The current economic situation is tough, not only for higher education, but for government funding across all areas. We know that the new government has clear ambitions to drive economic growth, renew public services and capitalise on the potential within our country to deliver a stronger future.
Our sector is key to realising those ambitions. The latest figures published in the September 2024 London Economics report on the UK higher education sector’s economic impact show that once direct spending by the sector and the benefits of international students are combined, the sector contributed £265 billion in 2021–22. For every £1 of public money invested into UK higher education institutions, £14 of economic benefit is generated.
While we could learn more about the government’s intended direction of travel for higher education at the upcoming Labour Party Conference, the focus must be on the upcoming spending review. Our submission proposed a combination of costed and cost-neutral actions that will underpin key messages we take into party conference season and beyond.
Diversity and distinctiveness
The first of these is that maintenance of diverse and distinctive higher education provision is vital to ensuring access and success – yes, for students, but much more widely as well. Our member institutions are deeply embedded in their towns, cities, and industries, developing accessible learning opportunities, driving support for local and national businesses, and spearheading powerful civic engagement.
Our members, along with the rest of the higher education sector, have been seeking significant efficiencies in recent years, given the reality that the £9,250 undergraduate tuition fee is now equivalent to £5,793 in 2012 money. As most of us now agree, cost saving exercises are not sufficient to solve the deeper financial problems wrought from this level of underfunding.
Institutions around the country are looking hard at the cost of different subjects and their range of student and staff services. But leaving institutions to take those decisions independently, without some level of coordinated dialogue across the sector, increases the likelihood that we reintroduce subject or geographical cold spots.
Diversity of institution and subject is essential for ensuring and equalising access to higher education, for protecting genuine student choice and for underpinning a rich research, development and innovation system that can act as a catalyst for economic growth and for tackling 21st century challenges.
In June, we published our cost-neutral wish list for the incoming government. Those asks remain meaningful, and we’ll continue to reiterate them, but it’s now time to suggest where funding is needed to ensure we’re able to deliver to Labour’s ambitions while also preserving the value of higher education for all of us.
Show me the money
Increasing student maintenance support must be a priority. A recent HEPI report recommended implementing a minimum income standard for students of just over £18,000 per year outside London and just over £21,000 in London; both of which are much higher than the £10,227 available for those studying outside London for academic year 2024-25. If school leavers see university as unaffordable or just not feasible due to the extraordinary financial balancing act it has become, then they will not pursue it.
But as multiple labour market trajectories predict, demand for higher level skills will only increase in the future and we need those skills to come from diverse backgrounds to ensure we’re building a society fit to address 21st century challenges. To support this, we need student maintenance grants reinstated, as well as increases in the available level of maintenance loans.
A further opportunity to provide some financial relief to institutions would be release from the liabilities from the Teachers’ Pension Scheme (TPS), which many institutions are statutorily bound to be members of due to their legacy as teacher-training colleges. Ongoing obligations and increases to the contribution rate are placing an extraordinary strain on institutions; a burden the government acknowledged earlier this year when it alleviated the strain for further education and sixth form colleges by increasing their public grants.
Alongside this, independent schools have been relieved of their TPS obligations altogether. The fact that higher education institutions have not been afforded either of these opportunities feels not only a strong irony, but a detrimental oversight which could hasten the collapse of otherwise viable institutions focused on delivering teachers into primary and secondary schools across the country.
And then we come to funding that is provided specifically to protect and enhance specialist subjects and institutions. GuildHE institutions are often internationally-renowned in their industries and professions, but challenged by having to navigate a funding and regulatory system that was built for larger, more traditional institutions. Because of this, ironically, many institutions face barriers and challenges to participating in a sector focused on easing barriers to entry.
Many smaller or specialist institutions are currently excluded from research or knowledge exchange funding streams due to their size or specialisms. Excellent research and knowledge exchange should be funded wherever it is found, specifically by removing the Higher Education Innovation Fund threshold and gearing quality-related funding to support emergent and consolidating research environments.
GuildHE has conducted in-depth research and written extensively on the need to reform the current regulatory approach, advocating for a sharp reduction in the costs of regulatory compliance. The House of Lords Industry and Regulators committee recommended that OfS should be more transparent about its regulatory approach, streamline its activity and be more mindful of its impact on those it regulates. And more recently, the findings of David Behan’s Independent Review of the Office for Students showed the need for stronger coherence and collaboration between the regulators of HE to ensure efficiency and an improved relationship with institutions and students. Yes, we want to see all of that, please.
GuildHE is asking for a lot
There are other things we want to see. We want to see regional development plans that put HE institutions at the heart as key enablers. We want to see creative and cultural institutions as recognised assets in developing cultural capital, well being, and better living standards, with funding that reflects that recognition. We see Skills England as providing an immense opportunity to, finally, get to grips with a national skills strategy to tackle 21st century challenges – challenges that require key skills in sectors like education, agriculture, healthcare, the built environment and the creative arts.
GuildHE and others like us can be helpers on that journey, through participation in a new ministerial cross-governmental health and education taskforce. And we recommend that the taskforce quickly get to grips with creating a financial support package like those that exist in other countries, whereby student loan debt is forgiven for those in public sector professions after a certain number of years working in schools, hospitals, and other public services.
Of course, these aims are long-game stuff, so in the meantime, we’ll also push for the government to make permanent the two-year graduate visa. Because not only do we benefit extraordinarily from international students while they’re here with us, and after they’ve gone home to their countries, we also need them to help fill some of the holes left from years of underinvestment in our country’s precious infrastructure while we work to fill them ourselves.
We ask for a lot, but we, as a sector, give a lot and it’s time to start making clear what we need to ensure our institutions are able to deliver the promises of Labour’s new missions and improve our country in the ways we know we can.
