We now begin our public proceedings of the Education Select Committee. Can I welcome Committee members, our witnesses and members in the public gallery to our evidence session this morning? This is a one-off deep dive evidence session into the funding and finances of universities. I would like to start by inviting our witnesses to introduce themselves to us this morning.

My name is Malcolm Press. I am the vice-chancellor of Manchester Metropolitan University and currently serving as vice-president for England and Northern Ireland for Universities UK.

Hello. I am Jessica Corner. I am executive chair of Research England, one of the councils of UKRI, but I also lead for UKRI on financial sustainability of the research elements of the university sector.

Good morning. I am Philip Augar. I chaired the panel reviewing post-18 education for the May Government in 2018-19.

Thank you very much. You are all very welcome with us here this morning. I am going to begin our questioning with a question to all three of our witnesses. The Office for Students estimates that nearly three quarters of higher education providers could be in deficit by the end of this financial year. What are the key factors that have led to the current financial challenges in the higher education sector?

There is never a single cause of these events. It is a mixture of errors in policy going back many years and errors in governance on the part of the sector. It is a combination of the two in a generally hostile inflation and interest rate environment that has led to the current situation. Would you like me to expand on what I think the errors in policy and governance are, or should I leave it at that?

Briefly, if you can, that would be helpful.

Looking at the errors in policy, I go back to 2012 and 2013. These were years when the tuition fee was trebled at a stroke and the number cap on students was lifted. Suddenly, teaching, for a while, became a profitable activity for the universities. Without a number cap, the universities responded as you would expect. They grew very quickly. It is at that point that bad governance kicked in. Instead of taking a measured approach to the opportunities out there and the likely future landscape, there was an overinvestment in what some would call essential student amenities and others would say were vanity projects. There was a general dash for growth, which was not very well managed at the governing body level. That led to a situation where, when the music changed, as it did with covid, Ukraine and the current geopolitical situation—inflation and interest rates go up—the business models that had looked fine in those growth years suddenly looked very strained, especially when the tuition fee was frozen for a long period. The final error is that the fee has been frozen for some years too long now and that, in my view, needs to be addressed. I could talk all morning about that, but I do not think that you want me to.

We will come to some of the detailed issues as well.

From my point of view, I oversee the research and innovation aspects of what universities do, which make an enormous contribution to the strength of the UK in research, as a global leader. The picture that Sir Philip has just described also plays out in research. Universities make a large contribution from their surplus income to research, to the tune of about £5 billion per year. The public funding for research only covers a certain element of that, so there is now, in this circumstance, a gap between the funds that universities have been putting into research and the ability to cover the costs of it. That is another element that is fragile at the moment and we are concerned about.

It is important to understand the context of the external environment in which universities are operating. This September, the fee cap will be £9,535. In 2012 money, the fee was introduced at the £9,000 cap. That today would be worth £5,935. The primary reason why universities are struggling in some instances is that we have had to constantly do more with less as inflation has eroded the real-term value of the home undergraduate fee. You couple with that the fact that there have been downward pressures on international students due to government visa policies. You look at the fact that home undergraduate numbers have not grown in the way that you might have projected, despite the rise in the number of 18-year-olds, because of cost of living pressures on students. You put all those things together and that is why you end up in a situation where some universities are projected to be in difficulty according to the OfS data.

I accept the data as you present them. The sector is very concerned about the financial sustainability of universities for the reasons that we have just set out in response to the Chair’s question. The university sector is working very hard to drive efficiencies and understand what we can do to work together to resolve some of these challenges. This is a piece of work that is actively in train at the moment, so we are taking active steps. Universities are looking at ways in which they can support one another and continue to deliver value for students. It is worth remembering that we have a system in the UK that provides students with so much more than many other OECD countries. We have more favourable student-staff ratios and a huge amount of wraparound support that we deliver to students. We are reaching a point where we have to think about whether we want to deliver what is a world-class system for our students with great outcomes, or whether we operate in a different way. That is a challenge that we are faced with.

Professor Corner, do you accept that the long-term reduction in funding for research has had a funding implication for higher education institutions in the UK? Given that research funding comes from Government, charities and higher education providers, how can we make this more sustainable in the long term?

I accept the context that we have just been describing. That is creating difficult conditions for universities in terms of managing their research and innovation efforts, which are of crucial importance to the country. There are many factors driving how the situation has been unfolding. Universities undertake research on behalf of many actors, so charities, Government, businesses and other organisations. Some of that they do at less than the cost of doing it. Sometimes that is the right thing to do because small businesses, for example, may not be able to afford the full costs of what they might gain from universities’ help to them. Equally, government-funded research is not paid for at full cost; it is paid for at 80%. Other organisations do not necessarily pay at the full cost. Charities and others also do not. There is an issue about how we now, in the current circumstances, try to address the challenges that are in front of us. UKRI has been doing quite a lot of work to really understand which factors are driving cost recovery on grants, for example, in the system and has found that there are multiple factors in it. Some of them are about how the grant programmes and competitions are organised. Some of it is around policy, for example how UKRI sets its own policy on what it does and does not fund. Also, some of it is around how the system is working, such as how universities are putting costs together in order to apply for grants and how academics are behaving in a competition and maybe feel that they may be more likely to win if they put in a slimmer-costed proposal than otherwise. Some of this has begun to be uncovered by research work that we have been doing. We are beginning to address those challenges. We are trying to address our own policies around what can be recovered and improve that a bit. Also, we are letting the sector see around those behavioural issues and how they might be improved. The next thing is to make sure that other funders go through that same journey and try to cover the gap more. This is going to take time. It cannot be an overnight solution to it. Of course, there is funding that comes through Research England, which is part of the dual support system that underpins research in all universities. There is a question about how best to deploy that in future to make the system work as effectively as it can.

To our other two witnesses, how do we make funding of research in this country for HE institutions more sustainable?

Building on what Professor Corner has said, it is important that we can direct research funds to a mixture of blue skies projects and thematic projects with clear translation and impact pathways. At the end of the day, the purpose of the research is to grow prosperity and improve people’s lives, so that translational pathway is really important. That is why the money that we use through HEIF and QR would benefit from inflationary uplifts. Through both those pathways we can prioritise the research infrastructure that we need to enable us to thrive, but also those translational pathways to impact. We have to run the two hand in hand. Blue skies research often delivers impact, but a long way down the line. We need to tension investment in that with investment in what might be more immediate translatable activities, where we will see a shorter-term benefit. Getting the balance between those two is important.

Research is not really my speciality. There is a blend to be achieved between alignment with the industrial strategy, longer-term blue sky thinking and research into the arts and humanities, which are not really connected with short-term industrial outcomes at all—but it is not really my expertise.

I need to declare that I worked as a university lecturer for nearly 20 years. I contributed to AHRC-funded research projects and, more recently, UKRI-funded research projects. My question for the panel is about the full economic cost and the cost recovery. The Universities UK 2025 spending review submission said that universities are supposed to receive 80% of the full economic cost of research, but only received 69.3% of the total cost in 2022-23. What is driving the low cost recovery of UKRI-funded research projects and what changes are being made to improve the rate of recovery?

I said some of this in response to your colleague’s question. Yes, we can observe a declining cost recovery. It has ranged between about 74% and 69% over time and it looks as though it has declined. That is the first point. It is all the same factors that we have just been talking about: inflation, increased costs of research and a whole range of things that have been going on. Also, it may be around how universities are costing grants and thinking about their research activity, including some aspects of how funders are considering costs that are within grants. There is a combination of factors that have created what looks like a declining situation. Track data does not precisely indicate whether full economic costs are being achieved. That is an overarching estimate within universities and it differs between university types. The large research-intensive ones tend to have higher cost recovery and a wider range of sources of funding for their research, so can cover things off perhaps in a slightly different way from the less research-intensive universities, which probably rely more on the QR funding that we were just describing. There are multiple factors. It looks like it is a declining situation, so we want to try to see whether we can turn that around. UKRI has, only in the last two weeks, announced a series of measures that it is taking to try to improve the 80% recovery rate on its own grants. For example, it has raised the threshold for capital equipment, so that institutions can ask for more money. It has raised some of the thresholds for individual grants, so that, again, more money can be requested for projects. Also, it is not requiring institutions to put in their own resources as matched funding as part of grant competitions, which had become a bit of a trend over a period of time. Universities were offering to do extra on top of the grant as part of the competition winning-in-the-game approach. We have now made it explicit that there is no expectation of that from universities. There are multiple factors to try to improve this. Also, we have announced increases in stipends for postgraduate research students, so that the funding they receive to live on while they are studying actually tracks the national living wage. Equally, what is put in to support their studies to the university is increased a bit to try to make up some of the ground that looks as though it has been lost over time through the same trends that we have been hearing about.

