Universities: Funding and Employment
(3 weeks, 2 days ago)
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Mohammad Yasin (Bedford) (Lab)
I beg to move,
That this House has considered the impact of university finances on jobs in higher education.
It is a pleasure to serve under your chairmanship, Mr Vickers. The UK’s higher education sector is facing a severe financial crisis, with profound implications for both staff and students. Two years ago, university lecturers across the UK raised an urgent call for help when they voted to strike. Regrettably, their concerns were largely ignored. Over 5,000 job cuts have already been announced, with projections indicating that more than 10,000 jobs will be lost across the sector this year.
The Office for Students’ latest modelling suggests that nearly three quarters of English higher education providers could be in deficit by 2025-26. The University of Bedfordshire in my constituency has recently announced plans to cut over 200 jobs as part of its efforts to address financial challenges. Several factors have contributed to this situation, including tuition fees that fail to cover actual costs, rising operational expenses and a significant decline in international student numbers from 5,270 in 2023 to just over 2,000 in 2025.
The funding model, which depends on international students paying higher fees, has harmed universities since Brexit, as has the Conservative Government’s policy to crack down on student visas, despite international students contributing over £40 billion to the economy before the restrictions were introduced. The amount of income English universities receive for teaching home students has declined in real terms almost every year since 2015-16 and is now approaching its lowest level since 1997.
Wendy Chamberlain (North East Fife) (LD)
I congratulate the hon. Member on securing the debate. A 2024 report from PwC said that 10 of Scotland’s 15 universities were at risk of falling into financial deficit by 2027. Of the 18 institutions that students can now study in, seven have a deficit, so there is a particularly acute issue in Scotland. Does he agree that falling Government investment is part of the issue? Indeed, in Scotland, it is 22% lower than it was in 2013-14.
Mohammad Yasin
I will come to that point about universities in Scotland in a minute.
Even prior to the 2022 reforms, the UK had the lowest share of public funding in tertiary education among OECD member countries, with the majority of the funding coming from fees and student loans. The tuition fee system is unpopular with both students and universities. Although reversing it may be unrealistic, the model has to be improved.
A disturbing pattern of job cuts is emerging, with universities following suit at an alarming rate—even those that are running a surplus. Critical administrative and technical staff, key to the smooth running of courses and the welfare of students, are often the first to be let go. We are witnessing widespread deficits, restructuring, fire and rehire tactics and even the closure of entire departments, with faculties, schools and jobs being lost or downgraded. A survey of institutions in spring 2024 found that almost 40% had seen voluntary redundancies, almost 30% had reduced module choices for students and almost a quarter had closed courses.
In just the past month, universities in Dundee, Coventry and Bradford have announced similar measures. Perhaps most shockingly, Kingston University has proposed the closure of its humanities department. The closure of a humanities department, in a country renowned for its literary and cultural heritage—Shakespeare’s birthplace, no less—signals a troubling future for our higher education system. It is not merely a loss for humanities; it is a loss for the future of education in our nation and a blow to our global reputation as leaders in education. These subjects are disproportionately impacted by the cuts, and that reinforces the damaging notion that studying arts is the privilege of a select few—a hugely regressive step.
Under the previous Conservative Government a false narrative emerged, claiming that arts cannot equip students to thrive in a rapidly evolving world. In reality, these disciplines are adapted to a skills-based agenda, producing exceptional communicators, critical thinkers and researchers, which is still essential for a healthy democracy and a world increasingly driven by artificial intelligence.
The English higher education sector contributes £95 billion to the UK economy, while our vibrant creative industries generate £125 billion in gross value added each year. Last year, Labour unveiled our exciting plans for the arts, culture and creative industries as key sectors for driving economic growth, but none of that can be achieved without investing in the teachers and lecturers who train the next generation of skilled professionals. Post-1992 universities, which often serve the most diverse student demographics, are hit the hardest. Many students in those institutions are the first in their families to attend university and come from lower socioeconomic backgrounds. These universities are essential for students who cannot afford to live away from home.
The problem for the arts and humanities is not confined to post-’92 universities. Newcastle University, whose chancellor is the chair of the prestigious Russell Group, has announced plans to cut 300 full-time positions, including 65 academic roles. Cardiff University also plans to cut 400 academic staff, which is almost 10% of the total, and to eliminate subjects like music, modern languages, and nursing, despite ongoing NHS workforce shortages. The University of Edinburgh has a £140 million deficit forecast over 18 months, which outstrips the £30 million deficit recorded by Cardiff University. Durham University has joined the ranks of Russell Group institutions planning job cuts, with a target of reducing staff costs by £20 million over two years, starting with 200 professional services staff this year.
For a full view of the scale of the cuts, people can visit the UK HE shrinking page, compiled by Queen Mary University of London and the University and College Union, which tracks redundancies, restructures and closures across the sector.
John McDonnell (Hayes and Harlington) (Ind)
Before the hon. Member moves on, and to save people from going to the website, can I mention Brunel University? I have been on the picket lines with UCU, and there are large numbers of job cuts being threatened. It is a successful university that is doing everything asked of it by Government to provide skills training for the future. What is extremely disappointing to me is the refusal of management to even engage with the union to look at transitional arrangements and future planning. There must be a way in which we can work through this, after years of austerity. The Government must work with universities’ management and the unions to see the way through.
Mohammad Yasin
I am grateful to the right hon. Member for his comments; I must make some progress now.
Universities are major employers and significant contributors to local and national economies. A recent report on the economic and social impact of Lancaster University, for instance, found that it contributed £2 billion to the UK economy in 2021-22, with 61% of the impact felt in the north-west. If we continue to cut essential departments—English, nursing, modern foreign languages —where will our teachers and professors come from? The approach is so short-sighted. Without a strong university sector, how can the Chancellor grow the economy? Universities are central to delivering education, research and innovation in critical areas for future growth, including in science, technology, engineering and mathematics fields.
Degree-level apprenticeships are another important part of the Government’s strategy to address skills shortages and rebalance the economy. By combining academic study with practical work experience, apprenticeships offer a valuable alternative to academic degrees, but when universities shrink, the skills gap will only widen. In the blink of an eye, we are losing thousands of years-worth of accumulated knowledge. The university exists to pass expertise to the next generation; there is a moral imperative to protect it.
I urge the Government to review university governance and ask why expensive building programmes are being prioritised over investment in staff and students. Multi-year commitments on research and higher education funding are expected in June, when the Government’s spending review is finalised. The reduction in faculty options, loss of vital services and pressure on remaining staff all contribute to a diminished quality of education. This is not the future we should offer our students. We have to fix the broken funding model, safeguard staff, enhance the student experience, and ensure that our universities continue to be engines of economic growth and innovation.
Chris Law (Dundee Central) (SNP)
The hon. Member is making the powerful point that money should be put into staff and students. In my constituency, the University of Dundee faces critical challenges just now, with almost 700 jobs at risk. My thoughts are with those staff, and I thank the Scottish Government for the £22 million package of support for them. Does he agree that the UK Government need to reverse the Tory hostile environment policy for international students that means they cannot bring members of their family here? It has cost our university alone more than £12 million. Does he agree further that the national insurance contributions increase—an additional £3 million that the University of Dundee has to find—needs to be stopped right now?
Mohammad Yasin
I am asking the Government to look into this whole scenario very carefully, because it is impacting staff, students and future generations.
