Universities face uphill battle as British public ‘unaware’ of extent of financial crisis

The British public remains largely unaware of the severe financial challenges facing UK universities despite three-quarters facing budget deficits this year, polling has revealed.

Research carried out by consultancy firm Public First found that only one third of respondents believed universities had “too little” funding, while 8% perceived institutions as being in serious financial difficulty.

The findings, published in a report commissioned by the All-Party Parliamentary Group (APPG) for Universities, stand in stark contrast with the actual state of university finances.

The Office for Students has forecast that nearly three-quarters (72%) of British universities will run a deficit between 2025 and 2026.

Nearly a third of respondents (31%) believed universities could address shortfalls by sourcing savings from their existing budgets

This is a marked rise from earlier projections, which estimated that 40% of universities would operate at a loss this year. The revised figures account for student recruitment in autumn 2024, which fell “significantly below” sector expectations, particularly amongst overseas students.

The report also highlighted misconceptions about the availability of solutions to address the funding crisis.

Nearly a third of respondents (31%) believed universities could address shortfalls by sourcing savings from their existing budgets.

However, other factors are also contributing to the sector’s financial strain, including inflationary pressures and rising national insurance contributions – a factor which will cost universities an additional £372 million annually, according to the Universities and Colleges Employers Association.

Only 24% of respondents in the APPG study said that the government should remove the tuition fee cap altogether

Even the first increase in undergraduate tuition fees since 2017, from £9,250 to £9,535, is unlikely to ease financial pressures.

The Institute for Fiscal Studies estimates that the measure will raise £390 million for universities annually. Offset against the national insurance increase, the sector is left with a net gain of just £18 million.

However, only 24% of respondents in the APPG study said that the government should remove the tuition fee cap altogether. The abolition of tuition fees is also not widely welcomed by the public either, with only 18% showing their support for this proposal.

The current model – with a mix of government funding and repayable loans – was found to be the most widely accepted, with just under a third (29%) voicing their support.

Universities are facing serious financial challenges and need sustainable support to enable them to fulfil their potential

Adam Thompson MP, Chair of the APPG for Universities

Adam Thompson MP, Chair of the APPG for Universities, said: “The polling shows that the public believe there is a significant role for universities providing the skills and research capabilities to enable the country to thrive in the future.”

He did add a note of caution, however: “Universities are facing serious financial challenges and need sustainable support to enable them to fulfil their potential as powerhouses of future economic growth and opportunity.”

The findings therefore underscore the significant disconnect between public perception and the financial reality facing the sector.