Is that for both master’s and PhD students?

That is PhD students.

Universities cross-subsidise their activity. It is an ecosystem where teaching and research are intimately entwined. To reduce that cross-subsidy, the only way we can get through this is through economic growth and realising the benefits of research, to grow the size of the pie, so that we can actually put more money into driving prosperity. It has to be that; otherwise it is a case of continuing to think about how you can do things at increasing levels of efficiency, which, ultimately, will affect the quality of what we produce.

Just to press you on that, are you talking about the internal relationship of being able to draw down the economic benefits of research for a particular university through spin-offs and the like, or growing the economy in order to grow the taxation base, so that more government money can be put into universities? What is the economic growth relationship that you are talking about?

Both those things are really important. We need to do more as a country to ensure that we can spin out and scale up the outcomes of research activity by universities, and we need to understand how universities can contribute even further, as part of the ecosystem that will drive growth. You have nicely captured both those things.

I have two questions, if that is okay. First, will the tightening of the financial situation around research improve the quality of the research? You may remember that the previous iteration of this Committee, before the general election, looked at some of the research being produced by Manchester University by a man doing a PhD into shota comics. That unearthed a whole number of aspects of research being done in universities, even, in the case of Manchester University, a highly thought-of university, that was of very poor quality. Will the financial situation reduce the amount of such research and increase the quality of what is delivered?

I can attempt to answer. The current situation creates a number of concerns, because universities, given the constrained times, are going to have to make difficult choices about what research they can continue to support. They are doing that at the same time as trying to make sure they are managing the educational aspects of their offering as well. One outcome could be that the overall amount of research will contract in universities. We do not really know whether that in itself would lead to a different outcome in terms of quality. It could be that expensive types of research need to be reduced. We can see at the moment that perhaps disciplines such as the arts and humanities are being reduced in many universities, but we still need arts and humanities research to go on. Equally, UKRI, which has its funds from Government to support research, will also need to make difficult choices over which are the best areas of research to support. Those decisions, in terms of quality, are made at institutional level around a university’s strategy. They are given funds from Government to be able to make those decisions and are best placed to do it.

I want to say a quick word about arts and humanities. I do not want you to go away thinking that they do not add value. The creative industries sector is the fastest-growing sector in the north-west. It is not just about technology. It is about the creativity that comes from our academics and students in those areas. We have a school of digital arts and we are inundated with applications to study there and business engagement opportunities too. As an aside, I wanted to ensure that you did not go away thinking that the arts and humanities were not vital to the future success of our country. In response to your question, quality is paramount. The challenge for universities is to ensure that we do not internally fund low‑quality or unproductive research. I accept that that is a challenge for all institutions. We have to make sure that, when we allocate research time and internal resources, including QR, we are prioritising high-quality research. Universities are on a journey to do that, but there is still more distance to travel and we cannot condone low-quality outputs, full stop.

It is a very good question. The strategic importance of research across the field is clearly underlined and understood, I think, all round the table and across the wider community. There is a legitimate question to ask, and I do not know the answer, about whether the research resources are spread too thinly across the sector and whether we need to do all things everywhere, or whether there is a case for concentration in certain areas.

My other question was about whether there seems to be a feeling that all universities must succeed and that somehow, however difficult financial circumstances get for any given institution, they must be propped up at all costs. Is it reasonable to suggest that some university institutions offer relatively poor-quality degrees and/or little value for money for students, and that perhaps they would be better off doing something else?

We have 2.25 million students in the UK and 141 members of Universities UK. With a sector of that size and scale, it will always be possible to find an example of something that is suboptimal, but, when you compare the UK HE system with its international counterparts, we look very good in terms of quality. I say that in a way that is not intended to be defensive. We are committed to driving up quality, but we need to avoid talking ourselves down—otherwise we will get into a very challenging space. There are things that need to be fixed. There are always things that need to be fixed. In terms of whether we have the right number of universities, it is important to remember that universities also have a very important civic place-based function. When you speak to civic leaders in towns and cities that do not have universities, they will always say, “If only we had a university”. That will be the first thing they come back to you on. We are responsible for 850,000-odd jobs across the country. We deliver enormous benefit. There may be instances in some places that have high concentrations of HE providers for some coming together, working together and doing things differently. I absolutely accept that. It would be very difficult for a city or a region with one or two universities to think about giving up on those institutions, because that will deny access to young people, particularly people from under-resourced backgrounds who will not have the opportunity to travel, and to local businesses to benefit from those universities. The whole city region would be poorer as a consequence. We have to think about how we can provide these place‑based assets and anchor institutions in a sustainable way.

You believe that they cannot fail and need to continue.

I believe that we need to do our utmost to ensure that universities can continue to thrive. It may be that they do that in different ways from the ways they currently do it. I would argue that there must be virtually nowhere in the UK where you could think that we could do without the university or what the university provides. It is about how we package these things and put them together.

This is an important question. The question is about quality. Universities have to face up to the demonstrable evidence that not all courses in all universities deliver the outcomes that students want in terms of future prospects. The information is out there. It is not in very accessible form, but that form needs to make absolutely obvious to students and parents about what the likely outcomes are for the course they have chosen at the specific university. That is, if you like, the price that has to be paid for the increase in undergraduate fee that, as I mentioned at the beginning, I think is necessary. There is a kind of deal to be done. The fee can go up, but universities need to be honest with themselves, students and parents about what the outcome will be of attending course X at university Y.

Going back to the consideration of research funding, this question is to Professor Corner. We understand from board minutes in September 2024 that UKRI was developing an evidence base to understand the impact of interventions across the research and innovation system. What has been learned in that time in respect to the financial challenges experienced by the sector?

As I was describing before, we have a group of individuals who are spending their time investigating how research costs are being played out through the system and how best to respond to that. That is one there and we have already spoken about that. UKRI has a strategy, thinks about how it should invest the resources it is given by Government and works with Ministers to think about what the priorities around that are. We have a new industrial strategy and government missions to pursue. UKRI will be working closely with Government following the outcome of the next spending review, which is under way at the moment, as you know, to consider how best to use those resources. Many of them are invested, via universities, to deliver outcomes that are great for the country. As we have been describing, there are universities across the whole of the UK that deliver extraordinary research, and I am sure that that will continue. The bit that I am responsible for is part of the dual support system. One side is the competitive grants funded by UKRI and the research councils, and the other side is the funding that we have already spoken about that goes to universities for QR. That underpins the strategic direction of universities to make their own decisions in their own localities, as we have been hearing, around what the best things are to pursue, how to work with business, how to think about commercialising research and so forth. It works as this very cleverly integrated system and will continue to do so. Research England funds 127 universities through that model. The funding they get gives them a lot of strategic freedom to pursue research. The problem that we have just been describing is that that freedom is becoming eroded by the fact that the costs of research are growing and the resources that universities have to put in themselves are much more constrained. Going forward, we need to think about the best mix of all of that, and we will be actively doing it.

Like my colleague, I refer to my previous interest as a lecturer at a university and a member of UCU. I was a lecturer in the humanities, in fact, so very pleased to hear Professor Press’s comments on that. Sir Philip, six years on from the review that you did, what have been the main impacts and the uptake of the recommendations that you made?

