New analysis from Universities UK (UUK) shows the scale of underfunding English universities face in teaching today’s home students, compared to ten years ago.
Taking the 2015-16 academic year as the baseline, the analysis tracks the ‘unit of resource’ for teaching in England – which includes both tuition fees and direct government grants – up to this academic year. Both funding streams have failed to keep up with inflation through this period, leaving universities in England today receiving £6.4bn a year less in real terms for teaching home students compared to a decade ago. It means that funding per student for teaching in 2025-26 is 64% of the level it was in 2015-16.
The figures ahead of this week's Budget also come on the back of recent financial analysis published by the Office for Students. Based on their own forecasts, 35% of providers expected to be in deficit in 2024/25 according to the previous iteration of OfS data; however its recent modelling, based on the latest recruitment data, suggests that figure will now be 45%.
While the government has recently announced it intends to link tuition fees to inflation from now on, this will only prevent the gap that has grown in funding the teaching of domestic students from growing further. The yearly £6.4bn shortfall is effectively ‘baked in’ to higher education funding in England without increases in direct grant funding.
The regulator’s figures also reveal how the government’s proposed tax on international students, which government says will be used to fund maintenance grants for key subjects, will further hit the sector’s finances. It is expected to add £780m of additional costs to universities each year, with an inflation uplift to tuition fees expected to raise just over half that amount annually, £440m.
Research with 60 of UUK’s members has previously shown how, in gripping the financial challenges they face, universities have been taking difficult decisions, including on course provision. 49% of those surveyed in spring 2025 had closed courses; 55% consolidated courses; 46% removed module options, and 18% closed departments entirely. Meanwhile nearly 80% are considering future reductions in research investment.
Ahead of the Budget, UUK is calling for government to change its approach and recognise the damage that a tax on international students will do to their ability to drive economic growth by meeting the future skills needs and undertaking cutting-edge research and innovation.
Vivienne Stern MBE, Chief Executive of Universities UK, said:
This Budget has to be about growth. The Government has rightly identified universities as fundamental to this aim. They contribute over a quarter of a trillion pounds to the economy each year, they are a vital component of the skills system and provide the foundation of many new companies with the highest growth potential. The Secretary of State for Education was right to set the goal of putting universities on a firm financial footing.
“If that’s the goal, this research shows just how far off achieving that we are Universities are cutting costs hard, losing jobs and courses as a result. They are also showing that they can do things differently, with mergers and collaboration on the cards for some.
“The decision to increase fees in England in line with inflation was brave, and the right thing to do. It is beyond disappointing that the government plans to remove more than the amount this will bring into universities through a new tax on international students. That is the opposite of helpful, taking us further away from the goal of financial stability; which we need to play our full part in delivering the government’s missions.
Vivienne Stern MBE
Chief Executive of Universities UK
Notes to editors
- Taken together, the total difference in where teaching funding would have been if it had kept its real terms value since 2015/16, compared to where it actually is today, is £31.4bn; equivalent to the size of the UK’s recent Tech Prosperity Deal with the US.
- A full methodology explanation is attached and will be available here from 00.05 Monday: https://www.universitiesuk.ac.uk/latest/insights-and-analysis/how-teaching-funding-student-england-has
- At Universities UK, we harness the power of the UK’s universities and create the conditions for them to thrive. We are the collective voice of 141 universities in England, Scotland, Wales and Northern Ireland, bringing them together to pursue a common cause: thriving universities, serving society. We aim to ensure our universities can transform the lives of more individuals, drive greater growth and create flourishing places through the knowledge and skills they generate, while being globally competitive centres of research making ground-breaking discoveries. Universities UK acts on behalf of universities, represented by their heads of institution. www.universitiesuk.ac.uk