With the passage of the 1992 Further and Higher Education Act the British system of higher education formally moved from a binary to a unitary structure. However, ever since successive governments have argued for a diversified model of higher education within which institutions should pursue contrasting goals. This article offers an interpretation of the key ingredients of institutional diversification and constructs alternative structural models of higher education. It proceeds by exploring the changing structure of British higher education since the creation of the unitary model. The argument is that there has been a steady emergence of flexible sectors, which both converge and diversify. However, there is a danger that the 2011 White Paper, rather than sustaining flexible sectors, could intensify the nascent shift in the direction of stratification marked by increasing differentiation between sectors as they converge internally.