All change: Higher Education is struggling with higher inflation and pressure on foreign students. Photography by Sara Morris

Crash course

The UK’s universities are among the best in the world. So why do many appear close to collapse?
June 5, 2024

It’s a miserable time for Britain’s universities. Their funding has declined and will fall further; cuts and closures are everywhere; their management and staff are divided as perhaps never before; they are berated as a key target of the right’s “culture war”; and they are uncertain as to their very purpose.

Yet they should be a success story. They bring in a huge amount of revenue: higher education providers across England, Wales, Northern Ireland and Scotland have a collective income of more than £48bn a year. They earn the country a fortune, pulling in nearly £22bn a year in export earnings—for the most part, made up of the fees and living expenses of international students. British research is strong by any yardstick: the UK has the third largest share of the world’s academic publications, after the US and China. And universities are at the heart of “levelling up”—efforts by the UK government to address differences between London and the southeast of England and the rest. There are 21,000 companies active that emerged from our universities, which directly employ 96,000 people. Regional policy is, or should be, dependent on them: they add more than £14bn to output in England’s northwest and northeast combined, as well as supporting more than 100,000 jobs.

Even so, the hallmarks of decline are both unmistakable and inexorable. One in four universities is in the red. The sector’s annual losses stand at £2bn. Almost every day, news of more job cuts comes in. Universities of all kinds are slashing staffing: Coventry, for a while the doyen and leader of the post-92 “modern” universities; Goldsmith’s in London; Kent, which always sold itself as Britain’s most “European” institution; Lincoln, a vibrant and apparently successful new university that had been making a big name for itself. The list goes on and on: Aberdeen, Brighton, Cardiff, Essex, Northumbria, Queen Mary (part of the University of London), Sheffield Hallam, Surrey and more. It begins to look as though most universities will make large-scale cuts. 

Most of that downsizing is coming, and will come, through retirements and voluntary severance schemes—for now, at least, a bloodbath of compulsory redundancies everywhere seems a way off. What is more likely is a kind of fading away or greyout. The facade of the once-grand university as stately home will remain, but lots of the rooms will be cordoned off, some of the silver will be sold, dust will fall over everything and the furniture will be allowed to rot. Eventually, as in the case of lots of those huge houses that fell into disrepair during England’s postwar years, the paint will peel and the floors and ceilings will fall in. We’re not there yet, but we will get there eventually. 

To the wider public, universities will seem to be trundling along, keeping the lights on, teaching students, putting on conferences and pumping out research findings. But something ineffable, effervescent, will have been lost: perhaps, indeed, the whole point of a university. Goodwill, and the sense of being part of a shared endeavour, is already thin enough, and industrial relations can only deteriorate. Time, that key element in any sector that relies on its people, will get more and more pressed: academics are already losing much of “their” summers to endless exam resits and bureaucracy. Original thought—and that, after all, is what a university is for—will be at a steep premium. 

Even if most jobs are saved for now, life inside higher education has become pretty depressing. Vignettes abound that are straight out of A Very Peculiar Practice, a surreal campus TV serial from the 1980s. More and more, day-to-day toil in our universities feels strangely like a David Lodge novel, or perhaps a less upmarket Porterhouse Blue. The heating is turned down, and then off; lifts are roped off at a moment’s notice; IT start ripping out cable internet connections in favour of weaker wifi; old computers creak along, endangering online security because they can’t be updated; seminar rooms are taken out of use unannounced; hot-desking is brought in and then everyone stops coming onto campus. “You couldn’t make it up” is a phrase on many lips.

Tough Tynes: Northumbria university (left), the Times Higher Education university of the year in 2022, has been rocked by planned cuts. Meanwhile the university of Bristol has a modern department of biological sciences (right), and is building an entirely new campus in the city. Photo: © Alamy Tough Tynes: Northumbria university (left), the Times Higher Education university of the year in 2022, has been rocked by planned cuts. Meanwhile the university of Bristol has a modern department of biological sciences (right), and is building an entirely new campus in the city. Photo: © Alamy

In the end, of course, one or more universities will spectacularly fall apart. It’s hard to say where that will happen, exactly, but how it could happen is fairly clear. Some of them (for instance, Surrey or Chichester) are now very indebted, and not just to their banks, but to a range of lenders who are starting to get quite anxious. If news leaks out that one is in existential trouble, then parents, students, creditors, business partners and suppliers might run for the doors. The death spiral can be quick. Bankruptcy, as Ernest Hemingway famously put it, comes gradually, then suddenly. 

What on Earth is going on? Reading the newspapers, you could be forgiven if you thought that every issue on campus was about the culture wars: free speech, “wokedom”, gender, decolonisation and race. Far from it. Most academics are too busy trying to hang onto their jobs, book travel on impossible-to-navigate third-party portals, claim their expenses and fill out endless audits to think about beguiling young people with dangerously radical concepts. Indeed, having any ideas would be a welcome novelty.