I think about that a lot, as you can imagine. The recommendations set a framework for an integrated system of post-18 education, including further education colleges and universities. I am very pleased to see that the Committee is carrying out a parallel inquiry into further education. It set up something that potentially could be aligned with the Government’s industrial strategy. That framework seems even more relevant now than it did when we published in 2019. Broadly, the direction of travel has been in line with the recommendations, but there have been some places where it has been too slow, other places where it has been taken too far and then other places where it is about right. On the “about right”, the focus on skills has been very welcome. One thing we said in the review was that we had to concentrate not just on the 50% of young people who went to university, but on the other 50% who did not. I think that we helped to change the debate there. The lifelong learning entitlement, which I think Professor Corner mentioned earlier, is an important building block for this country’s future. The general focus on quality has been the subject of some of the questions around the table this morning. I think that we helped in that. We started a debate on what the appropriate mix was between the price for further education paid by the taxpayer and the price paid by the students. All those things are consistent with the right direction of travel. Various Governments have been too slow on the question of FE reform. It is no good just speaking the language; more money is needed. I am disappointed that one of the panel’s principal recommendations, the introduction of means-tested maintenance grants, has not been taken forward. That is an essential building block. A little has been done on low-quality courses. We are starting to talk the right language, but that now needs to be drilled down. There are a couple of places where the recommendations of the panel have been taken too far. That is principally—I am sorry; this is the third time I have mentioned it—that the panel recommended a fee freeze until 2023[1]. We felt that there was some excess in the system that could be worked out by a fee freeze for a period, but we wrote before covid, Ukraine and the inflation and interest rate increases. We felt that there was some fat in the system, but that has gone and we are now eating into muscle and something substantial needs to happen pretty soon, or we will be facing the question of what to do with a failed university.

You mentioned a number of things there where recommendations were not acted upon in the way that you would have liked. If you were writing the report today, would you make recommendations that boost some of those things that you have said have gone too slowly, or would you be making different recommendations completely? Do you think that there are new factors and challenges that are not covered by the original set of recommendations?

Ahead of this panel, I re-read the report. I chaired the panel, but it was a team effort with five experts around the table. The analysis holds up in a remarkably robust way. The alignment with industrial strategy needs looks even more pressing now than it did then. The general balance and general tone of it—“Let’s focus on both 50%s”, if I could put it like that—still looks right. What has changed? I felt that the university sector was slow to respond to the report we produced. It seemed to regard itself as above criticism. The tone has changed in the last two or three years. I welcome UUK’s taskforce on efficiency and reform, but the outcome of that needs to have bite. Universities do not just have to do things in the way they always have. There are important strategic questions about the mission of specific universities. Do all universities have to be the same? Do they all have to offer three-year degrees? How are they responding to the opportunities in lifelong learning, where learners can draw down their student loan in modules? That has a great potential to fix the issues of place, where specific places have specific challenges. It is a great opportunity to address mature learners. It is appalling the way that the number of adult learners in the UK has plunged over the last—I don’t know—15 years. The potential is all there. It now needs to be gripped and driven forward. The Committee has a role in that, I feel sure.

We all talk about the importance of quality, and it is absolutely paramount, but we have to recognise that we have a high-quality system, which carries cost. In the UK, the average student-staff ratio is 14:1. In OECD countries, it is 18:1. In Australia, it can drop to 34:1. About half the costs that it takes to teach a student go on amazing wraparound support, covering everything from IT to virtual learning environments, library, mental health support, careers and employability, catering, students’ union, gym et cetera. We have a high-cost, high-quality system, notwithstanding the fact that there is always work to do to drive up quality. You can talk about failing institutions, but you can also talk about repositioning institutions to offer an education with less favourable student-staff ratios and less wraparound. That is what goes on in many other countries. You need to weigh up the benefits of the high-cost, high-value system that we have against what a more stripped-back system might look like and the consequences of that for the prosperity of the country.

I should have mentioned at the start of our meeting that we are very pleased to have Kirsteen Sullivan from the Scottish Affairs Committee guesting with us today. I will bring you in to ask a question at this point.

Good morning. It has been very clear to me, particularly in recent months, that the challenges faced by universities across the UK are broadly the same. We have heard that the Scottish and Welsh Governments are providing extra funding for struggling institutions. In the case of Scotland, the Scottish Government have made available an extra £25 million. That really is a drop in the ocean in the context of the struggles that universities are facing—for example, the University of Edinburgh is facing £140 million of cuts in the next 18 months and Dundee University is looking at shedding over 600 full-time jobs—but, that said, do you think the Government should be replicating this kind of support in England? What longer-term measures do you think are needed?

There is no doubt that we cannot allow a university in England to fail or go under. There would be consequences for current and past students, let alone staff, academics, the locality and the UK’s international reputation. That is unthinkable, so something has to be done. There has to be a behind-the-scenes support package to ensure that the university does not fail. On what happens in future, though, the second part of your question, we have to try to avoid the policy errors I outlined a few minutes ago. That is obviously easier said than done, but index-linked fees would go a long way to help. We also have to address the issue of bad governance. The thing that troubles me is that, if a university fails, no one is really on the line for it—except probably the taxpayer. The governing bodies are part time, so it is tough to expect them to carry the burden, and the focus has to come on to the university vice-chancellors and senior managers. I wonder whether there is some potential to do in universities what, for example, the banking sector has done: with high-paid employees, part of the compensation is held back and paid on a deferred basis once the term has been completed and you can see that the university has gone through without falling over. We have to ask these tough questions to improve and get a grip on the governance of universities. Otherwise, it is a free thing floating out there with no accountability.

A transformation fund would be a sensible thing for English universities, because it would help them to make the sorts of changes that we want to make so we can operate at high quality, but even more efficiently. That would be a good use of public money.

That kind of model would also be valuable in research and innovation system support and change. It is going to take all parties to come together and collaborate, including the Department for Education, the Department for Science, Innovation and Technology and devolved Administrations, which have similar issues to deal with. We should connect together. Stable funding, being clear about how that is going to look into the future and thinking about the real-terms value of it is important. Equally, the sector itself might need to diversify and think about each individual institution and what, in terms of research and innovation, it is going to specialise in. Not all institutions should or could do everything. Maybe that is something to really think about. Should we co-ordinate around it? Obviously, there is cost sharing, so sharing facilities and resources. Does every institution need to have its own particular research facility? Actually, no; we can probably do better on all of that. There are lots of incentives in the system that need properly understanding that drive an unsustainable model. There are top-down ones, such as league tables and the research excellence framework—which I have some responsibility for—how we measure staff performance and how we compete for grants. Equally, there are bottom-up ones that are what academics think they need to do to get promoted. There is a system of incentives that we need to look at and evolve for the future. That is not an overnight job, but it is alongside all these other dynamics that we have been talking about that we need to address.

I am very mindful of time, so I will ask this very quickly. If the Government do not step in with emergency funding, what alternative legislative and regulatory measures should the Government and the Office for Students take to help struggling institutions?

I am glad you mentioned Office for Students. I wanted to come back and mention that. You interviewed Professor Peck, the new chair of the Office for Students, recently. The Office for Students has a big role to play in this, in terms of not just rescuing failed institutions, but looking forward, subjecting business plans to robust analysis and trying to see problems coming. Beyond that, the reality is that it would be too damaging for the sector and localities to allow a university to fail. That cannot happen.

The UUK view would be that the Office for Students needs to operate in a much more risk-based, proportionate way. At the moment, the regulatory burden feels heavy and increasing in its weight. I do not know whether you are aware, but the average university employs 17.6 people to deal with regulation from the OfS, so the regulatory cost is significant. I think the increase in fee went up by 13% a couple of years back, so we are paying for regulation, which is important. We need to be regulated, but in a sensible way. I very much welcome Professor Peck’s appointment. I am confident that his knowledge of the system and experience of Sir Philip’s review will ensure that the OfS has a future that will enhance quality.

