What Next For The University Crisis?
Newcastle University's Open Day for prospective students, Newcastle upon Tyne, England, UK
6 min read
The announcement this week that tuition fees will go up for the first time in eight years has received mixed reaction.
On Monday, Education Secretary Bridget Phillipson confirmed in a House of Commons statement that fees would rise to £9,535 per year in line with inflation.
It is far cry from Prime Minister Keir Starmer’s past pledge to abolish tuition fees that he set out during his campaign to lead the Labour Party.
However, for many figures in higher education the move was necessary and overdue, and for them is merely a starting point when it comes to delivering well-needed sector reform.
The environment in which universities are operating has changed hugely since Starmer's commmitment, with a sharp fall in international students — who pay higher fees than their domestic counterparts — coupled with rising costs leading to what's described as a "perfect storm" facing higher education.
Nicholas Barr, a Professor in Public Economics at the London School of Economics, who had input into the 2006 reforms, welcomed the rise announced this week but said it “isn’t desirable in terms of a long term strategy”. He described it as “a holding operation” before wider reforms.
While a university is yet to collapse under the weight of financial pressures, industry insiders say it's been a close call in recent years.
PoliticsHome understands that officials in the last Tory government discussed the possibility. Whether the Treasury would agree to prop up a university is another matter entirely.
So, what happens next?
Tuition fee rise "massively oversold"
Nick Hillman, director of the Higher Education Policy Institute think tank and once an adviser to former universities minister David Willetts, described the announcement made by Phillipson in the Commons this week as “massively oversold”.
Hillman said the changes were “small beer”, estimating that the fee rise will only equate to a net gain of £18m for the sector once the increase in employers’ National Insurance Contributions announced in the Budget is factored in.
This, he added, means under £45,000 per university.
Hillman accused the Government of ignoring the list of asks from the sector, adding “we didn’t even get measures that would help universities help themselves”.
Phillipson did this week set out her ambition to reform the higher education system, adding that proposals would be published in the coming months.
PoliticsHome understands that the Government is planning a shorter timescale for reforms and is not planning a commission-style review.
Unis operating in "black cab world but world has moved to Uber"
The Government — and a large part of the sector — is clear: more reform is needed. But what do people feel has gone wrong?
Robert Halfon, former skills minister, told PoliticsHome that “some universities are operating in a black cab world when the world has moved to uber”.
Halfon argues that the Government must first work out what higher education will look like for the next 50 years, and “then work out how to pay for it”.
The other elephant in the room is the increasing costs facing students. While the Government this week announced maintenance loans would increase, for many the cost-of-living continues to far outstrip the support to which they are entitled.
Speaking to PoliticsHome, vice-chancellor of the University of Sunderland and former permanent secretary to the Department for Education Sir David Bell said that on balance, he thinks that a long-term review of the sector “might be a sensible way forward”.
Phillipson hinted at a wider range of reforms to come in her speech on Monday, arguing for a need to improve access, drive up teaching standards and embed universities more in communities.
Bell added that there is an argument that the state “even beyond the loan system” should make a more direct contribution.
This is a view shared by Professor Barr, who told PoliticsHome that "higher education should be funded by a mix of fees and taxpayer support, but at the moment we put it all on fees”.
He is doubtful, however, that the Labour Government will be prepared to make this money available before the next election.
Clive Lewis MP, whose constituency encompasses the University of East Anglia, told PoliticsHome: "There is a perfect storm in higher education. British higher education is a valued asset but there is only so much of a battering it can take."
The MP for Norwich South said that it would be important to "look at root and branch reform before you even look [at] funding".
But Lewis was clear he didn't think "piling this [more debt] on the next generation" was the way forward.
He told PoliticsHome that if fees should have been raised is the "wrong question" and we should instead be asking, "what are you funding and what is its purpose".
He added that the country has to see a "complete comprehensive review of what the higher education sector is going to be" and ask "what do we need our next generation to be doing given AI, an ageing population and the climate crisis".
Not just money
On comments that the country needs to think again about what they offer to the public, Sir David said that the ideas hold water, but that the “initial decision-making about all that has to rest with university leaders”.
“There’s always been quite a light touch on the tiller when it comes to higher education and the courses they offer."
“There's a sense in which the market is shaping the choices and I would imagine that the state would always be quite reluctant to be much more direct over what universities are doing.”
Former minister Halfon told PoliticsHome that more thinking needs to be done around the future of universities with the courses they offer and the future impact of artificial intelligence.
He added that there are also “disruptors” to traditional higher education like institutes of technology, degree apprenticeships and the incoming Lifelong Learning Entitlement.
Others flagged the new arms-length body Skills England and how this could fit into any wider reforms.
Unis "not out of the woods yet"
Jess Lister, associate director in the education team at consultancy Public First, said that while Labour’s intention for reform is plain, “it's unclear whether the new Government will have the headspace to think through longer term reforms if they are still battling the risk of universities going bust over the next 12 months".
CEO of Universities UK Vivienne Stern is clear that the country does not need another huge external review. “We have had a lot of reviews and been round the block several times…the last thing we want is for [this] to be kicked into the long grass," she told PoliticsHome.
But she agreed that “nobody thinks that universities can continue to go on as they have been”.
Could a university still go bust now, despite the rise in tuition fees?
“It remains completely possible that that happens and that is a massive worry for us."
And while she doesn’t think the sector is on the cusp of an institution going bust, she stressed that we are "not out of the woods" just yet.
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