Chancellor announces new budget for universities and raises English tuition fees

English tuition fees have risen by £285 to £9,535, as announced by the education secretary, Bridget Phillipson, on 4 November. These changes come alongside the arrival of the Autumn Budget on 30 October which saw the Government continue its investment into Research and Development, allocating £20.4 billion for 2025-26 and maintaining universities’ links to the European Horizon scheme. However, there is concern the budget will deliver a blow to overall funding as the 1.2 per cent increase in employer national insurance could add an estimated £372 million to the sector’s pay bill, alongside the lower threshold employers have to pay.

These changes come as universities face unprecedented challenges with their finances. Professor Dame Sally Mapstone, the principal and vice-chancellor of the University of St Andrews, announced to students in September through Universities UK Report: “Universities in this country are running deficits of £1.7 and £5 billion respectively on teaching and research costs, yet the sector as a whole is contributing £265 billion a year to the economy.”

Sally Mapstone, alongside her role of principal, is also president of Universities UK (UUK), an advocacy organisation for 141 of the UK’s universities. Many of these financial problems emerge from the fact that tuition fees have failed to rise with inflation in recent years because of the prior cap on tuition fees. Mapstone has said that “the £9,250 fee is currently worth £5,924 in 2012-13 prices.” This “virtual freeze in tuition fees” has resulted in 40 per cent of higher education providers expected to be in deficit in 2023-24, a £5.3 billion loss in research activity and 33 per cent of decline in funding per student in English higher education since 2015-16, according to the UUK.

In September, the UUK proposed a Blueprint for Change to give the sector a sustainable future. They called for “increasing funding for teaching to meet the real costs through a combination of linking fees to inflation and restoring the teaching grant.” One of the commissioners of the UUK, Professor Shitij Kapur, said tuition fees should rise to £12,500 but added that asking for that “would seem clueless” and “out of touch”.

On 4 November, Vivienne Stern, the UUK chief executive, commented on the rise of tuition fees:  “Today’s decision cannot have been easy for government, but it is the right thing to do.” She added, “A decade-long long freeze in England has seen inflation erode the real value of student fees and maintenance loans by around a third, which is completely unsustainable for both students and universities.”

She added: “The increase in maintenance loans is also very welcome and important. Maintenance loans in England are currently at their lowest level for nine years, so this increase was also urgently required to allow students to access the financial support they need while studying, especially given cost of living pressures.”

The maintenance loans cap will increase from £10,227 to £10,544 for students living away from their parents outside London, and from £13,348 to £13,762 in London.

As for the consequences for students, Tom Allington from the Save the Student financial advice website expressed the “dismay” regarding the increase in fees. However, he emphasised that it would make "little difference to overall levels of student debt, and will have no impact whatsoever on the amount a graduate repays each month".

Many students feel let down by this change, given Prime Minister Keir Starmer stated in 2020 that he wanted to abolish tuition fees altogether when he ran for Labour Party leadership then. In 2023, he made a U-turn as he said Labour was “likely to move on” from this pledge and confirmed this in his general election campaign.

Moreover, academics have said the tuition rise is no more than “a stop gap” solution, as described by University of London vice-chancellor Wendy Thomson, in a 6 November  post on Research Professional News.

Nick Hillman, the director of the Higher Education Policy Institute, said: 

“The problem is that, according to the Institute for Fiscal Studies, the fee rise will bring in £390 million more while, according to the Universities and Colleges Employers Association, the changes to employers’ national insurance contributions will add £372 million to the sector’s pay bill.”

This leaves a gain of only £18 million for universities. Distributed across the over 400 providers on the Office for Students’ register, which translates into an  average of under £45,000 each, this makes very little difference to each university, despite individual students having to take out more debt.

In a post from 4 November on the University College Union (UCU) website, Jo Grady,  UCU general secretary, called the tuition fee rise “sticking plaster” and “both economically and morally wrong”.

“Taking more money from debt ridden students and handing it to overpaid underperforming vice-chancellors is ill conceived and won't come close to addressing the sector's core issues,” she wrote, calling for increased investment from the government instead.

Photo from WikiCommons