I should make a declaration of interest that I was employed until last year by the University of Oxford and had previously received an AHRC scholarship to do my doctorate. It has been fascinating listening to you today. We know that full-time equivalent jobs from the university sector equate to 2.8% of all jobs in the UK. We touched briefly on growth earlier, but could you say a bit more on the scale of the growth opportunities in terms of jobs and research, looking at the opportunities rather than the negatives? What capacity could the sector flex up to in terms of adding to the overall growth in the UK? As a side issue, but part of that, what more could the university sector be doing to back-map education pathways to help to close the gaps around economic inactivity for young people who have been out of work for a long time, and particularly SEND young people falling out of education, so that we are not losing those skillsets so early and getting them into the university sector?

That is a really important question. One of the things we are trying to do in Greater Manchester is to work together across the HE sector and with our FE partners. We are mapping the products that exist, the pathways between those products and the ability of young people to access those products. That sort of work is really important to understand what we currently have and whether there is sufficient information, advice and guidance for young learners, for teachers in schools and colleges, and for parents too, to enable the right choices to guide people through those pathways—recognising, as Sir Philip has said, that we all have a role to play. There is an important piece of work there, which you have nicely touched on. The recent blueprint by Universities UK showed that, for every £1 invested in higher education, there is a £14 return. I know that lots of sectors bandy around these numbers, but we think that we have the evidence to support the fact that universities can contribute to growth. As an aside, the GVA of my own institution outweighs that of both the Manchester football clubs, United and City, put together, so we make a really big impact at Manchester Met. That will be true for every university across the country, so we have a really important role to play.

I would add to the picture for the research and innovation side of what universities do, which is an extraordinary contribution. They work with businesses, very large and small, using their intellectual property to develop spin-out companies, and with students who develop start-up companies. Universities use the funding they receive from UKRI, particularly the higher education innovation funding, to do that. I go around the country witnessing it and it is extraordinary. I do not see any stepping back from that, even given the current circumstances that we have been talking about this morning. All the indicators are that they can use those resources extremely well and deliver outcome for local and regional economies. We have just done another evaluation on that higher education innovation funding. It returns £10 for every £1 that goes in. The return on investment is even higher for student start-up companies. We have been reviewing how universities work in the spin-out company dimension and trying to drive that even harder, show best practice and help universities to understand how they can do that most effectively and not think about taking too much equity for themselves. They are changing their practices around that as well, which helps to drive growth in the economy. It is very exciting.

The reason I agreed to chair the panel reviewing post‑18 education was that the remit was everything—further education, apprenticeships and universities. I felt that the right question was being asked. You asked the right question as well. We have record numbers of NEETs. The solution is not going to come just out of FE, apprenticeships or universities; they all have to work together. I am encouraged by what Professor Press just said about that. Professor Peck, the chair at the OfS, is the outgoing chancellor of Nottingham Trent University, and the way that Nottingham Trent has worked with local FE colleges is a really interesting blueprint for the potential way forward.

Can I thank all three of you for giving us your evidence today? We are really challenged on time today and I am conscious that this panel has run substantially over the intended time allocation at the beginning, but that is because of the breadth and depth of the topic. If there is anything that you felt that you did not have the opportunity to say to the Committee today that you would like to say to us, please feel free to write to us after this session with any further evidence. Thank you very much.   Witnesses: Raj Jethwa, Dr Hollie Chandler and Rachel Hewitt.

Let us press on with our second panel this morning. You will have seen that we ran slightly over time with our first panel. We are keen to cover as many topics as we can with this session this morning and we have quite a lot of questions. If I can therefore encourage all of you to be as succinct as possible in answering our questions and to take up the offer of following up in writing with any more detailed information, that would be a great help to us in getting through everything we want to this morning. Can I invite you now to introduce yourselves to the panel?

I am Raj Jethwa, chief executive of the Universities and Colleges Employers Association.

I am Rachel Hewitt, chief executive of MillionPlus, the Association for Modern Universities.

Hi. I am Hollie Chandler. I am director of policy at the Russell Group. We represent 24 research-intensive universities across the UK.

We have heard that a number of higher education providers are facing very significant financial challenges. Those challenges are well reported in the public domain. Could you say a little bit about how those challenges vary across the sector from the perspective of your different organisations?

The Office for Students analysis has shown that providers of all shapes and sizes are facing significant financial pressures. This is not an issue that is confined to just one part of the sector, and that includes Russell Group universities. Our universities are working, both within their institutions and collaboratively, to try to make efficiency savings. To illustrate some of the things they are trying to do, Manchester University is working together with Manchester Met University to provide mental health services for students in the area and to do that in collaboration. We are also looking to share research facilities where possible to try to ease some of the financial challenges. The University of Liverpool has an agreement with John Moores to share research facilities. There is a lot of work under way to try to improve efficiencies, but our concern is that that only goes so far. We are trying to protect the quality of our education and our ability to deliver research activities. The scale of the deficits that we are facing is so large that efficiency measures alone are not going to be able to address those. We need to see Government come forward with a plan for financial sustainability for the sector.

I certainly agree with what Hollie has said about this affecting all parts of the sector. There are a few elements I wanted to draw out around the way it particularly is impacting modern universities, one of which is that they are required to be part of the teachers’ pension scheme, which has faced significant increases in costs in recent years. Where schools and colleges have received additional support to be able to cover some of these additional costs, universities, as autonomous institutions—understandably to some degree—have not been able to receive that. The requirement for modern universities to be part of the teachers’ pension scheme means there is not a level playing field in terms of institutions, because of the significant additional costs of employing someone on the teachers’ pension scheme. That is one aspect. Another is the disproportionate hit to modern universities of recent immigration changes, particularly changes around things such as the dependants policy. Due to the diversity of markets that modern universities recruit their international students from, they were hit more by these changes than other types of institutions. Finally, there is the additional support that is put in place by modern universities for disadvantaged students. The universities I represent have widening access at the heart of everything they do. They often have higher student-staff ratios and see themselves as teaching-intensive institutions. That additional support that needs to be in place, and will increasingly need to be in place with the covid lost learning coming through as well, obviously comes at additional cost, in addition to everything the panel has already heard this morning about financial challenges.

I would echo those points. International student recruitment has taken about £300 million already out of the sector’s overall income. That is a modest estimate. In terms of the teachers’ pension scheme, it is about 100 institutions out of 170 we represent that participate in the TPS. Their costs have gone up by about 12 percentage points in the last five years, so it is a significant impact on the sector. The changes to national insurance contributions have also hit all employers in the sector. That adds something in the region of £400 million to the overall pay bill. It impacts different institutions in different ways. It is not simply the rise in national insurance, but also the lowering of the threshold. If you have small specialist institutions, particularly those built around an offer of specialist disciplines or subjects—the arts, for example—where their employment model includes employing people part time because they are based in the industry of the sector, previously they were not caught by national insurance. Now that is a significant additional cost for them on top of the wider costs to the sector of those changes.

At the most dramatic end of the spectrum of action that universities are taking, we are hearing about universities making significant numbers of redundancies and closing departments and courses. What is your best advice to institutions to navigate a way through the current financial challenges?

I can start with redundancies. It is an impact being felt across the sector—it is not contained to any one particular type of institution. There is no doubt about the human impact of this. Institutions are approaching this as carefully as they can. Several years ago, as the employers’ association, we agreed a statement with the unions about how institutions should approach redundancy situations and restructuring. All institutions will try their best to avoid compulsory redundancies. I speak to institutions on a daily basis. My team speak to institutions fairly regularly to give advice about how they handle these situations. I can say that at the forefront of how institutions are approaching this is the desire to avoid compulsory redundancies. In the last full financial year, 2023-24, there were something like 80 restructuring exercises that included redundancy. That removed 3,000 people from the headcount of institutions. The vast majority of those were done through voluntary measures and very few were compulsory. I have to say that the pace of this is picking up. Since September 2024, which is only a part year, we are already aware of about 60 institutions going through restructuring exercises. That has already looked at 3,000 job losses and saved £160 million from the pay bill. The previous year it was about £190 million. From March of this year, we are aware of about 40 institutions with live time-limited restructuring exercises. That will look to take another £300 million out of the pay bill. The advice we have for institutions, which I know they are all following, is, “Try your best to follow all measures before you get to compulsory redundancy”. From the conversations I have with institutions, I am reassured that that is exactly the approach they are trying to take.