Higher education in the UK is at a crossroads. We have a choice: continue down this path of a boom-and-bust approach, cutting jobs and course offerings, or make the necessary investment to secure our universities as pillars of innovation, growth and opportunity. I urge the Government to take immediate action to address the crisis, consider a sustainable funding model, look at capping the numbers for a fairer distribution of students, and look again at student visas, to save our universities. They must ensure that higher education remains a vibrant and accessible resource for future generations.
Several hon. Members rose—
Martin Vickers (in the Chair)
I remind hon. Members that they should bob, as indeed they are, if they wish to be called in the debate. It will clearly be necessary to impose a time limit, so we will start with four minutes. Jim Shannon will show us how to go about it.
Jim Shannon (Strangford) (DUP)
Mr Vickers, you are very kind to give me the challenge of four minutes; it will probably be an eight-minute speech in four minutes. I thank the hon. Member for Bedford (Mohammad Yasin) for setting the scene so very well and for providing lots of detail and information.
I wish to give a Northern Ireland perspective. We witness hundreds of students going to different areas in the UK to study. There is no doubt that the financial stability of our higher education facilities is important, so it is vital that we are here to discuss it.
As in many other areas, Northern Ireland has a different set of guidelines when it comes to higher education. Our approach is distinctive, because we have oversight from a Government Department: the Department for the Economy. In the 2012-13 financial year, the combined income of higher education institutions in Northern Ireland was approximately £502.9 million. Fast forward to 2023, and Queen’s University—Northern Ireland’s primary education facility—reported a total income of £474.2 million. I thank Queen’s University and Ulster University for the partnerships they have and for trying to find cures for some of the great diseases and problems, including heart disease, diabetes, cancer, cardiac arrest and eyesight issues.
Furthermore, there are growing concerns about the higher education sector’s reliance on international tuition fees. The House of Commons Public Accounts Committee has warned that higher education providers are potentially exposing themselves to significant financial risks if future growth in international student numbers is not high as they expect or had hoped. For example, Ulster University back home in Northern Ireland did experience increases in income, with tuition fees from international students rising by more than 50% in the 2021-22 financial year, reaching some £12 million.
Although it is understood that we cater for and are generous in welcoming international students, as we should be, when I spoke to students in my constituency it became clear that many are put off going to England, Scotland and even Northern Ireland for university placements because of the intense tuition costs. Yes, universities rely on fees to deliver fantastic programmes across the board for lots of people, and they train our young ones for the future to get them the jobs that will help the economy to grow, but it is no secret that the levels of tuition fees are extortionate, and they will have to be paid back.
In addition, it is worrying that one in five graduates, or around 70,000 students a year, would have been financially better off if they had not gone to university. That tells me that many students will ask whether they should go to university or get a job and not have a debt to pay back in the future. That is a worrying statistic that we cannot ignore. I seek the Minister’s thoughts on how that can be addressed.
There is a parallel between supporting students and supporting our wonderful universities. There is always a balance to be found, and we need to get that right. Universities can use partnerships with businesses to try to find cures to the world’s diseases, which Queen’s University and Ulster University both do, along with others across this great United Kingdom.
If we allow our universities to suffer financially, they will face challenges such as reduced funding for academic programmes, limited grants and diminished support. Although we must encourage students to attend universities and pursue their dreams, the facilities must be financially supported to allow that to happen.
I look forward to hearing from the Minister, and I have a request. There will never be a debate when I do not ask for something, but I ask in a respectful way. In future, will the Minister ensure that we engage collectively as a nation, despite our having different guidelines, so that universities and jobs are protected and all our students are supported?
Pam Cox (Colchester) (Lab)
It is a pleasure to serve under your chairship, Mr Vickers. I thank my hon. Friend the Member for Bedford (Mohammad Yasin) for securing this important debate. I draw attention to my entry in the Register of Members’ Financial Interests. I am a member of the UCU and a former professor in higher education.
As someone who dedicated over 20 years to teaching and research in higher education, I have seen at first hand the transformative power of that work. Students’ lives are changed, economies grow, communities are transformed and cities are lifted. Despite the challenging times facing the sector, I remain optimistic about the future of our universities and the vital role they play in our society, but we need to act before it is too late—which means sooner rather than later.
The current financial model for universities is the most challenging it has been since the previous Labour Government enabled so many to access higher education. Members will know that in 2012 a cap on the domestic tuition fee was introduced, which increased only slightly in 2017 and again this year. It has not kept pace with inflation, and the financial strain is felt across the sector.
Research funding is another area of concern. We cannot have universities without research, because the research informs the teaching. That is the nature of the beast and of the game. The UK rightly prides itself on being a global leader in innovation. Our universities are world class and attract people from around the globe. Research often runs at a loss and is subsidised by education provision, even though that research underpins our productivity and economic growth. That is the case in any sector I could name: AI, defence, health, life sciences and the creative industries. If the universities were taken away, where would we get that innovation—accessible innovation that is open to all—from?
As my hon. Friend the Member for Bedford said, international student recruitment has been severely affected. The University of Essex, where I taught, has seen a 47% decline in EU student enrolments post Brexit, and recent changes to visa policies have contributed to a 40% drop in international student numbers. The subsequent reduction in income exacerbates the financial challenges faced by the sector.
Despite the difficulties, universities have been proactive in seeking solutions—I was personally involved in creating those solutions over many years. At the University of Essex, we introduced efficiency measures, diversified income streams, invested in transnational education and merged departments. We have done an awful lot over the past few years—I felt myself slipping back into using “we” there, in a rather odd way.
The university also collaborated with local businesses. Indeed, I ran a doctoral training consortium that spanned 10 universities across the south-east of England, and my whole job was to get money in from business to support collaborative master’s and PhD programmes. Industry and business do need to step up in this regard. They benefit from universities and those who are educated there, and they need to step up and provide assistance.
The contribution of universities to economic growth is palpable. For every £1 of public money invested in universities, we get £14 back, so there is a good economic case to be made. I am encouraged that the Education Committee is to start an inquiry into higher education and funding on 8 April, and I urge the Minister to take seriously the issues raised. I encourage her to meet those of us who have worked in the sector to explore solutions that involve the unions, business and all the other stakeholders.
Stephen Gethins (Arbroath and Broughty Ferry) (SNP)
In following the hon. Member for Colchester (Pam Cox), I should refer to my entry in the Register of Members’ Financial Interests. I am a vice-chair of the all-party parliamentary university group and I am proud of my relationship with the University of St Andrews. The hon. Member talked about her experience; I was previously assistant vice-principal at St Andrews, with oversight of recruitment and internationalisation—areas that are crucial to the health of the university sector.
Today, I will remain closer to home and talk a little bit about the University of Dundee. My hon. Friend the Member for Dundee Central (Chris Law) has already referred to this issue. I should also register my interest as a graduate of the university. Like most people locally, the university is very much part of my family, with my father also being a graduate of it and my grandmother having worked there as a cleaner.
Before I move on, I want to make clear something that we do not hear enough in this place. Our higher education sector thrives and is world leading in teaching and in research because it is international, and because it is competitive and brings in the best researchers and students from all over the world. It will remain competitive only if it remains international. Today, the University of Dundee and the city face 700 job cuts. That would be devastating for families, for the city and for Scotland and the wider UK. We all benefit from the research and the teaching there.
