Why saving universities is far more than academic

There’s a strange cognitive dissonance about the role of universities in modern Britain. The number of young people applying keeps rising and the vast majority of parents want their children to attend. Employers continue to require degrees for most skilled jobs. In many towns universities are one of the largest employers and a source of local pride.

But at the same time almost half of Britons think there are too many graduates, so graduates have become something of a political pariah. Spokespeople for all parties instead line up to emphasise their commitment to boosting vocational education, trying to appeal to older voters’ nostalgic belief that we can recreate the industrial apprenticeship schemes of the mid-20th century. (Not that they ever fund further education properly when given the chance.) Universities have also become a punching bag because of their liberal values, accused of infecting the young with “wokery”.

This disconnect has left the sector unable to compete with the NHS or schools when it comes to receiving public money, or when governments have to weigh the interests of higher education against other priorities such as immigration. As a result, large number of universities are in serious financial trouble. Just under half will be in deficit this year, and this is after multiple rounds of restructuring. It’s not just the newer institutions making cuts: venerable Russell Group universities are firing professors and culling departments. Even Cambridge has made some staff redundant this year.

The reasons for this financial distress stretch back to the coalition government’s 2012 increase in student loan payments. Initially, this led to a big cash boost, and something of a spending spree on dilapidated buildings, but the maximum loan was capped at £9,000 (with one increase to £9,250 in 2017). This meant that, thanks to inflation, the effective level of the fee fell by a third over time.

A new source of income was needed and so universities turned, with the full support of the Conservative government, to international students, whom they could charge an uncapped fee. Between 2017 and 2022 numbers rose by an astonishing 70%, reaching 760,000. The most prestigious institutions benefited most because they could charge more, and became increasingly dependent on this income stream. Those with less of a reputation started to recruit enthusiastically as well, sending agents to sell the universities to Chinese, Indian and Nigerian students.

This offset the fall in domestic fees but created a new set of problems as, thanks to the rise of Reform UK, immigration became a dominant political issue. While public anger was mostly focused on small boats and porous borders, there was intense media focus on rising net migration, which hit almost 1 million in 2023. Targeting students was an easy way to reduce numbers, and so the last government changed the rules to stop most applicants from bringing family members to Britain with them. Enrolment has now fallen significantly in each of the last two years.

Thus the wave of redundancies and closures. To take a few recent examples: Goldsmiths is seeking to cut a quarter of its staff, its third restructuring in five years, and Nottingham has suspended all its music and languages courses. Some institutions are close to going bust or having to merge: the universities of Greenwich and Kent have already agreed to do so later this year.

In this face of this mess, the government has decided to let tuition fees in England rise with inflation. That will help a bit, but university incomes are still going to fall over the coming years due to other policies. A combination of higher national insurance bills, taxes, further tightening of immigration rules and cuts to research grants means that the higher education sector will be about £4bn worse off by 2030 than it is now.

Universities aren’t blameless in all this. They spent the initial proceeds of the tuition fee rise without planning properly for the future, and much of it went on big increases in administration and management costs. Some have turned a blind eye to obvious abuses in the immigration system. Courses have been expanded without much thought for student interests, in the hope of bringing in some extra income. To try to make savings, too many are relying on management consultancy firms that know nothing about education, leading to further unnecessary costs.

But ultimately they are responding to the bad incentives created by government policy, and it’s only by changing these that a full-blown crisis can be averted.

Unfortunately the debate about universities is mired in nonsense, promoted by politicians who should know better but are happy to play into misconceptions rather than correct them.

One popular proposal is to suggest that “low value” courses in the arts or social sciences be scrapped by government diktat to save money. But even putting aside the problem of ministers deciding what constitutes value, this would actually cost money. These courses are relatively cheap to run and subsidise subjects such as science and engineering, which would otherwise require more government cash.

Another common theme, especially from the right, is that we should have fewer universities and focus instead on vocational courses. Except most students are already on vocational courses: three quarters are doing degrees in science, engineering, medicine, law, teaching or business. The academic/vocational dichotomy is entirely outdated in a world where manufacturing jobs are more likely to involve managing complex technology than standing on an assembly line, which is why many universities already offer degree apprenticeships and work in partnership with local further education colleges.

When Suella Braverman, who has morphed from a failed Tory home secretary to Reform’s education spokeswoman, said in February that she wanted 50% of young people to learn a trade, she merely showed she has no understanding of the modern labour market. Yes, we could do with more plumbers and carpenters, but not 300,000 more a year.

Rather than trying to shut down universities, we should be restoring them to their true purpose. That starts by acknowledging that the experiment with marketisation has failed, creating the bad incentives that have led to where we are today.

When tuition fees were increased in 2012, universities were also given permission to recruit students at an unrestricted rate in most subjects. As a result, the ones with the best reputation have massively increased their numbers, without a commensurate increase in staffing, which has meant reduced teaching time. Universities that don’t have a famous name have been left scrambling around, searching for students in the international market, without the luxury of worrying too much about exactly who’s turning up.

The system needs to be reoriented around the long-term interests of students, especially given they’ll be funding it for the foreseeable future. That means capping recruitment based on a reasonable assessment of teaching capacity, and a focus on improving standards. At the moment there’s so much focus on recruitment that academics are under huge pressure to give higher grades (the number of firsts has risen 400% in the past two decades) and limit academic requirements. This is in no one’s interest, especially in the age of AI, when the risk of students not doing their own work is rising dramatically.

We’re not going back to a world where fewer people go to university. Indeed, in most of our competitor countries, numbers are higher. But given it’s now such a big part of our education system, it needs more oversight from the state. We can’t rely on a market to regulate the system for us, nor can we pretend the sector can self-regulate like it did when just a few percent of the population attended. For that to happen we need our politicians to stop pandering and start focusing on the real problems.

Photograph by Getty Images