As the 31 January deadline for undergraduate degree applications approaches, universities as well as would‑be students have reason to be nervous. Pressure on them is increasing from several sides, with a number running large deficits. Last week an internal memo sent by a senior academic at the University of York appeared to confirm what observers have long suspected: the need for the high fees paid by overseas students is so great that entry requirements are being lowered.
The university denies that this will make it easier for overseas students to get in than domestic ones. But the fact that York, which belongs to the elite Russell Group of research-intensive institutions, is making such changes points to the severity of the sector’s problems. Money worries are not confined to former polytechnics. Higher education finance is a mess.
Not only have successive Conservative governments failed to do anything to improve the situation; they have made it worse, particularly in England (there are significant differences in the devolved administrations’ policies, and Scottish students do not pay tuition fees). While public funding for research has remained roughly stable, funding for teaching has fallen by around a fifth since 2010. With student fees in England frozen at £9,250 since 2016, this income stream too has shrunk – by around a quarter in real terms – while maintenance grants have not risen with inflation either.
Faced with this drop-off, universities had little option but to turn to international recruitment and the much higher fees it brings. But Brexit slashed the number of EU students in half, as well as removing access to £800m a year in grants. Now ministers are making an already competitive business harder by tightening visa rules – making it impossible for most students to bring relatives, including children, to the UK – as part of their obnoxious campaign against immigration.
An increase in domestic fees would be politically difficult in the context of acute intergenerational unfairness, particularly in relation to housing. But some alternative to the arrangement whereby overseas students subsidise young people from the UK by around £2,500 per student per year is needed.
Given the many demands on the public purse, new funding is unlikely whoever wins the next election. But Labour could reverse the reckless decision to abandon planning around student numbers, which led to prestigious universities over-recruiting – to plug budget shortfalls – while lower-status ones saw numbers collapse. While this liberalisation means some students now attend more prestigious institutions than they might otherwise have done, this isn’t really a win when their experience is degraded by bigger class sizes and accommodation shortages, which also affect local housing markets. Meanwhile, weaker universities are forced to cut jobs, leading to strikes.
Politicians also need to answer the question of what happens if a university goes bust. Would a takeover by a foreign state-owned or private equity company be allowed, for example? Private equity already controls a large chunk of the childcare market and some private schools. Is this the rightwing strategy for higher education? If so, it is one that Labour must counter. An independent review of universities was commissioned by Australia’s Labor government. This is an option that Keir Starmer’s party should consider. There is no quick fix to a complex problem that includes the cost of the British custom of educating most students away from home. Securing the sector’s future will be a challenge.