The main issue that has been highlighted—it dwarfs all the others—is the huge drop in international income. The acting principal, Professor O’Neill, told the Scottish Parliament recently that
“changes in immigration policy and related factors…have had a negative impact on our international student recruitment.”
He also pointed to a two-thirds drop in taught postgraduate student numbers in the last two years.
Dr Scott Arthur (Edinburgh South West) (Lab)
I agree with the hon. Gentleman’s points about the impact of immigration policy—the sector needs a policy that helps it to attract the best staff and the best students—but he will know that the challenge facing the sector in Scotland is long-lasting and is due to underfunding. Student fees have dropped substantially below the level in England and there has been a cap on places. That is why universities in Scotland have had to look overseas so much. Does the hon. Gentleman share my disappointment that this year Scottish universities faced a real-terms cut from the Scottish Government?
Stephen Gethins
I wanted to give the Member the opportunity to intervene because I am going to criticise Scottish Labour and talk about some of its priorities. The difference between English fees and Scottish fees would not even cover the national insurance increase that has been imposed by his Government.
Stephen Gethins
I think the hon. Member has said enough. His Government have damaged the sector enough, never mind the £12 million, which is structural, that my hon. Friend the Member for Dundee Central highlighted. The sector has been battered by Brexit and by a Tory hostile environment that the Labour Government have embraced. We want to see something international.
Scottish Labour previously proposed that we should devolve greater migration policy. The First Minister has talked about a tailored visa route for Scotland, which Scottish Labour proposed previously. I would love to find out whether Scottish Labour still propose that, because that could make a real difference to our sector. The Labour party previously campaigned on that.
We have seen the biggest drop in dependant visas, whereas we know that the markets bring in dependants from all over the world. The hon. Member for Bedford (Mohammad Yasin) identified that as an issue, as have others. Will the Government rethink wiping out dependant visas? It is entirely understandable that people bring their kids with them when they come to study. I understand that the hon. Member for Edinburgh South West (Dr Arthur) cannot answer that, but I know that the Minister will. I hope the hon. Member will agree with me that the dependant visa needs to be looked at, because the health of the sector depends on it.
The UK is hobbling universities’ international competitiveness. I am pleased that the Scottish Government stepped up for the University of Dundee and made a contribution. Labour and SNP Members called on them to do so, and I was glad we all had that common approach. Given the damage that is being done at a UK level, as we sit in the UK Parliament, it would be nice to hear Scottish Labour stand up for the sector and address the damage that their own Government are doing. Will the Minister look at the hostile environment when they look at this issue? That is key to the sector.
Danny Beales (Uxbridge and South Ruislip) (Lab)
It is a pleasure to serve under your chairmanship, Mr Vickers. I thank my hon. Friend the Member for Bedford (Mohammad Yasin) for securing this important and timely debate on the issues in our constituencies in respect of our fantastic higher education institutions.
I have the pleasure of representing Brunel University, which my right hon. Friend the Member for Hayes and Harlington (John McDonnell) mentioned earlier. Many of the students and staff who make up the university community also live in my constituency. Brunel educates 16,000 students a year and contributes £750 million to the UK economy. It is an important employer, an important buyer of services and the centre of much of our community activity. It hosts a range of community sports groups, concerts and conferences, and has links with local schools. Brunel University even—I have some distant memories and scars on my back—hosts the election hustings, of which I have some positive and negative experience.
Unfortunately, because of the long-term funding challenges, which Members have already raised, and, particularly in Brunel’s case, a reliance on international students from particular regions who have been affected by visa changes, the funding crisis at our university means that Brunel has been hit extremely hard and is projecting a deficit this year of £32.9 million. Brunel has therefore instituted a scheme of redundancies of 125 academic staff and 239 other staff across the university and professional services. Around 20% of the workforce at Brunel is affected.
A few weeks ago, I met staff members from the university in Parliament at UCU’s lobby day. They told me they had dedicated their lives—sometimes 20-plus years—to the university. There is a deep level of concern among them and their colleagues about not only their futures but the university’s. It is a deeply disappointing situation for the university to be in. As has been said, universities are central to human capital, to education and to opening opportunities, as well as to research for our nation and more globally, as we face the challenges that we see before us. The cuts are bad for staff and bad for students, who want the very best possible education.
Moreover, I am concerned about the knock-on effects on the local economy in Uxbridge and South Ruislip. Brunel is a very good institution and an incredibly important part of my community. As we face up to the missions around recruiting more medical staff through its recently opened medical college, or supporting those who are not in education, employment and training into training and work, Brunel stands at the centre of our community to meet the longer-term challenges that the Government face.
I hope that we can put in place a more sustainable, long-term funding solution for higher education that will stabilise Brunel and the broader sector’s finances. More immediately, I hope the Government will consider how relatively small amounts of transition funding, through grants or loans, might be made available to institutions such as Brunel. Newer universities do not have very large reserves, historic estates or trusts on which to draw to change the institution at pace, so without those relatively small amounts of funding the cuts will bite harder, and they will have to make more redundancies than they might otherwise need to make. I hope the Government will explore those options for universities such as Brunel.
I hope that, through long-term funding settlements, we can secure Brunel’s future and ensure that it continues to provide the best quality of teaching and remains the best possible institution for students, staff and the broader community in Uxbridge and South Ruislip.
Ben Lake (Ceredigion Preseli) (PC)
It is a pleasure to serve under your chairmanship, Mr Vickers. I congratulate the hon. Member for Bedford (Mohammad Yasin) on securing this very important debate.
As we have heard, a great number of higher education institutions across the United Kingdom face very worrying times indeed, and I am sure we will hear of other examples from Members. Many who are more learned than me will say that the situation has been developing for quite some time. Scarcely a week goes by without yet another announcement of significant job cuts at a university somewhere in the UK, so there can be no doubt that the situation is unsustainable. If we do not act, and if the Government do not intervene to get a grip of it, a great number of higher education institutions face collapse.
That should worry us all because, as well as the incredible research and teaching they provide, universities make an important contribution to the economy of the United Kingdom. In Wales, higher education supports more than 60,000 jobs, contributes more than 4.2% of Welsh GDP and has an overall economic impact of nearly £11 billion. The new Government have identified growth as a key mission, and as such research and development will be key. In Wales, just as in other parts of the UK, universities are critical to ensure that research and innovation benefits not just communities but the economy. They account for 37% of all Welsh research and development expenditure. I have seen that at first hand in my constituency of Ceredigion Preseli, from the good work of the AberInnovation centre, associated with Aberystwyth University.
Universities also help ensure that we have the skills we need for a prosperous society and economy. A report by Universities UK estimates that more than 400,000 extra graduates will be needed in Wales by 2035 to respond to the skills gaps and workforce challenges of the future. That is clearly a problem if institution after institution in Wales announces severe reductions to teaching provision and staff cuts. We should also bear in mind that universities are crucial to train the workforce of key public services, particularly in education and health.
