Will 2025 be better after UK higher education’s annus horribilis?

The UK Labour Party’s 1997 election-winning anthem, D:Ream’s Things Can Only Get Better, enjoyed a brief reprisal last summer as the party swept back to power after 14 years in July’s general election.

But patience is already wearing thin with a government handed what’s been called a “loveless majority” in Parliament and that is widely seen to have been rather slow out of the blocks in terms of implementing the change promised in July.

For universities in particular, the change of Westminster government has failed to relieve the fear that things could still get worse, with a slew of job, course and departmental cuts prompted by ongoing fears of institutional bankruptcies. There is therefore a sense that after 2024’s annus horribilis, 2025 is a make-or-break year for UK university policy.

Vivienne Stern, chief executive of Universities UK, is on the side of the optimists. The government’s three-year spending review, which will shape much of the rest of its first term in office, is due in the spring, and Stern thinks it has the potential to be a “corner-turning moment for the sector”.

For England, a commitment to annual, inflation-indexed increases in tuition fees and student maintenance grants is high on her list of asks. “I’d also like to see the government using the strategic priorities grant to invest in deploying the sector behind some of the big government ambitions,” she adds.

“I hope we will see, by the end of 2025, a university system that is in much better shape, much more stable, where the leadership of the sector is really recognised by government for having got a real grip on their own financial situations and the government has stepped up to match that effort by doing the things that only government can do to ensure we get off the path that would lead to decline and get on to the path that leads to us really thriving as a system.”

But it is clear that universities should not expect something for nothing. According to a recent letter to vice-chancellors from education secretary Bridget Phillipson, the price of a new funding deal will be aligning to five government priorities – equality of opportunity, growth, civic responsibility, teaching quality and efficiency.

However, while this letter should be “imprinted in the minds of everybody in higher education at the moment”, says Nick Hillman, the director of the Higher Education Policy Institute (Hepi), it revealed very little detail, indicating that Phillipson’s plans are not yet fully formed.

Equality of opportunity, for example, “could mean any number of things”, Hillman says, from a return to the obsession of the Blair/Brown years with getting a few more disadvantaged students into the most prestigious universities to reducing the growing achievement gap between girls and boys or a real focus on why a large proportion of the population still don’t consider going to university.

Efficiency, similarly, could be “just shorthand for redundancies and a much bigger staff-student ratio”, Hillman adds. Or it could be a focus on rolling out new technologies in a way that will change how education is delivered. Equally possible is a focus on mergers, shared services and other forms of collaboration.

“It could mean all of those things, but it would be rather helpful if we knew at least a tiny bit about what the government thought it meant,” says Hillman.

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Beyond the areas under their immediate remit, universities are also going to be expected to be heavily involved in the government’s headline priorities, such as its industrial strategy and its English devolution agenda, which will take shape in the year ahead.

For Diana Beech, chief executive of the mission group London Higher, university policy currently feels disjointed, with little sense yet of how everything fits together.

“We have many universities on their knees at the moment,” says Beech, a former policy adviser to Conservative universities ministers. “For me, the government has two choices: either take baby steps to piece everything together to help institutions back on their feet, or be big and bold and take a big leap of faith and do something radical for the sector. At the moment, we are not seeing either. I don’t think the sector would mind which option they take but they need to choose very quickly and do something now.”

The tension running through the spending review for ministers is that they have to find a way to deliver the stability the sector craves but also put resource behind the specific things they care about, says Andy Westwood, professor of government practice at the University of Manchester. If ministers do more of the latter, it could mean big changes for universities.

“[Ministers] have made no secret of the fact they want to be active rather than passive in the face of markets or institutional autonomy,” Westwood, a former Labour adviser, says. “They have set themselves up to make those decisions and I think we must expect them to do so and work out what that looks like for the sector.”

As things stand, however, the uncertainty about the government’s overall direction for higher education extends to how it will treat key sector institutions, Westwood says. England’s Office for Students is one prominent example.

The OfS has had a troubled relationship with the sector since it took over from the Higher Education Funding Council for England in 2018, with a widespread sense that its initial remit was too wide and its approach too antagonistic. Its interim chair, Sir David Behan – author of an independent review of the organisation published in July – has narrowed that remit to monitoring financial sustainability, ensuring quality, protecting public money and regulating in the interests of students.

“I think the [OfS] leadership has realised it has gone wrong and it has a new strategy now,” Beech says. “We have an interim chair saying all the right things, but we don’t know who is going to [chair the OfS] permanently.”

