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Where do universities get their funding from?

Julie Tam

Julie Tam

Deputy Director of Policy
Universities UK


When university funding is discussed – whether it be in parliament, via the media, or elsewhere – more often than not, it is only undergraduate tuition fees and research grants that get a mention.


In reality, universities in the UK now raise income from a wide range of sources. With this in mind, Universities UK is today publishing University funding explained.

The publication seeks to highlight this diversity of university income and explains how universities manage this funding to support their core activities. Given the seismic developments of recent weeks – including Brexit and the changes to government departments with responsibility for higher education – its release is timely.

While the long-term impact of Brexit on universities is as yet unclear, there are obvious concerns about the possible financial implications of leaving.

While the government has given much needed reassurance that there are no immediate changes for EU students (currently enrolled or about to start this year), EU staff and those applying for research funding, much remains to be decided as part of the UK's discussions on its future relationship with the EU. 

While the future may be uncertain, what is clear is that the strategies universities have been employing to manage their finances prudently will be crucial in helping them weather this turbulent time. As our publication demonstrates, universities now raise income from a wide range of sources, across UK, EU and non-EU groups of students, and diverse sources of research and innovation income. For example, 66% of research income comes from UK government sources, with 13% from UK charities and 11% from the EU.​

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With such uncertainty, it is more important than ever that universities generate surpluses of income to withstand increased volatility of student numbers, unexpected costs, and possible reductions in government funding. What is left is reinvested into future capacity, including new teaching spaces and research facilities (or 'capital expenditure'). The UK leaving the EU may bring about changes to income to sorely test the surpluses universities aim to generate. This in turn may impact on the amount of money left for investment in the future.

Universities and government will need to examine the ways in which investment for future teaching and research capacity is sustained – investing too little will make it harder for universities to meet student demands and for the UK to remain a world-leading research power. It could also undermine the financial sustainability of the higher education sector in the longer term.   

The decision to leave the EU – and the impact that may have on the UK government's spending plans – could mean changes for university funding. In the weeks and months – and even years – to come, it will be important to not lose sight of the need for sustained investment in UK universities. This investment will be essential to ensure that the UK's world renowned track record of high-quality teaching and research continues. 


 

Leave a Comment

Ebunoluwa Feyisetan
Ebunoluwa Feyisetan says:
15 August 2016 at 13:46

Do unaccredited universities in the UK receive any form of government funding?


Joe Dempsey
Joe Dempsey says:
7 September 2017 at 08:47

With 66% of funding coming from government, it's reasonable for government to have a say in how the funding is used.


Ian Cameron
Ian Cameron says:
30 November 2017 at 22:33

Is it reasonable for the media to question vice chancellor payments?