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The past 14 years of Conservative-led government have, in many ways, been a successful period for the UK’s universities. Student numbers have increased by 12% to 2.9 million. Real terms income has grown by one third to £52 billion. In the latest global ranking, there are four UK universities in the top ten and 15 in the top 100.
But this success is built on fragile and unsustainable finances, with many UK universities in deficit. Each UK student now costs more than universities receive from tuition fees and government grants. Fees from international students help, but many universities experienced a downturn last year.
Universities are having to close courses that recruit relatively low numbers of students and cut jobs. It is not unthinkable that one or more might go out of business.
This must be a priority for the next government. However, no party has outlined a coherent plan for how the situation might be resolved.
Higher education is devolved across the UK, so policy is shared between the Conservatives, Welsh Labour, the Scottish National Party (SNP) and the Northern Ireland Executive. In England and Wales, changes by the Conservatives and Labour have replaced most government funding for universities with tuition fees and income-contingent loans. This was pioneered by Labour before it left office in 2010, and fees were then raised further by the Conservative-Liberal Democrat coalition.
Students in Northern Ireland pay lower fees and Scottish students pay no fees at all. But there are UK-wide strategies for research, for which income from government, charities and industry has grown by 15% in real terms. The same is true for international students, which have increased by one third. This has enabled universities throughout the UK to sustain their global standing – but a tipping point may be approaching.
Resolving the shortfall in university funding would require increasing tuition fees, government grants or international students, or alternatively reducing student places. But all of these options come with difficulties.
Young people (and their parents) still want university places – but not higher fees. Universities attract private finance, so they are a lower priority for public funding than schools and hospitals.
Without an increase in fees and funding, universities will need to rely more on international students, which increases immigration – something political parties are often keen to avoid.
Party proposals
The Conservative manifesto proposes to reduce income for universities further, moving £900m from higher education into apprenticeships and national service by 2028-29. This would be achieved by withdrawing public funding from courses with low retention and employment rates, which are currently chosen by more than one tenth of students.
The plan to remove funding from universities while also capping work and family visas, which attract international students, would likely put many universities into deficit.
The Conservatives also plan to create a new Advanced British Standard qualification for 18-year-olds, which would broaden school education by integrating academic and technical learning. Many university courses embrace both types of learning. So this may increase demand, rather than encouraging young people to choose other routes into careers as intended. The manifesto does promise a £2 billion increase in research funding, but most of this is likely to be earmarked for defence.
In 2010, the Liberal Democrats breached a manifesto promise by increasing tuition fees for students in England. They lost votes in the following election, but the policy enabled universities to grow in response to demand.
The Liberal Democrat manifesto promises grants for maintenance and lifelong learning, which would provide an additional £1.5 billion for higher education. It also commits to helping universities by excluding students from immigration statistics, investing in European research collaboration and re-joining the Erasmus exchange scheme. But there is no reference to tuition fees. There would instead be a review of higher education finance during the next parliament.
The SNP, Green party and Plaid Cymru are all opposed to tuition fees. This requires more public funding for each student, which led to a recent reduction in places for Scottish students. These parties all support student maintenance grants and closer ties with Europe.
Labour has acknowledged that higher education is in crisis and that the party would act to secure its future. There is, though, no commitment on tuition fees, university grants or international students in the Labour manifesto. No reference is made to universities within the budget tables.
Labour has, nonetheless, outlined three distinctive commitments. The party says it would work with universities. They would position universities centrally within an industrial strategy, which would influence research funding, skills training and immigration rules. A unified strategy for post-16 education would aim to improve both work-based learning and university access, including through progression between colleges and universities.
This signals a more co-ordinated and collaborative approach, joining universities up with local government, industry, public services and other parts of the education system. It will only, though, succeed if it is underpinned by a sustainable funding model, which is not addressed in the manifesto.
The problem of university funding calls for difficult decisions about the balance between student places, tuition fees, university grants and immigration. So far, no party has laid out a viable route forward.
Chris Millward works for the University of Birmingham, which receives UK government funding for teaching and research, as well as tuition fees backed by government loans. Its recruitment of international students is also influenced by government policy on student, work and family visas.