From my personal experience, not just as an MP but as someone born and raised in a university town—Lampeter, the birthplace of higher education in Wales —I know we face a very uncertain future. The university in Lampeter has announced its decision to relocate undergraduate teaching from the campus in the town; more than 200 years of history is going down the pan. The point is that the university also sustains a whole load of extracurricular community benefits, from the arts hall to the sports facilities. We often make the point that universities are important to the economy, and they are—that is where I had my first job, so perhaps I should declare an interest—but as a young student at sixth form I was able to benefit from the resources at the library and the extracurricular courses that the university provided to enrich my own learning and prepare myself for university. Many of my sports teams trained in the university sports hall during winter months. The university also plays host to two of the big events in the town: the St David’s day march and the annual food festival. All that is now in jeopardy. When we consider the importance of higher education providers, let us remember not just the economic impact but the wider social and community consequences.
Alice Macdonald (Norwich North) (Lab/Co-op)
It is an honour to serve under your chairship, Mr Vickers. I thank my hon. Friend the Member for Bedford (Mohammad Yasin) for securing the debate.
As we have heard, there is a crisis in higher education in this country. The crisis is writ large in an academic institution in my area, the University of East Anglia, which is why I am attending the debate. The University of East Anglia really matters for our city, our county and the country. It is a vital hub that delivers cutting-edge research, educates thousands of students and provides thousands of jobs. It is more than just an education facility; it is on a campus that is home to five research campuses funded by the Biotechnology and Biological Sciences Research Council, 40 businesses, four independent research institutes and a teaching hospital. That university, which has produced renowned novelists, filmmakers, scientists and cardiologists, is now in a precarious position, as are so many other institutions.
The proposals advanced by the University of East Anglia could see up to 190 staff members—163 full-time equivalents—losing their jobs, and it comes after losing more than 400 staff members a year and a half ago. It will have a direct impact not only on many people’s lives but on our economy. Last week, about 700 university staff members held a strike day to fight against the job cuts. I understand the pressure that chancellors and vice-chancellors are under, but the loss of knowledge and expertise when staff go lasts for not just years but generations.
I want to be clear that the jobs, and the education of students, must be protected at UEA. I am sure that the Minister agrees that higher education institutions such as UEA are central to our local and national economy. As we move towards more devolution in Norfolk and Suffolk, it is deeply worrying that the largest HE provider in our region is in such a difficult position.
I have recently spoken with the UCU branch at UEA, as well as with the vice-chancellor and members of the team. I know that work is being done to try to find a solution, but it is clear that stress levels are high and morale is low. Of course, for staff who go, the impact is huge, but it is also huge for the staff left behind as workloads increase and their colleagues leave. As we have heard, each institution will have particular issues, but there are systemic issues that need to be addressed. I think we all recognise that it is complex, with many factors at play, but also that it has been going on for too long and it has to be gripped. I do think this Government will get to grips with it. We have heard about some of the measures that we could be considering, such as how student loans, payments and tuition fees are structured, and about some of the shorter-term measures. We heard about considering caps on student numbers, and the impact of visa changes.
I also want to make a point about the importance of transparency and accountability for those who lead UK higher education institutions. I am talking broadly, not specifically about UEA. From listening to people at UCU, it sometimes feels that staff are not necessarily as fully involved as they should be in some of the decision-making processes. We need robust systems of accountability.
When we talk about higher education funding, we also need to talk about further education funding. We have very good colleges in Norfolk, but I heard from City College Norwich that under the previous Government, it felt invisible. I urge the Minister, as we look at all the funding conversations holistically, to also look at the role of colleges in addressing issues such as pay parity.
I would also like to take the opportunity to draw the Minister’s attention to the proposal for an undergraduate dental school at the University of East Anglia. That touches on funding and jobs. It has cross-party support and has been in the pipeline for a long time, but in order for courses to start this autumn, we urgently need an allocation of places from the Office for Students. I know that a lot depends on the spending review, but I want to highlight that important investment that we need in our area.
Tom Hayes (Bournemouth East) (Lab)
It is a pleasure to serve under your chairship, Mr Vickers. I start by putting on record my thanks to higher education. I could not be here if I had not been the first in my family to go to university, and that was possible because the last Labour Government set that high ambition for people from poorer backgrounds. This Government, too, can set that high ambition for people to go into FE and HE.
I also thank Professor Inderjeet Parmar at the University of Manchester and Professor Duncan Bell at the University of Cambridge. If they had not taught me critical thinking and helped to strengthen my sense of independence, I do not know that I would have pursued a career in politics. I say that because when I speak to professors and teaching staff at the universities in Bournemouth, the town where I am an MP, it is clear that they are passionate about the student experience and education. However, the three universities are facing danger.
We are fortunate, in Bournemouth, to have three universities, including Arts University Bournemouth, which teaches 4,000 students and was established in 1880. I was pleased to be there on Saturday, as they were hosting a youth celebration showing the ways in which they contribute to our local society. We also have Health Sciences University, which just installed Her Royal Highness Princess Anne as chancellor, showing that it is taking a leap forward in providing education, research and clinical care to help build a healthier society, and I commend the leadership of Lesley Haig there.
We also have Bournemouth University, the largest in the town. Its motto, “To learn is to change”, is one that the teaching staff and students feel deeply. Like my hon. Friend the Member for Uxbridge and South Ruislip (Danny Beales), I have been honoured to hold election hustings there, be quizzed by students, tour their facilities, meet frequently with their leadership team and attend their graduation ceremonies. It is a fantastic university, but it is in a difficult position. On 26 March, it was announced that teaching and support staff could face up to 200 potential redundancies. It was also announced that there would be a reduction of the number of faculties from four to three and a suspension of 15 courses, all to address a £15 million to £20 million financial black hole inherited by the new leadership team, which is moving quickly to put the finances right in a difficult set of circumstances. I have met constituents in surgeries to talk about the possible repercussions of that on their livelihoods and of their commitment to their students. They are worried about the possible impacts on students’ education.
Arts University Bournemouth is also in a difficult financial position, announcing earlier this year that it could be at risk of job losses due to ongoing financial pressures, having posted a deficit in the last three financial years. This shows that two of the three universities in Bournemouth are not immune from the national challenges. They are in the firing line because over the past 14 years we have seen the funding model for higher education trashed and higher education disrespected by the Conservatives. Enough is enough. I am calling on the Government to provide to all universities—and in doing so the universities in Bournemouth—the longer-term financial settlement that will offer the security that universities need to plan and the certainty that teaching staff need to develop their courses, improving both the teaching experience and professional development. That will ensure that students have the very best possible education.
Dr Scott Arthur (Edinburgh South West) (Lab)
It is a pleasure to serve with you in the Chair today, Mr Vickers. I thank my hon. Friend the Member for Bedford (Mohammad Yasin) for introducing the debate so well. I should start by referring Members to the register of interests and saying I am a member of the University and College Union. I am also proud to say that I employ two university students in my office on a part-time basis.
“Our education system in Scotland is crumbling, and it’s being allowed to happen. It’s becoming all too common to hear from university or college management that course closures are necessary and staff redundancy schemes unavoidable.”
These are not my words, but those of Sai Shraddha Suresh Viswanathan, the current president of NUS Scotland. Scotland is unique in so many ways, but one of those ways is that it stands alone in the world with a Government who think they can grow the economy by cutting university funding and capping the number of places available to Scottish students. Our universities are at breaking point in Scotland. Funding per undergraduate student in Scotland is more than £2,000 less per student compared with England. Think about what that would mean for universities in England. Undergraduate education in Scotland—universities—cannot run at a profit; they cannot break even. They have to do other things.