The academy is skewed to the left, of course, very likely more than it was during the second half of the 20th century, and the wilder shores of theoretical dispute are off-putting for both voters and their elected representatives. But academic radicalism and student protest are not exactly surprising if you recall the sit-ins, screaming matches and marches of the 1960s and 1970s. Today’s universities are remarkably sedate compared with the days when visiting Conservative ministers were harangued before they could even get inside the campus. Students are too busy with paid jobs to riot, since even the maximum loans for living costs fail to cover the basics in some areas.

The absurd idea that our universities are a hotbed of novel ideologies is worsening the situation, because it is dividing the public from their local campuses, and making lecturers feel as if they are under constant attack. We need to do better than these ridiculous caricatures.

The real crisis is buried deep within the finance and organisation of our higher education sector. It is a tale of ideological over-commitment, unexpected consequences, economic misfortune and financial blunders. No one comes out of it with much honour, and still less credit. 

The first problem is just the usual one: money. In England, undergraduate tuition fees for home students have not risen significantly since 2012, and not risen at all since 2017. Government funding in the other three parts of the UK has also fallen. There’s little else in the world that hasn’t risen in price, especially since the Russian invasion of Ukraine, and that’s a real problem for universities “selling” a fixed-price service in a new world of unpredictable inflation.

Once you take inflation into account, nearly 30 per cent of the value of tuition fees has been stripped away since the Conservative-Liberal Democrat coalition of 2010 brought them in. A settlement that was generous at the time has since become miserly. Universities make a loss of £2,500 on every home student they take. Funding is still above the level it collapsed towards in the late 1990s, but it won’t take many bursts of inflation to drag it back to that nadir.

For a while, some vice chancellors could patch up losses by recruiting more and more students in the arts, humanities and social sciences: “seminar-based” subjects that were cheap to teach and fairly easy to staff, and the costs of which certainly undershot the £9,000 and then the £9,250 paid for them by students every year. That money could then be used to subsidise the heavy sciences, and everyone would rub along as long as they didn’t think too much about the implications of that cross-subsidy. As chancellor, George Osborne made all that even easier when he removed student number caps for each English institution between 2015 and 2016.

The problem was that this approach to teaching (say) the humanities was one-dimensional, as universities stacked the courses high and sold them cheap, without a thought for the system as a whole—such as it was by this point. This was a zero-sum game that took students away from other providers, a beggar-my-neighbour policy reminiscent of the competitive devaluations and protectionism of the 1930s that back then helped ruin the world economy. As in the global Depression, so in the academic recession England’s big guns tried to leave everyone else in the dust. 

That couldn’t continue indefinitely. Huge redbrick universities with big names and some kudos with middle-class parents could drop their grades a little, allow seminars to get bigger and bigger, put on overspill rooms for lectures. But sooner or later everyone would notice the drop in quality and complain—an emperor’s new clothes moment once headteachers, parents and students began to protest. 

A “squeezed middle” also emerged, its ranks full of traditionally good and well-regarded universities that reacted to having their usual student cohorts drawn away by desperately dropping their grade offers and advertising everywhere they could think of. Many were eventually forced to pull arts and humanities courses altogether. If more do the same, that could leave some areas of the country completely bereft of such provision: the far southeast of England, say, or East Anglia. That would mean that low-income students who want to stay at home can’t study those subjects. It was this middling stratum of universities whose financial woes started to become obvious as Covid made its grim way through the country, and their complaints have now raised the alarm about the bad behaviour of a few running down the many.

Nor could that merry-go-round keep spinning forever. Some subjects, such as languages and English, have declined vertiginously in secondary schools, for which government ministers’ rhetoric must take a share of the blame. Eventually, too, the accounting rationale for hoovering up these students declined as costs in the arts, humanities and social sciences rose above the level of home tuition fees or government funding. Once these subjects were no longer of financial use, they could be downgraded or discarded. Some huge and prestigious Russell Group providers, such as Bristol, are still trying to expand further, but this threatens to exhaust the patience of their home cities, including local residents and councils. There are, after all, only so many students you can fit into even a vast city. 

Universities’ next answer to declining budgets was foreign students. If capped home fees covered less and less, perhaps teaching people from outside the UK would plug the gap. Fees for these undergraduates were never limited by statute, and they are often charged much more than locals, on average about £22,000 a year and sometimes approaching £40,000. In 2010, just under a tenth of UK universities’ revenue came from that source; by 2022, that number had doubled to nearly a fifth. That, too, was all very well for a while, but there are probably limits to how politically acceptable the numbers are. Nearly half a million students were given UK study visas in the academic year that began in autumn 2022, an 86 per cent rise from the year between 2018 and 2019. All while the government talked about taking back control of immigration.

The dependence on foreign students was also a gamble. Their numbers now seem to be falling, with a 27 per cent fall in applications for taught postgraduate places in the academic year starting this autumn (other, more alarming figures are also doing the rounds). For a long time, the Tories seemed quite keen on bringing in overseas students, setting a target for 600,000 enrolled on British courses that was met easily a decade early. As prime minister, Boris Johnson even brought back post-study work visas in autumn 2020, after Theresa May as home secretary had abolished them in 2012. Now the government has blocked access to the UK for students’ dependents, and has even talked about restricting the right to work after study has finished to those attending only the “top” universities. Understandably, students are beginning to look elsewhere. The increasingly tarnished reputation of Britain’s universities, and strong US competition, are not exactly helping. The gamble looks like a bad one.