There is no vice-chancellor I speak to who is not undergoing some sort of significant transformation programme and looking at the efficiency of the institution. Some of those have been under way for a number of years based on seeing the challenges coming ahead. Some of the ways in which that is being dealt with are through voluntary redundancy schemes, looking at the management structures and things along those lines. There is also significant work on estates, looking at capital projects and building stronger relationships with local partners, which are often well established within the institutions I represent, and on looking at the academic portfolio. That is where we get into concerns that, where that is being done by individual institutions, it may lead to cold spots. There is also lots of collaboration going on between the institutions I represent to share experiences and understanding about how they can help to move these efficiencies forward. There is a lot of work under way, but that is not without its challenges in implementation.

I would echo those comments and emphasise that these are really difficult decisions for our universities to be making. They will be avoiding redundancies where possible, but the financial pressures are such that action needs to be taken to ensure the future of their universities. The priority here is to support staff and protect the quality of our education. I would also add to the comments around portfolio reviews. Our universities are considering the courses that they offer, but, within those courses, the modules that they offer. A lot of courses have optional modules. For example, where there is low uptake of some of the modules and they are no longer viable to operate, they are looking at consolidating and reducing those options. There will be some impact on the options that students might have for some courses, but that is with a view to protecting the quality of that provision. While some of these decisions being taken at individual institutions will make sense strategically for their futures, we are concerned about the overall impact on the sector as a whole of those individual decisions taken by institutions. As Rachel said, you might see some disciplines that are no longer offered in certain parts of the country, or even that we are going to reduce our capability across the UK in those disciplines. Some work by the Office for Students, and probably Skills England as well, to look at how those changes in provision are happening across the UK, and to map and consider how to mitigate some of that lost capability, would be helpful.

Both the Russell Group and MillionPlus have proposed increased tuition fees linked to inflation and higher government spending. How realistic do you think that these two proposals are?

We appreciate the economic context here—it is challenging across all areas of government spend—but we need a sustainable settlement for the sector so that the sector can help to contribute to economic growth. You are right that we called for an increase in line with inflation for tuition fees. Something that was not mentioned in the session on panel 1 was the investment that Government make, the teaching grant and the strategic priorities grant, which has significantly decreased in real terms. We need Government to be looking at both of those sides, so the fee and the grant that is provided. In terms of growth for the UK, we know that we are going to need 11 million more graduates for our workforce by 2035 and 88% of new jobs will be graduate-level roles. The industrial strategy high-growth sectors are particularly reliant on graduate skills. We need to see growth in the sector, and sustainable growth, to achieve those graduates we need for our future workforce.

I agree with much of what Hollie has said on that front. Our members are pragmatic about the challenging financial environment that we find ourselves in and recognise that across the education space as well; they often have very close working relationships with their local colleges and schools, and see some of the funding challenges on that front. We do not underestimate the challenges around that. That is partly why there is a pragmatic response in terms of the work that is going on within institutions to drive efficiencies themselves and take action to address the challenges from their front, but we know that that cannot be the only element of it. We need Government to support a sustainable financial system for higher education. The moderate changes suggested around inflationary increases in student fees could be one way of doing that, along with increased support for student maintenance as well.

Several reports have suggested that an employer’s contribution might be a better way to fund going forward, rather than increasing student fees again and again to the point that it excludes students, particularly from disadvantaged backgrounds. That would create stronger bonds between employers and local universities, and encourage universities to develop courses that lead into direct employment. It would also make sure that the loans actually get paid back, because we know that quite a large proportion of student loans do not end up being paid back at all. Do any of you have a view on whether you would like to see that as a model?

Given the significant challenges, all options should be on the table for different models of funding higher education. Those relationships between universities and employers are really important. We see good examples of that work existing—for example, the development of satellite campuses at some of our member institutions, which are designed with local employers or local authorities to help to address cold spots in higher education already. There are some existing relationships between employers and higher education that could be strengthened, and universities are looking to do that. It would be complicated to implement, but it is important at this point that we think about what we want to see from our higher education system and how the funding can support it to get to that place.

Good morning. The Secretary of State has set out five priorities for the sector to focus on around access and outcomes for students, economic growth, civic role, teaching standards and the reform packages that you have been talking about in institutions. What conversations have you had with the Secretary of State or the DfE around implementing those changes and meeting those expectations in the current financial climate?

We broadly see all five priority areas as very important. We have been speaking to officials in DfE about how they are taking shape in terms of Government’s reform plan, which they intend to publish in the summer. We still want to see more clarity on what the Government see as the problems in achieving those aims that the Secretary of State set out and what their expectations are of universities. We need to recognise the good practice that already exists in the sector and look to build on it. For example, on access, providers in England have just agreed four-year access and participation plans with the OfS, which set out very stretching objectives and targets on increasing the number of disadvantaged students who come to our universities and supporting them during their studies. They have also committed significant funds. Across the Russell Group, that is £250 million a year to deliver those plans. Where change is needed and that is evidence-based, fine, but we do not want change that is disruptive for the sake of change, which might impact our ability to deliver on some of the plans that have already been put in place and the progress that we want to see in the sector. This is important so that we are using our resource as efficiently as possible to drive the progress that we want to see. All the areas set out in the HE reform agenda are very important, but in itself they will not deliver the sustainable system that we need for higher education. This needs to come hand in hand with a funding plan from Government that can achieve that sustainability and address the deficits that we are seeing.

Just quickly on that, from the Russell Group’s perspective, do you perceive any of the reforms that are being asked for as change for the sake of change and being disruptive? I think that you have signalled broad agreement with them to begin with, but are there any specific concerns you have?

We still have not seen the detail of what Government are intending in terms of policy, but access is an area where the sector has worked really hard to develop evidence-based plans and initiatives that it wants to deliver and has just started delivering that. We need to give those time to deliver and to see the progress. There is a risk that, if we disrupt them at this point, that will impact our ability to see that progress.

We welcome the areas focused on in the HE reform principles. We see a lot of parallels between them and what we describe as the shared missions of our member universities, so the civic role, widening access and teaching excellence as being key areas of focus for higher education. As Hollie says, we are working with the DfE on the next stages of that and look forward to seeing some of the detail that sits beneath that. My one concern would be that the final reform principle, which is around driving efficiency and reform in that area, could possibly knock into the other areas. Where universities are driving efficiencies and are really focused on maintaining a quality student experience—that is at the heart of what they are doing—can they still maintain all the elements of their civic role that they have had for supporting activities in the local community? If they are making tough choices, student experience and quality has to come top of that list. Does that have a detrimental impact? That is where, as Hollie says, the reform principles themselves cannot solve the funding challenges that we are facing; but, yes, they are important areas to be looking at.

I have a final point on the particular pillar of driving efficiency. The one slight anxiety I have is that this will require at some point, potentially, different forms of collaboration and operating models. Within that, staff engagement and workforce transformation are absolutely crucial. The longer there is a lack of clarity and institutions have to make present-time decisions about workforce change to try to meet their financial challenges, the more difficult it becomes to reach some of those efficiencies in the future, particularly ones that are genuinely transformative in terms of the offer to students and communities. Clarity soon would be really helpful, but also has to be seen within the context of needing a genuinely engaged workforce to deliver this. The more ambiguity there is, the harder it gets to reach that position.

My question is about franchise partnerships. The National Audit Office and Public Accounts Committee have raised concerns about franchising that include profit and surplus being taken by franchised and lead providers, not being spent on better outcomes for students. Also, there have been press allegations of fraud and corruption. What is your assessment of these concerns?

Of course, if there are any challenges with fraudulent activity, that must be addressed and dealt with immediately. I know that all my members would support that action taking place and would work closely with DfE and the SLC on making sure that that is the case. Franchising has been used as one of the measures as part of a wider group of work on access, so sometimes can be used to help with things such as cold spots, delivering non-standard higher education that could be perhaps better delivered through franchising partners and supporting mature learners. There is a role for franchising to play. We are very supportive of the proposals set out by the DfE and have supported those in our consultation response around franchising partners being brought on to the OfS register. Where issues come up, while we recognise that those students on franchising partnerships are a small proportion of the student body and the issues raised are suggested to be a small proportion of those students, they must still be tackled. Any issues must still be tackled and dealt with, but while recognising the proportionality as part of the whole system as well.