The cap on places is brutal. Since 2006, there has been a 56% increase in the number of applicants to universities, which is fantastic, but the number of refused entries has increased by 84%. When clearing comes in the summertime and options are posted for Scotland’s universities, they are available only for students from outside Scotland. Even when Scottish students have better qualifications, they cannot get access to those places because the cap has been used up.
The financial crisis is resulting in job losses right across Scotland. We heard about Dundee; the hon. Member for Dundee Central (Chris Law) is not in his place just now, but he outlined that 700 jobs are at risk there due to a £35 million deficit. The Scottish Government described the bleak outlook in Dundee as “troubling”—I think the staff there probably view it quite differently. The University of Edinburgh is looking at £140 million-worth of cuts over the next 18 months. That is 10% of its annual budget. The principal there has refused to rule out compulsory redundancies, saying,
“nothing is off the table”.
In Aberdeen, voluntary redundancy schemes are open. Robert Gordon University is talking about losing 100 staff. It is expected that the Scottish Funding Council will say, that, as we heard earlier, over half the institutions in Scotland are running at a deficit. This is a crisis that demands urgent action.
It is not just universities that are being short-changed; poor students are when it comes to loans for living costs. The living wage went up yesterday, which is good, but a single parent on the national minimum wage in Scotland working 37 hours per week will be earning £3,000 over the threshold for their child having full support at university, meaning that that single parent is expected to give the child £1,500 to attend university. That is utterly shameful.
I am a huge supporter of Scottish universities, and I love meeting staff and students in this place to hear about all they do. I have to acknowledge that often the hon. Member for Arbroath and Broughty Ferry (Stephen Gethins) is also there, supporting the sector in Scotland. Universities are at the heart of Scotland’s economy, and have been for centuries, but they need to be cherished, and that is not happening right now. We need a Scottish Government who take the sector seriously.
Rachael Maskell (York Central) (Lab/Co-op)
It is a pleasure to serve with you in the Chair, Mr Vickers. There is a real mismatch between the Chancellor’s growth agenda and the policies impacting the higher education funding landscape that we inherited. As has been highlighted, every £1 of public investment into university research generates £14 in economic output—but scale up, add in the direct, indirect and productivity overspill, and we are talking about £15.2 billion returned to the Exchequer from a £2.49 billion investment. The N8 Research Partnership universities have an economic impact greater than the whole of the premier league. We know that this is of significant value, and we must honour that. If £1 billion is deducted from UK Research and Innovation investment, we are talking a 42% fall in that return. That is poor for the economy and the UK industry, and catastrophic for universities and students—22,000 jobs could be lost. That must not happen.
We also must be aware that the demands of UK industrial ambition far exceed the supply of graduates that we are currently producing. We are all alerted to the falling roll that will hit higher education by 2030—another 11 million graduates will need to be found to fuel our economy into the future—yet last year we saw 5,000 jobs cut in the academic year. This is a real challenge. If we are going to realise the knowledge and scientific, innovative and technical opportunity that this country presents to the world, we must have a global outlook on the investment we must make into higher education.
There have been many factors impacting universities, many of which we have heard. On international students, I urge the Minister to make representation to the Home Office to ensure that dependants can accompany academics and students as they come to this country, and that we look again at visa costs and NHS surcharges. That will enable people to come our country to put in to it and bring benefits—including the economic benefit that we know has been deeply damaged with the change in visa rules.
We also must address our relationship with the EU, which we got so much out of. We must address a deeper relationship with Horizon, look at Erasmus again, and ensure that we are getting the very best academics, researchers, staff and students from across the EU. We must also give our students the opportunity to travel overseas and make it more attractive to engage in higher education.
The pain has been felt in York. There are two universities in my constituency: York St John University has removed 70 vacant posts and deleted 30 posts, while the University of York has already seen 273 leave. I know from talking to the unions just last week that the pressure is there once again. It is having a real impact on staff and academics as well as students. We know about the mental health challenges and the stress that people are experiencing, and those workloads are going up.
Dr Al Pinkerton (Surrey Heath) (LD)
As an academic in recovery, currently working as a visiting professor at Royal Holloway, University of London on Monday mornings before Parliament sits, what the hon. Lady is saying resonates with me very powerfully. Today, Royal Holloway announced a voluntary severance scheme. I remember that moment in 2016, after the Brexit referendum, when our international student numbers fell off a cliff. Britain cannot claim to be a genuine world leader in many things, but in our university sector we absolutely can. We have the second largest number of Nobel prizes of any country. Does the hon. Lady agree that, to paraphrase Joni Mitchell, we won’t know what we’ve lost until it’s gone?
Rachael Maskell
I completely agree with the hon. Gentleman, and thank him for participating in this debate and bringing his experience. The referendum was nine years ago, and the country was in a very different place then. We must address that, but also look at opportunities to put funding into the sector.
It is clear that the funding model is broken. We know that students cannot continue to pay higher tuition fees, and nor should they. The funding model needs to shift. I support a progressive taxation system, because whether someone earns more money because they are a graduate or through other means, I believe the more they earn, the more they should put into the system. In York, where the cost of living is exceedingly high, students are breaking. They are working more hours than they are studying, and as a result some are not even able to complete their course. That is not the kind of education system that we want, so we must revisit the funding model. Tweaking around the edges is not enough. We are missing opportunities for the economic future of our country. In York, there are the bioeconomy, digital and advanced rail opportunities, safer automation and the digital creative sector. They need these graduates and academics, and we need our universities to remain.
Peter Prinsley (Bury St Edmunds and Stowmarket) (Lab)
It is a pleasure to serve under your chairmanship, Mr Vickers. I should like to speak this afternoon about the vital but vulnerable role of clinical academics. These are the people who combine frontline work in the hospitals with teaching and research at the universities. They are essential to the success of life sciences, and central to the training of the future NHS workforce.
Clinical academics are employed by the NHS and higher education institutions jointly. Their pay follows the NHS consultant contract, which was updated last year after national negotiations. Universities, however, were not part of those negotiations, and are now required to implement that contract without having received any additional funding. The result is deeply worrying. I understand that 20 out of 26 medical schools may be preparing to offer redundancy to clinical academics because they simply cannot afford them. That would be a disaster. We cannot afford to lose the very people who train the future NHS staff and carry out the medical research that underpins all the innovation in our health service. As the Government rightly expand the number of medical school places, we will depend even more on clinical academics to educate the next generation of doctors. Their numbers are declining.
Clinical academics now make up just 5.7% of the consultant workforce—down from 8.6% in 2011. Over the last decade or so we have seen a 6% fall in medically qualified researchers, and a 24% decline at the senior lecturer level. We are marching towards a cliff edge. More than a third of clinical academics are over the age of 55 and approaching retirement, so universities need to provide incentives to get younger clinical academics to come.
We did solve this problem previously. When the consultant contract changed in 2003, the then Department of Health provided £15 million to support the medical schools with the implementation of the consultant clinical academic contract. That funding was later embedded in the baseline grants to the universities. That is a model for solving this problem. Unless we act now, we will lose this vital workforce altogether at the very moment when we need them most, and we simply will not be able to run our medical schools.
Jessica Toale (Bournemouth West) (Lab)
It is a pleasure to serve under your chairship, Mr Vickers. I thank my hon. Friend the Member for Bedford (Mohammad Yasin) for bringing us this important debate.
