Why 2025 Could Be A Pivotal Year For Universities
Students at the University of Greenwich posing for pictures on graduation day
6 min read
Securing the future of UK universities will be one of many major challenges for the Government next year.
The higher education sector has had an eventful 2024 — and mostly not in a good way.
Under financial pressure, many universities have closed courses and made redundancies as a way of saving money. Heading into 2025, higher education institutions across the board are restructuring in a bid to keep their heads above the water.
This all seemed to come to a head last month when Education Secretary Bridget Phillipson announced that tuition fees would rise to £9,535 per year in 2025.
But that wasn’t her only significant announcement, as Phillipson also told MPs that “major reforms” were coming for the higher education sector. Writing to vice-chancellors last month, she said the Government will set out these plans by next summer.
Ministers are expected to carry out a review before coming forward with its next steps.
What form the next steps should take is up for debate, like what parts of the under-pressure system should be prioritised for reform, as well as how wide-ranging reform should be.
While Labour had priorities for education heading into the July General Election, higher education reform was certainly not one of them, and some think that universities risk becoming a Pandora’s Box that could consume a lot of government time and energy.
As Jess Lister, associate director at Public First, said: "Labour's manifesto promised reforms to childcare and early years, Ofsted, the curriculum, assessments, and to post-16 skills.
"The financial instability facing higher education means that it too has been added to the list, but somewhat reluctantly.”
Lister said it is as yet “unclear what direction Labour wants these reforms to take — does it want to be transformative and ambitious, or does it want to put a sticking plaster over the sector until the next parliament while it prioritises other parts of the education sector?"
Professor Chris Husbands, former vice-chancellor of Sheffield Hallam University believes that the sector is not the Government’s principal priority. As a result, he does not think the funding regime will change much as a result of any reforms coming down the road.
“[The Government] don’t see universities as one of their polemical policy agendas in the way the previous government did. They are interested in universities to the extent that they are delivering government priorities and universities may want to think about how they are relevant in this space," he told PoliticsHome.
In November, Phillipson set out the areas for change in her House of Commons statement and in a follow-up letter to vice-chancellors: expanding access and improving outcomes for disadvantaged students; making a stronger contribution to economic growth; playing a greater civic role; raising the bar further on teaching standards; and sustained efficiency and reform programme.
Phillipson was insistent that while reform will require a shift in approach from the Government, it will also require “real change from the sector as well”, placing expectations at the door of universities — particularly when it comes to money.
She told universities that “adapting to the changed context of the higher education sector over the next decade will require a more fundamental re-examination of business models and much less wasteful spending”.
She also set out expectations for the sector “to be significantly more transparent on how it is managing its resources and to be held to account for delivering great value for money for students and the taxpayer”.
Some experts believe that this approach from Phillipson – a warning to university leaders that it is them who must adapt – is the result of a judgement made by the Government on the level of empathy the public has for those institutions.
A poll by The Policy Institute at King’s College London ahead of the July election found that higher education ranked towards the bottom of the public’s priorities when compared with other potential issues. Thirteen per cent of respondents said it would be "very important" to deciding how they would vote.
One of the financial pressures affecting universities has been brought about by a fall in the number of international students coming to the UK.
The Tory government led by Boris Johnson made it easier for people from overseas to study in the UK. Students from abroad pay higher tuition fees than their domestic counterparts, meaning foreign students quickly grew into an important source of university funding.
The last Conservative administration tightened the rules around international students as part of a wider policy of reducing net migration. The result — a significant fall in the number of applications from overseas — has compounded the financial strain on universities.
PoliticsHome understands that the Government is planning for the higher education review to be short and internal, engaging with stakeholders. However, some in the sector are concerned that it will not go far enough.
Dani Payne, Senior Researcher at the Social Market Foundation, said that “for the Government to opt for a quick and short review of post-16 pathways would be a mistake”.
“Creating better integration between further and higher education would be a significant undertaking even in stable times, let alone when both are reporting serious financial pressure and when the current system incentivises providers to compete, not cooperate.”
He said a short review would amount to ministers "tinkering around the edges of a broken system that we don’t fully understand".
"Government risks tying itself into the logistically simple but politically unpopular fix of regular rises in fees, without understanding where this money is going or if it is well spent," he said.
Nick Hillman, Director of the Higher Education Policy Institute think tank, is calling on ministers to commit to multiple years of inflation-plus tuition fee rises.
While tuition fees were originally meant to rise each year in line with inflation, the former Conservative prime minister Theresa May froze fees at £9,250 in 2017.
As a result, Hillman said, the fee is much lower in real terms than it used to be.
If tuition fees had not been frozen they would now sit at over £12,000, according to some estimates.
“The only alternative to fee rises is more direct Government funding but that doesn’t seem a priority for either voters or policymakers," Hillman told PoliticsHome.
"At the moment, ministers have given a small fee increase, all of which and more are being snaffled back in the National Insurance changes, and yet they are expecting universities to do much more in areas like access.”
Then there are the cost-of-living pressures facing students.
Husbands said that while it is right that the Government has prioritised access in the higher education sector, “the real challenge for widening access is now the out-of-pocket, day-to-day living costs for students from poorer backgrounds”.
Prime Minister Starmer will likely face calls for a further boost to maintenance loans in 2025 to help students cope with financial pressures.
“Students are having to work significant hours and for some, it has compromised their learning and course," Rachael Maskell, the Labour MP for York Central, told PoliticsHome.
Maskell said that universities should provide accommodation, arguing that family homes being used by students during a housing affordability and availability crisis has created a "clash of housing need" between local people and students.
Since being elected Prime Minister Starmer has repeatedly stressed that it will take "difficult decisions" to get the country back on its feet. When it comes to the future of the UK's universities, the Prime Minister might have some more "difficult decisions" to make in 2025.
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