We are also very supportive of DfE’s proposal for franchise providers to be registered with the OfS, because we think this will ensure greater regulatory oversight. Where there are instances of abuse, robust action should be taken. Only five English Russell Group universities have franchise provision. That represents less than 0.5% of our students, so it is a very small number. Generally the motivation for these arrangements is not profit. They tend to be with local FE providers. For example, the University of Liverpool has an arrangement with local FE colleges to provide a foundation medical course for mature learners, with the aim that those students then progress to undertake a medical degree at the university. That is an example of the rationale for some of these arrangements.

My question is primarily for Dr Chandler and Rachel, although feel free to come in if you feel you have something to offer on this one. To what extent are universities dependent on international student fees to run their core business? Do you agree with Edward Peck, who is the next chair of the Office for Students, that some providers are not using realistic projections on the number of international students they will take in, which further undermines the financial resilience of the sector?

International student income is incredibly important to Russell Group universities. International fees represent between a third and a fifth of overall income across our universities. That is subsidising research activity and the teaching of UK students, given the deficits that we are experiencing. On the projections, our governing bodies oversee the projections that are made at our universities. In recent years, changes to government policy around immigration have been challenging. For example, the postgraduate taught student ban on bringing dependants that came in was a significant shift that has impacted international student recruitment. Home Office data for 2024 shows that there was a year-on-year decrease across the sector of 14% in international student visa applications. Across Russell Group universities that was 5%. These shifts have made it challenging in some cases for our universities to make long-term forecasts, which is why we need stability in immigration policy. We need to ensure a welcoming environment for international students and staff, with affordable and internationally competitive visa options. Our priority really is to see the graduate route protected in the UK, so that students have those post-study work options available to them.

I agree with much of what Hollie said. The higher education system has been designed to be based on some level of cross-subsidies between home students, international students and research funding. As there has been a decline in the fees for home students in real terms, that has had a knock-on impact on how those cross-subsidies have operated. In terms of international students, it is always worth reiterating that they bring great financial benefits to the higher education system, but also enrich our university campuses and being wider social benefits. As Hollie says, the challenge, rather than necessarily university planning and targets, is partially around the changeability of government policy in this area. We have seen that over the last few years. We would really like to see a better‑planned system, setting out what the Government would like to see from higher education and international students. We hope to see that as part of the international education strategy refresh. As Hollie said, we would like to see protection of the graduate route, which, in the work that was done by the MAC last year, was demonstrated to bring great benefits to the higher education system in the UK.

I am interested in this question about international students. The previous Government were driven to limit the dependants visa because of a feeling that people were using the student visa to come across as a migration tool to the UK, rather than necessarily because they perceived they wanted to do those particular courses. I am interested to understand a few things. What has happened to these individuals? Have they applied to other universities in other nations or not? Do we know how many UK students who do similar courses in other parts of the world take dependants with them when they do so? Also, you said that there had been a reduction, Hollie, in the number of international students, but I think you said it was 5% in Russell Group, which is lower than for the university sector as a whole. That suggests that, for our more high-profile universities, it is not having so much of an impact as it is for others. Finally, there is another part of the question. Where there has been a reduction in students, Raj, you suggested that there had been a £300 million fall in income to the UK. Do we know how that compares with the cost to the public purse of supporting the dependants of those who would have come had the law not been changed?

No, we do not know what the impact is on the public purse. Those are the figures for 2023-24. In the figures that Hollie was talking about in terms of visa applications going forward, I would expect to see a greater reduction in income to the sector. It will be felt, as you say, differently across different parts of the sector. The key thing here is this changeability of government policy. In 2019, the Government set a very ambitious target of increasing international student recruitment by 30% and 600,000 students a year. The sector met that challenge. Institutions have to make forward projections that go several years into the future. They really need a degree of stability and to know the environment they will be working within. That is the greatest challenge our members are facing. There is this suggestion that there has been an overreliance on international tuition fees. You have to remember that, over the last decade, universities have become much more reliant now on fees as a source of income than on other forms of financial support. Within that, as Malcolm said in the last session, when the domestic undergraduate tuition fee has not risen in real terms, they have had to rely on the cross-subsidy from international students, as well as trying to meet the Government’s policy objective of trying to make this country an attractive destination for study.

So you want stability and things staying the same.

There is a lot in there. I would emphasise that, where there is abuse in the system, that needs to be addressed. We want to recruit genuine students who are going to thrive during their studies and beyond. As Rachel said, it is not just the economic contribution that international students make to our universities. They bring diverse perspectives and really enrich the learning environment for UK students as well. Their contribution is really important, but also more broadly for the UK economy. International students bring a net benefit of £37 billion per cohort of students. It is a significant impact on the economy and will be important for Government’s growth agenda. In terms of the differential impact of the PGT dependants ban on different institutions, we have not seen as big a hit as some other institutions. This probably also reflects the different countries that different institutions recruit from. We know that students from some countries, such as India and Nigeria, are particularly sensitive to changes in rules around the ability to bring dependants. Students from those countries have been more impacted by the change, whereas students from China are less sensitive to those changes.

Have you been so impacted that you have found you have empty places? Presumably, when you have your places at the beginning of the year, you have a number of British students who you turn away, particularly for Russell Group, who apply to you and are not able to get a place, because they are full. You have criteria. What about the international students? Do you now have so few applications that you are having to backfill with UK students, or have the numbers not fallen that much?

There have been different impacts on undergraduate versus postgraduate, which makes sense because it was a ban on postgraduate dependants. A recent survey at our universities has found that there has been a drop in enrolments of international postgraduate students of around 7% this year.

I would like to ask a question very briefly on that last point. As you will be aware, Scottish students do not have to pay tuition fees in Scotland. While I think everyone appreciates the importance of international students, do you believe that there is an overreliance on income from international students by Scottish universities, particularly when there is a cap on the number of Scottish students, which can make it particularly difficult for them to access certain courses?

We represent members across England and Scotland, and it is interesting to see where there are parallels and where there is divergence in higher education across those two models. In terms of international students, our Scottish members have faced many similar challenges to our English members in terms of the decline in numbers, partly due to, as Hollie mentioned, the diversity of markets that our members recruit students from, particularly countries such as India and Nigeria. That is a real challenge in terms of the UK as a whole remaining globally competitive. I know that that is something that our members across both England and Scotland are very mindful of. There are some similar challenges being shared on the international perspective across England and Scotland in the conversations I have with my members around that.

Does anyone else want to come in on that question?

In particular, it relates to the limited number of spaces for Scottish students.

In Scotland, the situation is quite different from the England context, where we do not have limits on the number of students who can study with us. In England, the increase in the numbers of international students has meant that we could grow the number of places for UK students, which has not necessarily been the case in Scotland, because there are caps on the number of places available to Scottish students.

Moving on, do you think that poor governance, particularly financial governance, contributed to certain higher education providers now facing difficulties? I think that the inquiry at the University of Dundee might touch upon some of those points.

It would not be right for me to speculate on an individual institutional case. There will be different approaches in terms of possible challenges with governance across different institutions. The scale of the challenges we are seeing in the sector across all types of institutions indicates that how those matters are dealt with will be different at different institutions. How those governance processes play out will be different, but the scale of the challenges is impacting all institutions. I know from talking to my members that they all face similar financial challenges. There is a much greater focus on the role that university governors play now and a more prominent role for them. That is right. Good governance is important, as well as good leadership across institutions.

We would agree with that. We have robust governance processes in place and that is especially important. We comply with the Office for Students condition of registration around governance in England. There is also work under way to share best practice around governance. The CUC is undertaking a review of its code of governance and that should help to strengthen governance arrangements across the sector.

UCU has criticised higher education providers for borrowing too much for capital spending on buildings, for example, at the expense of academics. How do you respond to those criticisms?

