In mid‑2025, the Labour government’s Spending Review 2025 confirmed a sweeping £1.4 billion net reduction in funding to English universities for the 2025–26 academic year.
This historic move marks a major shift in public priorities — while capital investment and defence receive boosts, higher education is being squeezed hard.
How Much is Being Cut and Where
| Funding Type | Change | Details |
|---|---|---|
| Net university funding | –£1.4 bn | Includes tuition, grants, cost increase |
| Capital grants | –£66 m | Drop from £150 m to £84 m |
| Strategic Priorities Grant | –£108 m | Key teaching support funding slashed |
| Foundation year fee/loan limits | –£332 m | Fee cap reduced to £5,760 |
| Level 7 apprenticeships funding | –£108 m | Funding for postgraduate apprenticeships removed |
| Teachers’ Pension Scheme & NI rises | +£555 m cost | New employer costs for institutions |
| Domestic tuition increase (fee cap) | +£371 m income | Fees up to £9,535 from 2025–26 |
Net effect: Funding reductions outweigh income increases — leaving universities facing ¥ deficits, tighter budgets, and deep cost-cutting measures.
What This Means for Students
With funding set to shrink dramatically, students should prepare for several major changes:
- Cut courses & departments: Nearly half of universities have closed or merged courses; 18% ended entire departments
- Staff layoffs: Up to 10,000 job cuts across leading universities
- Worsening resources: Reduced campus repairs, larger classes, fewer module options
- Reduced support: Scholarships, mental-health and career services likely under pressure
- Rising (or static) tuition: Domestic fees inch up only slightly; international student numbers drop
Why Is This Happening?
- Shift in government priorities: Spending Review favors defence, healthcare, capital projects over education
- Rising costs for institutions: Employers’ NI contributions and pension scheme reforms add £555 m costs
- International student decline: Visa restrictions down 16%, impacting revenue by billions
- Tuition cap frozen: Domestic fees haven’t kept pace with inflation since 2017
Long-Term Outlook for Students
- Degree mix shifts: Focus turns to high-cost, strategic courses (STEM, labs); arts and humanities likely see cuts
- Institutional mergers: Financial strain may push smaller universities to merge or close
- Resource constraints: Under-utilized infrastructure, student support systems trimmed
- Future reforms: Sector bodies propose a transformation fund and easier collaboration
How Students Can Respond
- Monitor your course status: Check whether your course is flagged for cuts or consolidation
- Engage with university bodies: Join student unions or forums shaping institutional decisions
- Upskill independently: Use free or low-cost online platforms for additional skills or modules
- Consider institution strength: If contemplating postgraduate study, research financially resilient universities
- Voice concerns: Reach out to MPs or media if changes threaten educational quality
The UK higher education sector is entering a period of profound structural change, reshaped by the £1.4 billion funding squeeze.
Students should prepare for course realignment, staff cuts, and reduced support services, but also seize new opportunities for advocacy and self‑development. Staying informed, proactive, and vocal will empower you to navigate this shifting landscape successfully.
FAQs
Will my tuition fees increase significantly?
Not really. Domestic fees will only rise slightly to £9,535. Most of the budget cuts affect non‑fee sources.
Are arts and humanities at most risk?
Yes. Specialist and niche subjects like media studies and history are more likely to be cut
Could my university go bust?
Unlikely – most universities are “too big to fail.” But expect mergers, course closures, and departmental cuts