In my constituency of Bournemouth West, we are fortunate to have two world-class universities producing the next generation of entrepreneurs, leaders in the creative industries and journalists. Universities are a cornerstone of our communities and play a hugely important role in our local economy, but as we have heard from many hon. Members from a range of parties, higher education is in crisis. Our education system is struggling to cope with the many years of chronic mismanagement under the Conservatives, and student numbers have suffered from a combination of visa changes, Brexit and the rising cost of living. Those factors have affected student decisions on whether and where to study in the UK, and universities across the country have been left facing difficult decisions about what they continue to offer.
My hon. Friend the Member for Bournemouth East (Tom Hayes) has rather stolen my thunder by talking about the two universities in my constituency, Bournemouth University and Arts University Bournemouth, so colleagues already know that the challenges are great, and not simply limited to Bournemouth University. The whole higher education system faces these issues. I too have heard from numerous staff members and students who are worried about what cuts will mean for them. Many have moved to Bournemouth to make their lives because of the opportunities offered to them by Bournemouth University. I met local university leaders to discuss these issues with them, and I hope to do so again during the consultation period, which I encourage all staff to engage with.
I am pleased that the Government have demonstrated commitment to supporting the higher education system. I know Ministers are acutely aware of its challenges, and I appreciate the steps that have been taken. Our higher education system creates vital soft power links with nations and individuals around the world, and it is important to our standing in the world. Given that, what assessment has the Minister made of the impact that visa changes will have on international students and university finances?
I welcome the Government’s mission to break down barriers to opportunities and to provide young people with the right pathways that are suitable for them after secondary school. Given that the funding crisis is clear, what assessment has the Minister made of the stability and sustainability of the current fees-based model? What steps is she taking to ensure that young people across the country can access good-quality, affordable higher education should they wish to?
I now turn back to Bournemouth. Can the Minister reassure students and staff at Bournemouth University that the Government are aware of the proposals that have been made, and that they will work with local partners to address the issue? Would the Minister be willing to meet me and the other Dorset MPs, who represent many amazing universities, to discuss this situation in greater detail? I want to reassure the students and staff at Bournemouth University that I will continue to press for the support you need during this difficult time, and I will work closely with the university, the local community, the UCU and my colleagues in Parliament to ensure that your concerns are heard and that we begin to tackle the gravity of this situation.
James Naish (Rushcliffe) (Lab)
It is a pleasure to serve under your chairship, Mr Vickers. I congratulate my hon. Friend the Member for Bedford (Mohammad Yasin) on securing this important debate. I note with sadness that barely any Conservative Members—whose party presided over the system when it was in government —are here.
The impact of university finances on jobs in higher education is felt deeply in my constituency of Rushcliffe, which is not only home to a University of Nottingham campus but sits in the middle of a fantastic cluster of east midlands universities: the University of Nottingham, Nottingham Trent University, the University of Derby, Loughborough University, the University of Leicester and De Montfort University. The universities are all vital to our local economy and play a major role in producing spin-out businesses, which in turn create high-quality jobs for local people.
However, as has been admirably described by many hon. Members, the pressure of the funding crisis in higher education is already being felt locally. In 2024, Nottingham Trent University removed over 230 staff members in a cost-cutting drive. The University of Nottingham has also faced a highly challenging year, reporting a £17 million loss. Those are not isolated events; they are part of a sector-wide crisis. The University and College Union has warned that over 5,000 jobs are already marked for cuts this year and, if current trends continue, more than 5,000 additional posts could follow. That equates to thousands of lecturers, researchers and support staff, many of whom are already working under precarious contracts, now facing uncertainty or redundancy.
The consequences of the crisis extend far beyond employment. When institutions are forced to shrink their workforce, course offerings are reduced, class sizes rise and students—especially those from disadvantaged backgrounds—lose access to the quality education that they deserve. The knock-on effects on research output, regional economies, and especially the UK’s global reputation for higher education, are significant.
University finances are being squeezed on multiple fronts: numbers of international students are declining, costs associated with inflation and pension liabilities are increasing, and income from domestic tuition fees is flatlining. For many institutions, especially those without large endowments or global brand recognition, the financial model is simply no longer sustainable. We therefore need a serious review of governance structures across the sector. Will the Minister explain what the Government are planning to do in this regard? If some institutions are being forced into short-term reactive cuts, while others remain relatively stable, we must ask why. Are decisions being made transparently? Are senior management teams being held to account for financial planning? How can we ensure that long-term educational quality is prioritised over short-term balance sheets?
Today’s debate is not simply about special treatment for one sector; it is about recognising that higher education is a national asset. Universities drive innovation and regional economies and provide opportunities to millions. If we allow them to hollow out their workforces, we risk eroding the very foundation on which they stand. I know that many Members across the House have universities in their constituencies facing similar pressures, and I hope that today’s debate serves as a call to action, not just to acknowledge the funding crisis in the higher education sector, but to begin charting a new, sustainable path for its future.
Martin Vickers (in the Chair)
We now come to the Front Benchers. If they limit their contributions to nine minutes, we will just have time for Mr Yasin to sum up.
Ian Sollom (St Neots and Mid Cambridgeshire) (LD)
It is a pleasure to serve under your chairmanship, Mr Vickers. I thank the hon. Member for Bradford for securing the debate and raising this important issue—
Ian Sollom
I am sorry. I should know; I was just about to say that the hon. Member for Bedford (Mohammad Yasin) is a near neighbour of mine.
Although I am here as the Lib Dem spokesperson for higher education, the proximity of St Neots to Bedford gives me a particular constituency interest in the concerns that the hon. Member raised about the challenges facing the University of Bedfordshire, which, as we have heard from hon. Members across the Chamber, are echoed around the country. It is clear that many universities are feeling huge financial pressure, and it is something we are all concerned about. Universities’ financial challenges are not just numbers on a spreadsheet; they affect real people, their livelihoods and their communities, as well as the quality of education and research.
I am not as young as I used to be, so I hope it is valid for me to say that I cannot remember a time when universities faced such financial pressures. We desperately need the situation to change. The income that English universities receive for teaching UK students has declined in real terms almost every year since 2015-16, and is now approaching the lowest level since 1997. There are major budget shortfalls due to rising energy costs and, more recently, the increase in national insurance contributions, as well as a lack of investment and support after years of neglect from the last Conservative Government. That is coupled with a decline in international student numbers because of visa restrictions, as point that many hon. Members made well. We are in a global competition in that regard, and it is unsurprising that our institutions have ended up in such a fragile financial position.
Figures released in November by the Office for Students revealed that 40% of education providers were already forecasting deficits, but I believe that new data suggests that, without mitigating action from the Government, up to 72% of providers could be in deficit by the 2025-26 academic year. It is unsurprising that many institutions are being forced to make difficult decisions on staffing across the sector, in all jobs—support workers as well as academic staff. That is deeply worrying, and will negatively impact the sector and the country more widely.
Universities play a crucial role in our country by providing a high-quality education to many, through research and development and, crucially, by boosting regional economies. Many universities are the largest employer in their area, and the knock-on economic benefits of students living in those areas cannot be over-emphasised. The bottom line is that higher education is an investment in our future on many levels.
When it comes to research and development activities, our universities are world leading and at the forefront of discoveries and innovations that boost growth and improve everyday life. The hon. Members for Colchester (Pam Cox) and for York Central (Rachael Maskell) mentioned that for every £1 invested in university research and innovation, the UK gets £14 back. I had a slightly more—dare I say it?—conservative figure, £10, but the order of magnitude is clear, and it is reassuring that different research reinforces similar numbers.