The staff pay bill makes up about 50% to 60% of the overall expenditure of institutions. They have to invest in capital expenditure and estates, but it makes up a much smaller proportion of overall expenditure. The balance of that has changed in recent years, and we can provide figures to the Committee afterwards. Every year, whenever we look at the pay uplift, there is never a sense that institutions are prioritising capital investment over investing in their staff and students.

That is right. A lot of our universities have been pushing out or even cancelling capital projects because of the financial pressures. Looking at the data, we have seen a nearly 20% reduction in spend on buildings since 2018, so they have been really reducing their spend on capital projects.

I wanted to go back to international students. How are you treating British students who live overseas and then apply to come and study in UK universities? Are they home students, or are they treated as international students?

It depends on how long they have been overseas as to what their fee status would be, but we can follow up with the Committee with more information on that.

It would be helpful to follow up on that. I have come across examples of the same student who has been overseas for the same length of time being treated differently by different institutions in the same year of application. It would be helpful if you could provide clarity on that.

I want to talk about insolvencies. What would happen if a higher education provider went insolvent? If this university is an anchor institution in a rural area, I want you also to think about the ramifications for employees, not just the academic and student body. Could you let us know about the process?

It is going to look different, given the institution in question and its local context, in terms of the impacts we would see. There has been a lot of discussion on the impact of students, but there is also the impact of staff and research, as well as the local economy. For students, we have student protection plans that are in place at all universities in England. Where the Office for Students has a concern that a provider is at risk of market exit, it can require a student protection directive, which is a more detailed plan of how students would be able to continue with their studies or receive compensation in the event that that was not possible. There are structures in place to say how students would be treated in the event of market exit, but the specific circumstances would just depend on the institution in question. Given all the implications for research, for the local economy and so on, it is important that it is not just the Office for Students that is looking at this. We really want to see a more strategic, multi-agency approach—the Office for Students working with all relevant Government Departments and agencies, including UKRI and DSIT on the research side, so that there is co-ordination. There is a role for Government to make sure that those structures are in place to be able to achieve that co-ordination.

The universities that we represent are quite often the only university in that town or place, such as Wolverhampton, Staffordshire and Suffolk, but even where it is a university where there are other universities locally, it is generally the biggest recruiter of local students, and supporting local students through their studies who might want to stay local due to caring responsibilities, being mature students, or other aspects like that. We often hear from these students that, if the university was not there they would not look to go further afield. They want to have that local relationship. Given the ongoing conversations around the rise of NEETs, I would be significantly concerned about the impact that it could have on those. We are already seeing a greater number of people initially applying to university, but not following through with their full application and going into higher education. We can only speculate on why that is, but it is probably related to student maintenance funding. That is an important part throughout all our conversation around higher education funding. Our concerns would be, as Hollie said, the negative impact that it could have on students; the potential for it to hamper access to higher education, in view of the Government’s aims around the opportunity mission, and cause cold spots; the impact on the skills pipeline; and the negative impact it would have in the region, given that they are operating as large employers in the local area, as Hollie has set out. The ramifications would be broad and significant for local areas and the work that we want to see done in terms of the future skills pipeline.

May I second that last point? This is a sector that directly employs almost half a million people. In many parts of the country they are big anchor employers. Outside of the local authority, the university or universities collectively can be the biggest employers in that area. One reason why you are seeing very difficult decisions being made right now is that the sector understands its collective responsibility to its students, its staff and those wider communities, as well as institutions’ responsibility to each other, when looking at potential provider failure. That is why you are now seeing very difficult decisions to try to recalibrate the operating model and take some costs out of their operations in order to maintain their sustainability; not just because of their offer, but because of what it would mean for those local areas if those universities were no longer in existence there.

I can start off on that. It is not really my area of expertise, but there are some restrictions. Under competition law, universities have to be treated as economic entities, like other organisations. There is a concern that, when institutions are trying to think about really helpful collaborations, they have to be very mindful of the law. It is collaboration in terms of the offer to students, but also where we are seeing the greater impact on jobs and how universities can work together. There is no definitive point, but there are real concerns in the sector. The sector needs clarity about what is permissible and what it can do, because there is a real will in the sector to try to work together. We have already referenced the Universities UK initiative around transformation and efficiency. There are all sorts of examples of conversations in the sector about how institutions would like to work together, but the law is something they are very, very mindful of.

I echo much of that. There are a few different blockers, one of which is possible VAT implications for shared services being brought in, and options around that. Similarly, there are issues with the Competitions and Markets Authority guidance, as Raj has set out. The way that our current system of regulation is set up does not necessarily encourage providers to operate in a way that is innovative or to encourage these kinds of collaborations. A shift in that focus would be beneficial as well. None the less, institutions are pragmatic and working out how, regardless of these challenges and blockers, they can look to collaborate within the rules. There is work going on among our membership to do that and to look for opportunities to work more closely together and drive efficiencies in that way as well.

I would just add that we need to look at how the system can support that collaboration. The CMA area is one where we would like to see clarity, just so that institutions feel reassured to undertake these collaborations. One area where there is particular concern is discussions. If one provider no longer feels that operating course X is viable, it may want to have discussions with other institutions in its region to ensure that that will not mean that there is a gap in provision in that subject area. Those discussions are really important to make sure that we do not see those cold spots emerge, but there is currently uncertainty as to how to have those conversations within the regulatory framework that we have. That clarity would be helpful.

Can I thank all of you for coming to give your evidence to us today? We have been ambitious in what we have sought to cover in a single evidence session. If there are aspects that we have not been able to get to in the evidence today, please do write to us afterwards, including with any recommendations for further work that you think would be helpful for the Committee to undertake in this area. Thank you very much.   Witnesses: Alex Stanley, Jo Grady and Andrew Bird.

Welcome to our third panel of the morning. Thank you very much for your patience. You will be aware of the extent to which we are running over time and have struggled to get through the level of content that we would wish to this morning. Before I invite you to introduce yourselves, I propose to allow this session to run on until 12.15, subject to Committee members being able to stay and keep the Committee quorate for that amount of time. I would appreciate you helping us to get through as many topics as we can today with the time available. Apologies, again, for keeping you waiting. Can I invite you to introduce yourselves to the panel, please?

I am Andrew Bird. I am chief marketing officer for Southampton Solent University, and here as chair for the British Universities’ International Liaison Association, which is a 147-member-led organisation that helps to support the delivery of the international agenda of our institutions and universities.

I am Alex Stanley. I am the vice-president for higher education at the National Union of Students.

I am Jo Grady. I am the general secretary of UCU. We represent education workers in post-16 education.

Thank you very much. Following on from what we have heard from our first two panels today, to what would you attribute the financial challenges facing the higher education sector?

I want to start by saying a little bit about how dire the situation in our universities is. To have any chance of understanding the crisis, we really need to understand properly what has caused it. There is a real financial issue in higher education. Much of it is essentially based on a tuition fees funding model that is not fit for purpose and is at the core of this deeper crisis. We believe that what we currently have is not fit for purpose and that increasing fees more will not resolve the issue. In the last 10 to 20 years, we have hardwired into universities that this fee-based model is how they generate their revenue. This has caused a boom-and-bust current terrain. Philip Augar outlined it really well earlier, when he talked about the detrimental consequence of the lifting of caps on student numbers and the ways in which institutions reorientated their business models to essentially accommodate that. Up until 2019, I was a university lecturer myself. I can tell you how institutions have sought to over-recruit and stockpile students, often to the detriment of competitor institutions in the same city. This has meant exploding workloads for staff and a status quo in the classroom and beyond that does not benefit students. The focus of today in terms of this financial model is that we have a boom and bust. If you are at the peak at one moment, you might be at the bottom of a trough in the next year. That is what has really been so detrimental. We have seen this model be lobbied for by vice-chancellors. We heard it being spoken about in the previous session as well. As we have heard, we have Governments in Scotland and in Wales releasing additional money, but this is not enough—and not just because it is not going to get us out of the boom and bust; it is just going to make the boom and bust more severe. I want to echo something that Sir Philip Augar said, and this is crucially important. We have seen the hollowing out of governance mechanisms in our institutions. Dundee has been mentioned. Dundee has lost £30 million. Its university governance boards cannot account for where that money has gone from. This is a huge issue. We have taxpayers’ money bailing out institutions. We have taxpayers’ money accounting for this boom and bust, but taxpayers do not have full control over what happens in those institutions. We have a regulator that is not fulfilling its obligations either. I really want to stress that we have 10,000 jobs potentially at risk in this sector. This is not a bolt from the blue if you work in it or if you study in the sector. It is predictable. The boom-and-bust model has led to this approach. Choices by university employers to over-recruit from certain areas, and to hollow out their own governance mechanisms so that the staff who work there and the students who study there cannot properly hold them to account, are a huge contributing factor.

