Universities warn of financial ruin if tuition fees are not increased

The Government must increase tuition fees in line with inflation as “the bare minimum” to avoid financial ruin among universities, campus bosses have warned.

Universities UK (UUK), which represents 141 institutions across Britain, is set to publish a blueprint in the coming days calling on ministers to roll out urgent support.

The document, which will be similar to the report published last week by Lord Darzi on how to fix the NHS, will warn Sir Keir Starmer that “doing nothing is not an option” for universities as they face a major crisis.

The group will demand tuition fees be raised in line with inflation from the 2025-26 academic year as a “necessary” step, The Telegraph has been told.

Tuition fees in England have remained frozen at £9,250 since 2017, when they received a minor uplift of £250 – their first increase since 2012. Universities have warned it means they are now losing thousands of pounds for each home student they enrol.

Vivienne Stern, the chief executive of UUK, told The Telegraph that the Government must step in to “stabilise the ship”, as more than 40 per cent of institutions in England are expected to sink into a deficit this year.

“Just get on and index-link the fee – this cannot be allowed to continue. That’s the bare minimum – you know, you can’t go on like this,” she said.

“I think they should also step in with public funding as well, but at the very least index-linking fees in 2025 is necessary.”

UUK’s proposals suggest that if investment for university teaching had kept up with inflation, funding per student would now be in the region of £12,000 to £13,000.

The group will also call on the Government to raise maintenance loans in line with inflation, reinstate maintenance grants for the poorest students, and increase overall funding for the sector.

Maintenance grants, which were scrapped by Lord Cameron in 2016, were a form of means-tested support worth up to £3,500 for university students in England.

In return, UUK will list the “efficiencies” that universities are prepared to make to save money within the sector. Ms Stern told The Telegraph it would include plans for universities to share campuses and other resources.

The move will form part of a “major efficiency programme” that will “double down” on a report led by Sir Ian Diamond on how to repair the sector following the 2008 financial crash.

“For most universities, consistently declining income has to be met with action. That’s what’s going on. Government keeps saying that they expect universities to take responsibility – that is already happening,” Ms Stern said.

“What we’re going to try and do is help them by bringing a lot of institutions together [to do] what they might not be able to do individually, just like we did in 2008.

“This is a sector that has opened the bonnet and looked hard at what it can do itself. It’s a sector that knows it also has to change. It’s not just about holding out a begging bowl to Government and saying ‘give us more cash’.”

The blueprint is expected to highlight examples of universities successfully pooling resources, such as the joint campus shared by Exeter and Falmouth.

The 100-acre Penryn campus in Cornwall is split between Exeter, a Russell Group university, and Falmouth, a specialist arts institution. The two universities share research buildings, teaching facilities and halls of residence.

It could pave the way for other shared campuses between Russell Group universities and neighbouring institutions as the sector tries to stave off potential collapses.

‘Don’t waste a good crisis’

Ms Stern said universities would also be told to mimic the University of London and look at sharing the provision of individual courses to save costs. It is thought that pooling resources could avoid wholesale mergers between universities, which are costly and legally complex.

“In a way, the message to the sector is: don’t waste a good crisis. See what this set of financial pressures can lead to in terms of you working with other institutions,” she said.

It comes after Bridget Phillipson, the Education Secretary, suggested earlier this month that universities would have to make budget cuts to ease financial pressures.

Addressing vice-chancellors at the UUK’s annual conference, Ms Phillipson said: “I will continue to work with you to secure the future of our universities. That will mean tough reform coming from this Government, but I need you all to be ready to drive reform from within as well.”

Ministers have repeatedly said Government is “considering all options” to help higher education, but that there would be no quick fixes.

Labour admitted in its election manifesto that higher education was “in crisis” and that the current funding settlement did “not work for the taxpayer, universities, staff, or students”, but has so far failed to say how it will address the problems.

On Tuesday, Downing Street would not be drawn on the Prime Minister’s position on increasing tuition fees.

Asked whether Sir Keir was against tuition fee increases, a No 10 spokesman said: “The focus has been on ensuring that the Office for Students has greater flexibility so it can work closely with the universities on this and when it comes to fees there is an annual process for that.

“They are, as I understand, set for this year, there’s a process, but the focus is very much on working with universities, recognising they are independent and responsible for the decisions that ensure their long-term financial sustainability.

“But we think it’s right that the Office for Students has a greater remit so it can monitor that financial sustainability.”

A Department for Education spokesman said: “We will create a secure future for our world-leading universities as engines of growth and opportunity so they can deliver for students, local communities and the economy.

“We have inherited a challenging set of circumstances in higher education. By bringing economic stability and growth, we can fix the foundations of our economy, strengthen our higher education system and rebuild Britain.”