staff, their students and the communities they operate in. These are difficult times, but we are seeing examples of universities utilising their expertise to explore new solutions, and finding opportunities by being creative in how the estate is used.

Aphorisms can be irritating, but one that stands out at present is ‘if you fail to prepare, prepare to fail’. It’s clear that while a multitude of factors are at play across the entire sector, experiences, and the magnitude of what is being asked of the education estate, differs significantly between institutions. Nonetheless, for any immediate property decision-making, it’s clear that any education establishment needs to have a clear picture of its long term-future, and understand how each decision fits into their wider strategic objectives.

Savills Education group brings experts in buildings, planning, consultancy and more into one team working cohesively to support clients throughout children’s lives from nursery to HE settings; we look forward to supporting you and them.