So we are at an impasse. The money is running out. Mid-ranking and mid-sized universities are in real trouble, and a few could eventually go under if nothing is done. Little more can be wrung out of the existing structure. Cross-subsidies across home fees are now played out, while Russell Group providers cannot take every student in the country. The number of foreign students is declining. The well is dry. It’s this dead end that is causing the despair inside higher education, because only complex reconstruction can save it.

The problem is that no one knows what that would look like, or who would do it. Once upon a time, the government’s Higher Education Funding Council would dole out money on the basis of fixed student numbers. The future was steady, dependable, even boring. It ran like clockwork. Now it has become almost impossible to work out how many students you will get next year, let alone in three or four years’ time. The result feels like chaos.

All our higher education structures are based on presumed stability. Around £2bn of Quality-Related (or QR) research funding is paid by Research England to universities every year on the basis of how well subjects are rated in periodic research audits. The time horizon for that money actually being paid out might be six to eight years. Now there’s no way of knowing if the subjects winning that money will be taught, or the departments that housed them will even exist. Large-scale research projects funded by the seven Research Councils amount to around another £2.6bn this year: but if core members of those projects’ teams were to lose their jobs, no one seems sure what will happen to that research or that money. 

The government seems to want British science and its wider research culture to play a key role in projecting the country’s “soft power”. But that cannot be conducted in an ecosystem that is getting harder and harder to understand, let alone govern. The senior management teams of every university have been forced into a position where their job, indeed their responsibility, is to fight tooth and nail against other universities for every single extra student they can get their hands on. That makes strategic direction of the sector impossible. There’s no point patching it up: it requires fundamental re-engineering that allows for at least some measure of command and control. 

All many universities feel they can do is cut. So they take on the mantle of axe-wielders

Universities’ management systems are not up to that task. They are often made up of ex-academics who have gradually learned to be managers—some good, but others bad. The quality of university leadership is variegated: the nimble mixed with the static, the precise blended in with the clumsy, and the forward-looking cheek-by-jowl with the antediluvian. Public relations, media management, advertising and image-making are not their forte, to say the least. Nor are imaginative or novel blends of courses that might appeal. 

In this situation, all many universities feel they can do is cut. So they take on the mantle of axe-wielders as if they were Gordon Gecko, the archetypal tough-guy of capitalism, in the 1987 film Wall Street. The effect can be comic, but it’s also deeply dangerous. Universities abolish courses, and whole departments, on the basis that they are not making a big enough contribution to “the centre”—that is, not building up enough of a surplus to pay for the services that make a university run smoothly, from the library to estates through to payroll and HR. By so doing, they gradually undermine their own critical mass and income, until there is little left.

First degree burns: Many felt financially scorched by the 2012 tuition fee hike. Photo: © Shutterstock First degree burns: Many felt financially scorched by the 2012 tuition fee hike. Photo: © Shutterstock

This disorder and disarray is holding Britain back. The country actually needs far more undergraduate places if it is to merely keep up with the birth boom of two decades ago: the numbers of 18-year-olds are rising and will rise further until the early 2030s. One estimate is that 45,000 more places will be needed every year by then, which would mean perhaps an - 8 per cent rise in capacity. In those circumstances, slashing departments and cutting places is nothing more than vandalism.

In the end, the retreat of British higher education is simple. There’s not enough money in the system to sustain the high-quality experience that British and foreign students are used to. There’s not enough planning to juggle student numbers, regional policy, urban policy, scientific research and development. Will and promise are draining away. 

British higher education is like the Titanic after it had hit the iceberg. It is fatally flawed below the waterline, but it is still floating, and many passengers have difficulty believing that it will go under. Yet the water is pouring in and rising. It has gushed right up past third class, flowed through second class and is about to lap at the doors of first class. During the next parliament, the lights will go out and the ship’s keel will break. 

A rescue mission is some way off, partly because Labour as the likely next government seems unable to grasp the gravity of the situation. What universities and policymakers therefore really need is a breathing space and a pause, so that we can work out what in the world to do. The next government may be forced to drop in a small amount of money, concert a slight rise in fees (outside Scotland), and perhaps place a cap on English student numbers at “the top” to bail out the others. It could again encourage rather than disparage the post-study work visa. Universities may be encouraged to merge, though that will be fiendishly complex. In the end, however, those are stopgaps, and nothing will stop the ship going down if it has no directing mind on the bridge. 

Then it will not just be export earnings and output that are lost. Attracting teachers, doctors and dentists will get much harder outside London and the southeast. At an even deeper level, the whole local ecosystem of life will be disrupted. University drama, theatre, arts, adult learning, evening classes, school visits, walking clubs, discussion groups, sports facilities, museums, displays, galleries—they could all be gone. Everything, in fact, that makes life worth living. That would be the unkindest cut of all.