The financial impact of government policy decisions on universities

Our analysis shows that government policy decisions lead to an estimated £3.7 billion reduction in funding to higher education providers in England from 2024-25 to 2029-30. 

This assessment includes the annual impact of tuition fee uplifts announced in the government’s Post-16 Education and Skills White Paper, along with the continued impact of cuts, tax increases, the international student fee levy, and the ongoing loss of income from recent immigration policies.

• Taken together, government policies lead to a worsening of universities’ aggregate financial position in every year to 2028-29. A small improvement in 2029-30 depends strongly on continued fee uplifts. It is currently unclear how many universities this will affect: from 2028-29, the government has indicated its intention to link fees to judgments on quality, with further detail yet to be announced.
• Within this, we see an estimated £5.5 billion cumulative increase in income over the period from uplifts in domestic tuition fees, compared to counter factual of no fee uplift over the period. 
• In practice, uplifts in the tuition fee will keep fee income at the same level in real terms, rather than addressing historical real-terms erosion of the tuition fee.
• These fee increases are offset by an estimated increase in costs of £9 billion from cuts, tax increases, the proposed levy on international student fees, and a reduction in income from international students due to more restrictive immigration policies, over the period to 2029-30.
• Of the £9 billion cumulative increase in costs over the period between 2024-25 and 2029-30, 42% is associated with income lost due to immigration policies, 24% with increased pension and employment costs, 6% with the international student levy that will be introduced midway through the period, and 28% from changes to government grants and funding for teaching and research that have been announced to date.
• For 2029-30 only, the international student levy accounts for 20% of the £1.6 billion in estimated costs the sector will face from government policies in this year alone.

Estimated financial impact of government policy changes on universities in England (£ millions) 

Cumulative financial impact of government policy changes on universities in England, from 2024-25 to 2029-30 (£ billion) 

Further details of assumptions and sources used in the analysis can be found in our methodology document.