In considering the strategic direction of their institutions, governing bodies will have to be increasingly aware of pressures to collaborate with other institutions, including other universities, colleges of further education, industry, commerce and overseas providers. The 2010 Grant Letter from the Secretary of State to HEFCE included the instruction that HEFCE should “incentivise HEIs to collaborate, for example through greater sharing of research equipment and infrastructure” and that efficiency savings could be made through “sharing services.”
PricewaterhouseCoopers have published a report In the Eye of the Storm: Moving from Collaboration to Consolidation which reviews the financial benefits from greater collaboration between institutions. An article by Nicola Hart in Perspectives, the journal of the Association of University Administrators (AUA) reviews the various legal forms of collaborative agreements. Collaboration may take various forms:
Mergers
There have been 40 institutional mergers in the last 15 years, for example the creation of London Metropolitan University in 2002 from the former London Guildhall University and the University of North London. Such projects are major and can create uncertainties and anxieties; they are also very time-consuming, but they can in due course lead to significant economies of scale and estate rationalisations. Mergers can result from:
The HEFCW has published an explicit description of the future shape of higher education in 
Wales, the key elements of which are that by March 2013 the structure of higher education in Wales should be based on no more than 6 institutions; that their distribution should reflect regional needs; and that there should be a balance of provision (in terms of research / teaching and community) in each region. This is likely to involve several mergers. It has been reported that discussions are taking place among a number of institutions. The Welsh Government has consulted its institutions on a HEFCW report which recommends a number of mergers.
In Scotland 
the Scottish Government is understood to be considering giving Ministers the power to compel institutions to merge if recommended by the SFC.
HEFCE published a Guide to Good Practice on mergers in 2004 [Feb 04/09] and more recently has issued a consultation report on lessons learned from collaborations, alliances and mergers.
The LFHE has a knowledge resource on mergers and has a short paper Collaborations and Mergers in Higher Education: Lessons Learned and Future Prospects by Glynne Stanfield.
Alliances
While mergers are unlikely to be reversed, other forms of strategic alliances can be ended if they are not successful.
Alliances may take various forms. In terms of academic collaboration Sheffield University and Sheffield Hallam University are working together on the Collaboration Sheffield project, to try to find ways to bring together healthcare, digital and education in new and innovative ways. New developments can be initiated using a joint venture between institutions. The Universities of Birmingham and Nottingham have announced a partnership driven by academic collaboration. The University of Warwick has entered into a major international partnership with Monash University in Melbourne.
Eight research intensive universities in the north of England have set up the N8 Research Partnership, which also involves collaboration with industry.
Institutions may also ally with private providers or with local or regional organisations including industry, commerce, the NHS or others.
European Links
Most institutions have links with other universities in Europe, particularly as part of networks promoting staff and student mobility programmes (Erasmus Mundus or the Lifelong Learning Programme) or in research consortia.
Joint Research Projects
Many major research projects are run by teams of academics drawn from a number of institutions, either universities or other types of research organisations. Some projects will be inter- or multi-disciplinary; others may involve international collaboration.
The UK Research Partnership Investment Fund has been established to help to develop research facilities and encourage collaboration, in particular with business.
Franchise Agreements
Many universities work with individual colleges or consortia to validate foundation degrees or other programmes through franchise agreements; there are also various forms of collaborative agreements to facilitate access and /or develop student recruitment; many universities also collaborate with overseas institutions in various ways. Some partnerships between higher education institutions and FE colleges are branded as University centres, which give rise to some interesting governance issues.
Shared Services or Facilities
Groups of institutions can work together to achieve financial efficiencies in various ways, for example the Bloomsbury Colleges Consortium in the University of London. Other universities are working with private service providers; an example of this is University College, London’s work with Microsoft for the provision of e mail services. Other universities work with local providers of public transport. A major difficulty in sharing services has been the requirement to pay VAT on shared or outsourced services, but a report Higher Education in the Age of Austerity: Shared Services, outsourcing and Entrepreneurship suggests that if this could be overcome significant savings would be possible. The Government has announced (January 2012) that shared services are to be exempted from VAT.
HEFCE has set up the University Modernisation Fund to help to improve efficiency through greater use of shared administrative, IT and other services. One example of this is cloud computing infrastructure and applications.
In Scotland, the SFC has established the Invest to Save fund to support major collaborations, shared service arrangements and other strategic links which produce quantified savings over a defined period.
Powerpoint presentations:
The Work of the HE Collaborations and Mergers Group, David James, Policy Consultant, HEFCE
Legal Perspectives on Collaboration, Helen Cairns, Eversheds LLP