Higher education institutions take strategic decisions regarding their engagement with government policy, with choice of strategy structured by the character of the national system and notions of what is appropriate in given contexts for the institution. In this study a series of factors influencing institutional strategy in response to the higher skills policy of the New Labour government in England during the period 2006-10 are briefly examined. How the policy was interpreted by institutions is discussed, in the context of the various forces that impact on strategic decision making at the institutional level, in addition to the influence of sectoral, regional and employer links. The significance of cultural change within institutions is highlighted, and the paper concludes with a suggestion as to why strategic engagement with this policy particularly suited certain institutions.