A new report has put UK universities’ difficult financial position in blunt terms.
The Russell Group, the association of some of the UK’s most prestigious universities, including the University of Glasgow, has published a new report outlining the precarious financial state of Britain’s top universities. A combination of a decline in external funding from research, along with increased spending on student support, IT services and capital investment puts universities in a difficult position.
The report concludes that a new funding model is needed to offset the wide-ranging threats to the universities’ business model.
Without a tuition fee increase, the per-student average subsidy in England is expected to double to £5,000 by 2029. In Scotland, depending on the course, that subsidy already ranges between £4,000 and £7,000 today.
The vast majority of that shortfall is cross-subsidised by the much higher tuition fees that international students are charged. This subsidy is crucial for the entire business model of UK universities, and is particularly vulnerable to geopolitical shifts and changes in UK visa and immigration policy.
The Russell Group outlines several potential cost-cutting measures, such as resource sharing with other universities, tapping into surpluses and reserves, or outsourcing some services. However, the report makes a point to advise against further cuts to research and student experience for UK students, as in the long-term those will only hurt the sector’s world-renowned reputation and decrease interest from international students.
Increasing the proportion of digital learning, using artificial intelligence and other potentially radical changes to the university business model “would achieve significant savings in the longer term” according to the report. Innovation in material delivery prompted by the pandemic is cited as a potential long-term funding solution.
This follows a previous stark warning from a Universities UK financial review, pointing to research as the first area to suffer potential budget cuts. Jenny Higham, vice-chancellor for St. George’s, University of London who leads the review, then stated that “in the end, the obvious answer to this is we are going to do less research and innovation.”A previous analysis of the sector in the Financial Times pointed out that the £9,000 cap set in 2012 would now be over £12,000 if it rose with inflation – instead it barely moved to £9,250. In that analysis, an Oxford professor pinned challenges on the ‘triple whammy’ of inflation, Brexit, and uncertainty about the future enrolment of students from China in the UK.
