| 7 mins read
Although the financial crisis facing the United Kingdom’s universities is by now well known, the detailed reasons behind it have been less prominent in public and political debate. Tuition fees have gradually reduced the true value of funding for undergraduate teaching, but the sector’s deep instability is also a result of two further errors. The first was removing all controls over home student numbers, making universities’ income generally less reliable and allowing famous institutions to grow very quickly at the expense of others. The second major problem has been successive governments’ encouragement of international student recruitment. Universities increasingly depended upon international students until Whitehall then reversed course and left the sector exposed. Overall, UK higher education now faces a very bleak future, continuously retreating in the face of very little public sympathy and consequently limited political interest.
Britain’s universities: the context
In 2024-25, the number of institutions reporting a financial deficit went up from 29.6 per cent to 45.2 per cent, while those with ‘low net operating cash flow’ reached 47.8 per cent. Sixty-three higher education institutions have now reported a deficit for three years running. This is unsurprising given that the number of international students dropped by 12 per cent between 2023 and 2024.
There have likely been 10,000 or more university redundancies in the academic year 2024-25, with a live running total provided by Times Higher Education amounting to over 4,300 confirmed redundancies since the beginning of 2025. The effect on staff morale has been extremely serious, too, with one recent survey by UCU reporting that 90 per cent of respondents ‘cited emerging anxiety, stress, depression or other health problems as a result of redundancy processes’. Academic mental health is now a serious problem.
Labour’s White Paper, Restoring Control Over the Immigration System, published in May 2025, makes clear that the rules around recruiting international students will be tightened again. Such a policy seems bizarre. It is likely cause grave difficulties in many Labour-held areas of the country which depend on their local or city university for growth and employment. Policies in the White Paper are likely to slow growth when that is one of the government’s key missions. It is more bizarre given that one recent poll showed that only 29 per cent of voters wanted the number of student visas reduced; 65 per cent did not. Another poll even showed that a majority of voters said they wanted international student numbers to stay the same or even increase.
But universities come near the bottom of voters’ priority list when it comes to more spending. Only 6 per cent said they would increase university funding, beating only further education (at 4 per cent) for its place in the public’s imagination. It is likely therefore that Whitehall will adopt only a ‘salvage and lifeboats’ strategy vis-à-vis individual universities when they reach near-failure, as happened at the University of Dundee in summer 2025. There, the Scottish government provided £22 million to avoid insolvency in return for Scottish Funding Council staff being placed in key areas of deliberation within that university, to make sure that public money is spent wisely (read, ‘parsimoniously’). But this approach runs very clear risks such as wasting resources and, without longer-term plans, continued struggles further down the track.
From sector expansion to contraction
After four decades of expansion, the sector is retreating, but it is still larger than it was even just a few years ago. In 2023-24, there were nearly 247,000 academics working in Britain’s universities. Back in 2014-15, that number was about 198,000. International student numbers fell between 2022 and 2024, but they were still at much higher levels than they were before the Covid-19 pandemic. But the entire system is now set up as a chaotic quasi-market, with the Office for Students in the role of regulator. The whole system will require rethinking—not something the OfS or the Department for Education is equipped to do.
Here, the original sin was to sell higher education to policy makers as ‘skills training’ or ‘investment’, which brought money in for a while, but has, in the end, prevented the public and policy makers from seeing its true value. Once everything is about economic feedback, then the very purpose of a university is degraded: every element that cannot be shown to turn a ‘profit’ is eventually discarded.
All this is a far cry from successive policy-making generations who lionised higher education’s transformatory ability, recommending growing the student base from around 2 to 37 per cent of eighteen-year-olds in the years after 1963 when the Robbins Report recommended large-scale expansion. Most notably, the Blair and Brown years made universities into ‘anchor institutions’ aiming to replace the heavy industry that had collapsed during the 1970s and 1980s in, for instance, south Wales. But the whole system in Wales seems clouded by doubt, and the share of school leavers entering higher education appears to be declining.
Where next?
Both the left and right long feared exactly this debacle. Yet neither of those camps has much to say about the disaster presently unfolding inside UK universities. Few voices on the left (and certainly not the present Labour government) now call for a rolling back of those fees first imposed in 2012, still less the abolition of fees in their entirety. Conservatives have even less to offer beyond a rather threadbare attack on supposedly ‘woke’ universities and a call to reduce their size and scale.
So we are left with a doleful picture. Money is short and unlikely to start flowing soon. Academic professionals are exhausted and demoralised. The public is not that interested. There are, as usual, one or two signs of light, a potential recovery in international recruitment being among them. The system is unlikely to collapse overnight. But no one should be under any delusion. Higher education’s years ahead are likely to involve a bitter, alienating and chaotic decline.
Produced by Sean Hannigan in collaboration with the author.
