Universities could “slide into decline” unless action is taken to address funding pressures, an education chief has warned.
Dame Sally Mapstone, president of Universities UK (UUK), which represents 141 higher education institutions, said the sector is at a “fork in the road” and a “rebalancing of responsibility for funding” is needed in England.
Her comments come after university leaders warned of significant financial concerns as a result of frozen tuition fees paid by domestic students and a drop in overseas students.
In July, the University and College Union (UCU) called on the Government to offer an “emergency rescue package” for the sector amid concerns about universities struggling financially.
Dame Sally, who is vice-chancellor of the University of St Andrews, will address hundreds of university leaders at the annual UUK conference in Reading on Thursday morning.
The UUK chief will highlight new research that suggests the UK higher education sector’s teaching, research and innovation activities had a positive economic impact of nearly £158 billion in 2021-22.
The London Economics report, commissioned by UUK, adds the total economic impact from UK higher education was around £265 billion once the economic benefit of international students is accounted for.
The research estimates for every £1 of public money invested into UK universities, around £14 of economic benefit is generated.
Dame Sally said: “It is clear we are at a fork in the road. We can choose to act to ensure our universities thrive, or we can allow them to slide into decline. For me, the latter path would be unconscionable.
“The figures released today will inform work underway by a leading group of experts within and outside higher education, exploring how universities can address the UK’s greatest priorities and challenges, especially around growth, opportunity and supporting delivery of the Government’s missions.
“Our blueprint, which will be published in the coming weeks, will set out plans for a ‘reset’ of the university sector including a rebalancing of responsibility for funding in England to recognise the significant benefits to the Treasury generated by graduates.”
On Wednesday, Baroness Jacqui Smith – universities, skills and apprenticeship minister – told the conference the Government is considering “all options” to deliver a more robust higher education sector amid reports of the “financial peril” facing universities.
Addressing hundreds of vice-chancellors, the higher education minister said she is committed to ensuring plans are in place to mitigate risks to institutions which are “under financial strain”.
But Baroness Smith said the Government is looking at how it can help in a way where the state does not take on the “whole responsibility” of funding.
The London Economics report – which focuses on 906,000 domestic students who started higher education in 2021-22 – estimates the public purse makes a profit on each graduate of £75,000 on average, even after the costs of subsidising their studies are taken into account.
Dame Sally added: “These figures make a strong case for viewing universities as another part of the UK’s growth infrastructure and one which can deliver economic and social benefits more quickly and effectively than others.
“Unlike other sectors, the influence of higher education is felt in communities along the length and breadth of the country and by people of all backgrounds.
“With a new Government at the helm, it’s imperative now more than ever to acknowledge the key role HE can play in unlocking the full potential of the economy both locally and nationally.”
University leaders have been calling on the Government to raise the annual tuition fee for domestic students in line with inflation to help institutions struggling financially.
The previous government raised the cap on university tuition fees in England to £9,000 a year in 2012 but it has been fixed at £9,250 since 2017.
Last month, Education Secretary Bridget Phillipson pledged to reform the system but said raising university tuition fees would be “unpalatable”.
Addressing the latest London Economics research, Jo Grady, general secretary of the University and College Union, said: “This crucial report highlights how important university staff are to the economy and society at large, and demonstrates the benefits of government funding.
“But university leaders cannot be handed blank cheques: they must use public money to invest in their own workforce.”
She added: “We echo Universities UK’s call for more investment, but this must be accompanied by a fair pay uplift, in line with that awarded to teachers, train drivers and junior doctors.
“Meanwhile, the Government needs to protect our world-leading universities by lifting Tory visa restrictions on international staff and students, and financially supporting any institution at risk.
“Ultimately, increased public funding will be necessary to sustain the sector.”
A Department for Education spokesperson said: “The Government is committed to breaking down barriers to opportunity and enabling everyone who meets the requirements to go to university.
“We will create a secure future for our world-leading universities as engines of growth and opportunity so they can deliver for students, local communities and the economy.
“The Education Secretary has taken the crucial first step of refocusing the role of the Office for Students, so that it focuses on key areas such as monitoring financial sustainability, to ensure universities can secure their financial health in the longer term.”
Peter Kyle, Secretary of State for Science, Innovation and Technology, is expected to speak at the UUK conference at the University of Reading on Thursday afternoon.
