Government’s key growth sectors losing out on home grown talent as university courses integral to the workforce struggle to keep up with demand

Many of the sectors identified as key to future growth require graduates from courses that are classed as 'high-cost' by the universities regulator in England. Lab-based subjects, or subjects that need high-cost equipment and facilities like engineering, computing and physical science, cost more to run than the standard domestic tuition fee. Universities receive a grant from government to cover these extra costs, but this extra funding is not enough to bridge the gap.

UUK’s analysis found that although more than half (57 percent) of applications from UK students were to high-cost courses, enrolments onto these courses made up just 47 percent. 

In recent years, the proportion of all university places allocated to high-cost courses fell from 52 percent in 2015/16 to 47 percent in 2023/24, but between 2019 and 2024 applications to high-cost courses actually grew by 14 percent, indicating that demand for high-cost subjects is now outstripping supply.

The disparity is cause for concern given the analysis also found over half (52 percent) of home-grown graduates from high-cost courses were working in one of the government's industrial strategy growth sectors three years after graduation. 

Overall, graduates from high-cost courses are 1.5 times more likely than those from other courses, to be working in one of the government’s industrial strategy growth sectors three years after graduating. For example, UUK analysis found that graduates of high-cost courses were 1.7 times as likely to be employed in the clean energy sector, while employment into advanced manufacturing was seven times more likely for graduates of high-cost degrees. 

Although tuition fees are due to rise to £9,535 in the new academic year, the increase will still fail to cover the cost of most courses with universities having to cover the difference. High-cost subjects are in a unique position as they require even more funding that institutions are unable to cover themselves.

This cost challenge is recognised through dedicated per-student funding for high-cost subjects from government through a grant known as the strategic priorities grant (SPG). However, this funding stream has followed the same trend as tuition fees, having fallen in real terms by 18.4 percent between 2018–19 and 2025–26. 

Funding towards high-cost subjects is only one element of SPG funding, which the government announced last week will be cut by £108 million. 

Ahead of the forthcoming comprehensive spending review and the publication of the industrial strategy, universities are calling on government to increase the growth focused elements of the SPG, as institutions continue to battle the financial challenges facing the sector. 

UUK’s latest report, ‘Why universities are critical to an industrial strategy’, reinforces the point that universities are not only central to developing a high-skilled workforce but are also drivers of local and national economic growth—making them vital to the success of the UK’s industrial strategy.