For his part, Westwood is sceptical that the OfS has radically changed course. In essence, he believes it is still “facing in the direction of the priorities of the previous government: competition, autonomy, student choice, student protections: all that kind of stuff”.

Moreover, if Labour wishes to turn it into a more interventionary organisation akin to its predecessor, charged with actively helping universities survive, that will require a fundamental rethink, says Hepi’s Hillman.

“How can a market regulator help one player in the market against its competitors?” he asks. “That is unfair competition. You almost have to go back to first principles about what the OfS was set up to do.”

Another question for 2025 is how exactly Labour will grasp the skills agenda. Despite the fanfare around the creation of another new body, Skills England, Labour has so far offered little clarity on how it will seek to address the perpetual problem of getting the tertiary sector to work together to deliver for the country’s skills needs, says Beech. That stands in contrast to Wales, whose new pan-tertiary regulator, known as Medr, began operating in August – which is also taking an active interest in addressing the financial woes of Welsh institutions, according to its chief executive, Simon Pirotte.

Lacking clarity on English policy, there is a risk of university leaders falling into the trap of trying to second-guess the politicians, says Hillman, a former adviser to the coalition government’s universities minister, David Willetts. Calling for more politically palatable inflationary fee rises – rather than the £12,000-£13,000 fees actually needed to balance the books – is one example, he says.

Hillman recalls the 2010 spending review, when a deal to protect the science and research budget amid huge public spending cuts was thrashed out between Willetts and the then chancellor, George Osborne, on a Sunday night phone call mere days before the big reveal (the quid pro quo being that most teaching grants would be replaced by trebled tuition fees).

He describes politics as “a dirty, mucky, short-term, quick-fix sort of business”, in which changing economic conditions can make “things that looked impossible – things that we thought politicians would never do in a million years – suddenly become feasible”.

Better, therefore, for vice-chancellors to “tell politicians what they need to do to have a world-class university sector and let our case be debated inside Whitehall alongside everybody else’s”, he says.

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That also applies to the other big UK policy debate that will continue to rumble on in 2025: the future of the international student market. This will be subject to another review, ahead of a promised new strategy on international education after the country met a 600,000-student target years early.

Universities might be tempted to campaign, for instance, for an abolition of the previous government’s ban on most international students bringing their dependants to the UK, which saw international student enrolment decline by a quarter in 2024. However, UUK’s Stern senses that the sector will need to remain on the defensive and protect what it has after the “intolerable [policy] roller coaster of the last few years”, which also saw the post-study Graduate Route work visa – only reintroduced in 2021 after being abolished in 2012 – come close to re-abolition.

“The number one ask is policy stability,” she says. “Give us a stable and predictable environment that allows us to manage ourselves and our fortunes well. The number one mission of this government is growth. International students unequivocally contribute to that, directly and indirectly. Bridget Phillipson has been fantastically supportive on this front, but we have to work with government to find a settled position which will inspire confidence in prospective students.”

For Hillman, however, asking for stability is “missing a trick” as it implies that the current situation is “rosy”.

With conversations ongoing about a new European Union mobility scheme for young people and incoming US president Donald Trump’s suggestion that every international student in the US should be given a green card on graduation, Hillman senses the need for reform – not just maintenance of the status quo.

But in a hypothetical situation whereby the sector is asked to stipulate its main ask from the international education refresh – be it lower visa fees, better post-study work options, rethinking the dependants ban or setting a new student recruitment target – “I don’t know if we collectively have the faintest idea of the answer,” Hillman says.

Institutional failure may be most likely in Scotland, according to Hillman, where institutions are much less well funded than English equivalents and where University of Dundee vice-chancellor Iain Gillespie recently resigned after his institution announced a £30 million deficit and in the wake of another real-terms cut in university funding. Smaller, more specialist institutions may also be under particular threat, Hillman suggests.

For Stern, however, the drastic cost-cutting universities have undertaken over the past year has begun to relieve some of the immediate risks of an institution going under.

“It’s been a really difficult year,” she says. “Lots of university leadership teams have had to do tough things. But I hear more and more that ‘we have faced a big challenge, we’ve gripped it, done what needed to be done, and we’re going to return a surplus this year’.

“That’s not pretty,” Stern adds. “Government needs to pay close attention to what is being lost as universities do what they need to do to balance the books – including just halting necessary investments to facilities and infrastructure. But the sector has gripped this crisis and I hope and expect that it is going to result in them getting through what has been a very difficult year and, hopefully, back on to firmer footing in 2025.”