On top of that, universities are vital in supporting start-up companies across the country. Universities UK recently launched its “Unis start up the UK” campaign. It says that partnering with start-ups boosts economic growth by creating jobs and attracting investment, and sees universities equipping entrepreneurs with the right skills through incubator hubs. Analysis by the Higher Education Statistics Agency shows that between 2014-15 and 2022-23, there was a 70% increase in the number of start-ups founded in UK universities, and that in 2022-23, around 64,000 people were employed by those start-ups—up 170% from 2014-15. HESA predicts that, with the right support, 27,000 new start-ups, with a predicted turnover of around £10.8 billion, could be established by students and staff at UK universities by 2028.
Despite the positive contributions that universities make to social and economic life, in far too many cases their finances are simply unsustainable. In the past year, around three quarters of universities have implemented significant savings programmes, including, sadly, redundancies, course closures, reductions in module options, and the consolidation of professional services and student support.
Thriving universities are essential to a thriving UK, delivering stronger growth, better public services and improved individual life chances. If the Government are serious about their growth mission, they have to work with the higher education sector to stabilise funding, protect fair pay and jobs, and ensure long-term sustainability. We have been calling on them to implement a full-scale review of higher education finance. We believe there are many more things that could be done to support universities that do not involve raising tuition fees further, such as recognising the benefits that international students bring and giving universities policy stability in that respect, and reversing the decline in quality-related funding for research. Finally, the Government should work with the sector to put clear plans in place for any university that finds itself in financial distress. We really do not want to lose any university in the higher education sector.
Rebecca Paul (Reigate) (Con)
It is a pleasure to serve under your chairmanship, Mr Vickers. I thank the hon. Member for Bedford (Mohammad Yasin) for securing this important debate, which could not be more timely, and I am grateful to all colleagues who have contributed.
Our universities are among the most important institutions in our national life. They are centres of research, innovation and learning, and for many thousands of young people every year, they are the route to opportunity, economic independence and personal growth. Despite its great importance, the higher education sector has come under increasing pressure in recent years. The latest modelling from the Office for Students suggests that nearly three quarters of English higher education providers could be in deficit by 2025-26, and 40% would have fewer than 30 days’ liquidity. Indeed, as we have heard from many Members today, redundancy programmes are already under way in some institutions and, across the country, university staff are understandably anxious about the future.
I will say at the outset that I am deeply sympathetic to those who work in institutions that have found themselves in financial difficulty. Nevertheless, I believe it is past time for us to have a grown-up conversation about university finances, in which we look seriously at what is driving the pressures and what it might be possible to do to alleviate them.
I will begin by stating the obvious: decisions taken in recent years have increased the financial pressure on students and graduates, without necessarily addressing the deeper questions of value and sustainability. We have seen steady rises in student loan interest rates and tuition fees, which both fall heavily on students, and now, the spike in employer national insurance contributions is putting further cost pressures on universities.
Meanwhile, the Government’s proposals to cut funding for level 7 apprenticeships, which are essential qualifications in a number of fields, including education, health and engineering, risk further undermining key parts of the post-18 education ecosystem. Many university departments rely on that funding not just to sustain course provision, but to attract and retain highly qualified staff. The impact of the cuts will not be evenly spread, and it is right that we consider how they will affect institutions already under financial pressure.
Rebecca Paul
I suggest to the hon. Member that we need to deal with the situation that we have now, and that her questions should be targeted towards the Minister. We should make the right decisions to do the right thing for our country, and for our students and university staff.
We must confront an uncomfortable truth: there is mounting evidence, including from the Institute for Fiscal Studies, that a sizeable share of higher education courses simply do not provide good value for money either for the taxpayer or for the individual student. The IFS has concluded that around 30% of graduates, both men and women, would have been better off financially had they not gone to university at all. That raises important questions about how we can ensure that our higher education system delivers for those who fund it—namely, the students who invest years of their lives and take on significant debt, and the public whose taxes support the student loan system.
The current funding model is failing under the enormous weight of rapid expansion, marketisation and insufficient quality controls. The ability of an institution to prop itself up on the backs of overseas students who pay vast fees is coming to an end. Although fee income from international students has grown by an average of 15% a year between 2017 and 2023, the recent international recruitment environment has been challenging. Recent Home Office data indicates that 393,125 visas were issued to main applicants in 2024. That is down 13.9% year on year and down 18.8% compared with two years ago.
While some institutions have embraced innovation, strong outcomes and world-class research, others have pursued growth at all costs, adding courses with limited market value, often to attract overseas students or to maximise short-term income. We cannot and should not return to a time when university was accessible only to a wealthy minority, but we do need to have a serious conversation about the purpose of higher education, who it is for, and how it can be sustainably funded in a way that delivers for students, taxpayers and the wider economy. That means looking at systemic reform, rather than simply demanding that young people pay more without addressing the underlying issues. We need to examine course quality, graduate outcomes, student choice, and the role of further education and apprenticeships alongside traditional degrees.
Rebecca Paul
I will in a moment.
Such a reform could begin by addressing the unacceptable lack of transparency around the student loan system. The public have a right to know how the system is operating, who is borrowing, who is repaying, and where there may be a risk of fraud or misuse. I understand that a paper on this very subject, compiled by the IFS and commissioned by the last Government, remains unpublished, despite efforts to obtain it via freedom of information requests. I hope the Minister will explain why that is the case, and will understand that transparency builds trust, while withholding data only fuels suspicion.
On a related theme, questions have rightly been asked about the eligibility criteria for student loans, particularly for non-UK nationals and EU citizens with settled status. It is surprising to many that, even several years after Brexit, more than 180,000 individuals were granted settled status in the first six months under this Government. That figure deserves scrutiny, and it is legitimate to query the implications for access to taxpayer-funded support for accessing higher education. It has been widely reported that the Student Loans Company is now accepting a mere certificate of application for settled status in order to approve loans. If that is the case, I urge Ministers to review that policy as a matter of urgency. We must ensure that eligibility checks are robust and that the system is not open to exploitation.
Rebecca Paul
I am going to continue because of the time.
On the concerns about the quality of some higher education provision, the Government have said they are considering changes to the regulation of franchise providers, some of which have been implicated in cases of poor-quality provision and potential fraud. Although I welcome the consultation launched by the Department for Education, I caution that many of the largest franchise providers are already regulated by the Office for Students, so the key question is not simply whether they are regulated, but how well the regulatory framework is working and whether it is actually driving up standards.
Finally, we have heard Ministers speak in recent months about “tweaking” the role of the Office for Students to strengthen its focus on value for money. In September, the Department said that it was
“developing options for legislative change,”
and the Secretary of State has since re-announced that commitment, but as far as I can tell no tangible progress has been made. When will we actually see legislation brought forward? We have also heard mention of the Public Sector Fraud Authority being brought in, but that sounds remarkably similar to the Internal Audit Agency investigation mentioned in last year’s National Audit Office report. What is changing, exactly? Are we simply hearing the same announcement robed in new language?
