New analysis from Universities UK (UUK) shows the scale of
underfunding English universities face in teaching today's home
students, compared to ten years ago.
Taking the 2015-16 academic year as the baseline, the analysis
tracks the ‘unit of resource' for teaching in England – which
includes both tuition fees and direct government grants – up to
this academic year. Both funding streams have failed to keep up
with inflation through this period, leaving universities in
England today receiving £6.4bn a year less in real terms for
teaching home students compared to a decade ago. It means
that funding per student for teaching in 2025-26 is 64% of
the level it was in 2015-16.
The figures ahead of this week's Budget also come on the back of
recent analysis published by the Office for Students predicting
45 per cent of universities will face a deficit this academic
year, compared to 34 per cent when the regulator undertook the
same analysis six months ago.
While the government has recently announced it intends to link
tuition fees to inflation from now on, this will only prevent the
gap that has grown in funding the teaching of domestic students
from growing further. The yearly £6.4bn shortfall is effectively
‘baked in' to higher education funding in England without
increases in direct grant funding.
The regulator's figures also reveal how the government's proposed
tax on international students, which government says will be used
to fund maintenance grants for key subjects, will further hit the
sector's finances. It is expected to add £780m of additional
costs to universities each year, with an inflation uplift to
tuition fees expected to raise just over half that amount
annually, £440m.
Research with 60 of UUK's members has previously shown how, in
gripping the financial challenges they face, universities have
been taking difficult decisions, including on course
provision. 49% of those surveyed in spring 2025 had closed
courses; 55% consolidated courses; 46% removed module options,
and 18% closed departments entirely. Meanwhile nearly 80% are
considering future reductions in research investment.
Ahead of the Budget, UUK is calling for government to change its
approach and recognise the damage that a tax on international
students will do to their ability to drive economic growth by
meeting the future skills needs and undertaking cutting-edge
research and innovation.
Vivienne Stern MBE, Chief Executive of Universities
UK, said:
“This Budget has to be about growth. The Government has rightly
identified universities as fundamental to this aim. They
contribute over a quarter of a trillion pounds to the economy
each year, they are a vital component of the skills system and
provide the foundation of many new companies with the highest
growth potential. The Secretary of State for Education was
right to set the goal of putting universities on a firm financial
footing.
“If that's the goal, this research shows just how far off
achieving that we are Universities are cutting costs hard, losing
jobs and courses as a result. They are also showing that they can
do things differently, with mergers and collaboration on the
cards for some.
“The decision to increase fees in England in line with inflation
was brave, and the right thing to do. It is beyond disappointing
that the government plans to remove more than the amount this
will bring into universities through a new tax on international
students. That is the opposite of helpful, taking us further away
from the goal of financial stability; which we need to play our
full part in delivering the government's missions.”
ENDS
Notes to editors
