Last week, hundreds of thousands of students found out their A-Level results. But the health of the universities these students have been studiously studying for is uncertain. Without significant investment into universities and university towns, many of the UK’s top educational institutions will lose their edge on the global stage.As the Labour Party sets about ‘taking the brakes off Britain’, it shouldn’t ignore one of the UK’s potential drivers of growth – higher education.
According to the think tank London Economics, UK universities account for around £130 billion worth of economicimpact and over 768,000 full-time jobs. And for every £1 of public money invested in research at the UK’s 24 Russell Group universities, more than £8.50 is generated for the UK economy.
Alarmingly the UK’s status as an international hub for education is under threat. This year, 58% of British universities fell down the QS World University Rankings – the widely used metric for where best to study – while only 22% rose. Moreconcerningly, research earlier this year by PwC and Universities UK warned that 40% of universities will experience budget deficits in 2023/24.
The statistics are sobering but unsurprising. The success of UK higher education is threatened by underfunding – in part a result of tuition fees remaining unchanged since 2017 while inflation has spiralled, and in part due to a chronic lack of government investment in the sector. Universities are also wrestling with a drop in international students’ fees, estimated to have resulted in a £1.2 billion loss of income in the last year.
In this context, universities are resorting to job cuts and course closures to overturn financial deficits.
Add a housing crisis into the mix, and it is little wonder that universities are failing to attract student numbers. Our data suggests that by 2026, the UK will have a shortage of over 620,000 student beds. With demand for housing continuing to outstrip supply, student rents look set to increase on the 10% like-on-like growth from 2023.
Unaffordable rents mean that domestic students are being priced out. And international students – who account for a significant proportion of course fee income – may begin opting to study in countries where their money goes further. Year-on-year student visas are down 16 percent this year.
Allowing this situation to continue will have long-term ramifications for the sector’s appeal to international students, in turn compromising the potential for UK universities to fuel economic growth.
After all, student populations are the lifeblood of the UK’s smaller town centres and regional economies, contributing over £2bn in economic output to every region in the UK. Moreover, it is these regional centres of knowledge that are home tothe new skills, technology, research, and partnerships that will be so vital to the UK’s growth plan – whether navigating the green transition or capitalising on the paths to productivity offered by AI.
Growth, clean energy, and opportunity. These are areas that Labour has pledged to prioritise in its mission to ‘rebuild Britain’, and areas in which higher education has a key role to play. To see results, we need investment to return the UK’s universitiesto financial stability and to reverse the decline of higher education before it is too late.
Thismeans working out a fair funding model so that institutions don’t have to cut back on staff or research. It must also include a focus on student housing, to ensure that university towns are enjoyable and affordable places to live.
In the King’s Speech, Labour made clear its commitment to planning reform. This is a much-needed step to increase planning activity and, therefore, the delivery of stock. We also need a data-led national student accommodation strategy that considers regional demand for university housing and provides a framework for local authorities to bolster housing development.
Increased government funding for universities alongside investment into student housing can help revive the appeal of UK universities and safeguard their future. If Labour plans to become the government of growth, part of its mission mustinclude getting higher education back on track.