I conclude by emphasising that the largest losses to the taxpayer do not always come from outright criminal fraud, and can come from legally operating institutions that provide poor value. These providers operate within the letter of the law, but not within its spirit. They enrol students on low-value courses with high drop-out rates and weak earnings potential, while drawing down large sums from the student loan system—sums that in many cases will never be repaid. We cannot continue like this. Our goal should be a higher education system that is sustainable, high quality and genuinely life-changing. I look forward to continuing this discussion in the months ahead.
The Parliamentary Under-Secretary of State for Education (Janet Daby)
It is a pleasure to speak under your chairmanship, Mr Vickers. I congratulate my hon. Friend the Member for Bedford (Mohammad Yasin) on securing a debate on this important subject. I know he has a keen interest in the financial sustainability of the higher education sector. I have heard my hon. Friend and many Members from all parties speak about the amazing universities in their constituencies, and I welcome all their contributions. I have heard about universities’ contributions to economic growth, systemic issues, operational expenses, home and overseas student numbers, staff redundancies, the deficits that universities carry and many other issues.
I hear and acknowledge the concerns raised. In response, I will address higher education employment; the financial position of higher education; the role of the Office for Students; the tuition fees increase; the risk of financial failure; the sector’s independence; the higher education workforce; higher education reform; international students; research funding; and employer national insurance contributions. I will also address the franchising fraud mentioned by the hon. Member for Reigate (Rebecca Paul).
I thank all the Members who have spoken: the hon. Member for North East Fife (Wendy Chamberlain); the right hon. Member for Hayes and Harlington (John McDonnell); the hon. Members for Dundee Central (Chris Law) and for Strangford (Jim Shannon); my hon. Friend the Member for Colchester (Pam Cox); the hon. Member for Arbroath and Broughty Ferry (Stephen Gethins); my hon. Friends the Members for Edinburgh South West (Dr Arthur), and for Uxbridge and South Ruislip (Danny Beales); the hon. Member for Ceredigion Preseli (Ben Lake); my hon. Friends the Members for Norwich North (Alice Macdonald), for Bournemouth East (Tom Hayes), for Edinburgh South West (Dr Arthur) and for York Central (Rachael Maskell); the hon. Member for Surrey Heath (Dr Pinkerton); and my hon. Friend the Member for Bury St Edmunds and Stowmarket (Peter Prinsley).
I assure my hon. Friend the Member for Bury St Edmunds and Stowmarket that the Government recognise the vital role that clinical academics play in research and education in the NHS. Although universities are independent and, therefore, responsible for decisions around pay, we are committed to working closely with partners in education to ensure that clinical academia remains an attractive career choice.
I thank my hon. Friend the Member for Bournemouth West (Jessica Toale) for her invitation to visit Dorset MPs; I will pass that on to my noble Friend the Minister in the other place, who responsible for skills, higher education and further education. I also thank my hon. Friend the Member for Rushcliffe (James Naish), the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom) and the hon. Member for Reigate.
As I set out in a similar debate on this topic in December, the Government value the vital contribution that our world-leading higher education sector makes to the United Kingdom. Through education provision and research output, our providers are integral to our economy, industry, innovation and wider society. The sector contributes to productivity and growth, and plays a crucial civic role in local communities. It also helps to enhance the UK’s global reputation.
Of course, higher education providers are vital employers in their local communities and across England. They provide not only jobs for academic staff, such as professors and researchers, but a wide range of non-academic roles in administration, facilities management, IT, student support services and many more.
The Government recognise that the financial position of the sector is under pressure. In November, the Office for Students published an update to its May report on the financial health of the sector. The update states that the financial context for the sector has become more challenging since the May report. By 2025-26, the Office for Students predicts that incomes will be £3.4 billion lower than provider forecasts, and up to 72% of providers could be in deficit if they do not take significant mitigating action. We have heard much about that in the debate.
It is clear that our higher education providers need a secure financial footing to face the challenges of the next decade. I assure Members that we are committed to working in partnership with the sector to put providers on a firmer financial footing than that which we inherited. As has been mentioned, the fact that absolutely no Members from His Majesty’s Opposition are here to speak on this important issue sends a message to universities about how they are valued, or not.
The Government have acted quickly to address the challenges. Last month, Professor Edward Peck was appointed as substantive chair of the Office for Students. Professor Peck will continue the excellent work of the interim chair, Sir David Behan, focusing on the sector’s financial sustainability and increasing opportunities in higher education. In recognition of the pressures facing the sector, in December the Office for Students announced temporary changes to its operations to allow for a greater focus on financial sustainability. It will work more closely with providers that are under significant financial pressure, to protect the interests of students.
Of course the Government have announced that tuition fee limits will increase in line with inflation. As a result, the maximum fee for a standard full-time undergraduate course in the 2025-26 academic year will increase by 3.1%. Fees will increase from £9,250 to £9,535 for a standard full-time course; from £11,100 to £11,440 for a full-time accelerated course; and from £6,935 to £7,145 for a part-time course. This was not an easy decision, but it was the right one to put our higher education sector on a more secure financial footing. In return for the increased investment that we are asking students to make, we expect providers to deliver the very best outcomes for students and the country.
I want to affirm that all providers, regardless of their current position, must continue to adapt to uncertainties and financial risk. Although the Office for Students has statutory duties in relation to the financial sustainability of the higher education sector, the Government have a clear interest in understanding the sector’s level of risk. As well as working closely with the Office for Students, my Department continues to work closely with higher education representative groups such as Universities UK, and with other Government Departments, such as the Department for Science, Innovation and Technology, to better understand the sector’s changing financial landscape.
I also want to make clear the Government’s position on providers that are at risk of financial failure. If a provider was at risk of unplanned closure or, indeed, found itself in the process of exiting the sector, my Department would work with the Office for Students, the provider and other Government Departments to ensure that students’ best interests are protected—students will always be our priority—and to support the university itself as best as possible.
I commend the dedication of staff across the sector during these difficult times. Their hard work and commitment continue to uphold the quality and reputation of our higher education providers. These are undeniably challenging times and we understand that some providers have had to make difficult decisions around staffing to safeguard their financial sustainability. As independent institutional providers, they are responsible for managing their budgets, including decisions about pay and staffing, and the Government do not intervene in these matters, or in disputes between providers and their staff. However, we expect providers to engage constructively with their workforce to identify ways to reduce unnecessary expenditure while ensuring sustainable long-term benefits for both students and the sector as a whole.
Looking ahead, Ministers and officials remain committed to maintaining strong collaborative relationships with employers, staff and unions through continued dialogue. We aim to better understand the challenges facing the sector and to provide support for its evolving needs. Due to the time, it feels like I need to finish, so I will end by saying that this Government are committed to working with universities.
Mohammad Yasin
It is an honour to open and close this important debate. I extend my heartfelt thanks to everyone who has participated and made a compelling case for the future of our higher education sector. It is clear that we all share a deep pride in our world-class universities and the exceptional staff who dedicate their lives to educating and shaping the workforce of tomorrow.
However, we must recognise that words alone are not going to be enough. We must take meaningful action to ensure that our universities remain sustainable and fit for the future, without compromising their invaluable knowledge base or limiting student choice.
I thank the Minister and the shadow Minister for their contributions. I look forward to the Education Committee session on this matter next Tuesday. Together, I hope that we can rise to the challenge and collaborate to ensure that our universities continue to provide transformative educational experiences.
Question put and agreed to.
Resolved,
That this House has considered the impact of university finances on jobs in higher education.