Universities: Funding and Employment

Ian Sollom Excerpts

Wednesday 2nd April 2025 Westminster Hall

[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—

[Mohammad Yasin]

Bedford.

[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.