In the short term, the reason for this financial crisis is the fact that international student recruitment has started to dry up. We have relied on that recruitment as a sector for far too long. It is the result of previous government policy, be it the restrictions on dependants, making it harder to access housing for international students, visa issues or concerns around the White Paper, but also things such as the far-right riots and a literal students’ union being attacked, or students coming to this country for the first time and hearing people say, “Go back home” or “You are not welcome”. I can see why international students or prospective international students are choosing not to come to the UK to study. That gap is not something that is just going to be plugged unless there is a policy change, but even that feels unsustainable. If you go back to when tuition fees were first introduced, they were done so under an understanding that there would be some balance between public investment through the Government and private investment from the student. Currently, that public investment sits at just 14% per student. There has to be some rebalancing there if we are going to ever move away from this urgency that universities feel to recruit, sometimes at unsustainable levels. We also have to consider the impact this is all having on students, too. Since 2022, food bank usage among students has doubled, up to 14%. Some 69% my members are now working alongside full-time study and 62% of those are working paycheque to paycheque to pay off their rent and bills. We need to see not just more financial support for universities and better conditions for staff, but a fairer deal for our students too.

In my remit, speaking specifically for international student income, the lack of longitudinal policymaking with regards to immigration, and how immigration and student recruitment overlay with each other, has really had an impact in terms of our international students wishing to come here. That instability means that on a year‑by‑year basis it is quite difficult for universities to understand how many potential students they could be bringing in. To help to support that, we would be asking for policies that go the length of the Government’s areas, ensuring that that stability allows for meaningful and proper planning from the institutions on a longer-term basis.

Very briefly, if there is not more money forthcoming from the Government to support universities, what should individual institutions prioritise and not prioritise as they seek to navigate a way forward?

We just heard in the last panel that institutions are reining in their capital spending. I am afraid to say we do not really see much evidence of that. At Cardiff University our members are set to go on strike against compulsory redundancies, but the leadership of that university, while slashing jobs in nursing at Cardiff, are opening up a new campus in Kazakhstan. The University of Hull is slashing hundreds of jobs, but it took out a £130 million loan in a private finance deal five years ago to finance a carbon-neutral campus. That is a laudable aim, but it cancelled the project last year and is lumped with the debt. I could provide you with countless examples of these things. The final thing I will say is that I thought Philip Augar’s idea in the previous session was excellent. We see institutions pay vice-chancellors an average of £325,000 across the sector, if not higher, many with remuneration packages far, far higher. They are continually rewarded for failure. We do not see any mechanisms where part of their remuneration could be withheld or whether or not their institution is getting through a financial crisis without laying off staff. It would be fully appropriate for Government and for the OfS to investigate ways in which institutions could rein in senior remuneration packages, but that is never put forward as a way to get through a crisis.

I sympathise with a lot of what Jo has said there, but the fundamental point is that, when we have these conversations about prioritisation, we are talking about trying to escape a race to the bottom rather than, vice versa, talking about excellence in our institutions. If you look at the things that universities and student unions are already having to focus on, it is talking about expanding bursary support to higher levels than ever. It is talking about food banks on campus and community fridges. The very basics are already what we are having to focus on. I know that slightly evades the question, but, without some form of intervention, that is going to be the continued reality. Conversations about prioritisation probably look like saying, “Are we comfortable as a sector with some institutions only focusing on a very specialised area? Are we comfortable with the fact that there is not going to be HE provision for a variety of subjects in all parts of the country?” For some of those students who might come from less privileged backgrounds, who do need that extra access support or who would benefit from this Government’s mission of opportunity, are we comfortable saying to them, “It is going to be more difficult for you to access higher education”?

I am going to dodge this question with regards to BUILA’s remit. We would defer to Universities UK or mission groups’ responses to that.

That is absolutely fine. Q39            Mark Sewards: Andrew, my question—hopefully not to be dodged—is on the number of student visas, which dramatically increased in the two years following the pandemic and obviously dropped in 2023 and 2024. What impact has that had on university finances?

A very great impact. On average, international income generates over 40% of the overall income for universities. Any drop in international income has an obvious impact on the wider workings of the university, in terms of not just income, but programmes being able to be developed and courses being run. That is to the detriment of both international and UK students. As the portfolio of courses goes down, the choice for domestic students also goes down. A drop in income means a drop in terms of not just the internationalisation of the university, but the effect it has on domestic students.

As a follow-up to that, the House of Lords Science and Technology Committee described the Government’s visa policy as “an act of national self-harm”. Do you agree with that assessment?

In terms of the immigration policy and how it affects international students, there are certainly ways in which you can have a strong and robust immigration policy while also defending the quality of a strong institutional university culture and student numbers. Right now, that instability with regards to the graduate route, for example, does ensure that students who are interested in coming to the UK will not do so, because these are huge investments in their time and they have other choices of university they could go to. We would hope that the immigration policy, the immigration White Paper coming out and the international education strategy coming out are aligned, so that there is cross-departmental strategy involved to help to support universities, to ensure that the Government’s immigration policy is aligned, and to ensure that quality students still wish to come to the UK.

Jo or Alex, do you have any brief thoughts on that second point?

I completely agree with what was said. It makes absolutely no sense to base an entire funding support mechanism for universities on the fees of international students, and then to make the offer less and less attractive. That comes down to either incompetence or an intentional decision to make life more difficult for universities. In some instances it was the latter, but there is now an opportunity to change that with this White Paper. I hope that that moves in the right direction.

Just to add, whether it is incompetence or intentional, in 2019-20 we had 147,800 students from the EU. In 2023-24 we had 75,490, and that is even before the full restrictions take effect for students from outside of the EU. The Tory-era restrictions are fundamentally wrong, because our international students have a right to a family life just as anyone else does, but I want to agree that they are profoundly self-defeating. Not only have they been really detrimental from a financial point of view, but the hostile environment in higher education is doing much deeper damage that will not be fixed by greener balance sheets. That is damaging our reputation and the global power that the UK has as a result of our higher education.

I have a very quick follow-up on that. Do any of you have a view on what effect pulling out of Erasmus+ has had on the university sector? Would going back into Erasmus+ or trying to restore relations with the European Union help the situation we are facing with regards to international students?

The figures I have just quoted demonstrate that it would have a beneficial impact, not just on student recruitment, but on the erosion of the international community that has happened post Brexit and has occurred post these increased visa restrictions, which is really detrimental for university life in general.

I agree with that. There really is something to be said about the civic role that schemes like Erasmus+ play in our internationalism, particularly in difficult geopolitical times. Strengthening those ties, particularly with young people who are going to be in those spaces in the future, is incredibly important. There really is appetite among young people and students for it.

The Turing scheme that was brought in was very welcome. That is an outbound-only scheme that allows English students to go overseas. That has hugely added to the administrative burden of universities, because, instead of having this support mechanism around you, you now have universities going university to university, so it slows down. It has restricted the number of partnerships that universities can deliver on. It goes against the ethos of what exchange programmes really should be about, which is that generation of back and forth. That reciprocity is really important, whether it is Erasmus+ or something similar, because that is basically what education is all about.

The easy answer is yes. The United States, Australia, Canada and the UK are seen as the big four, so we have the opportunity right now to be seen as the sane and stable country to support international student mobility. As you said, Australia and Canada are bringing in caps. The latest research showed that interest in postgraduate study within the USA is down 40%. If we get our cross-government policy correct, there is the opportunity for the UK to take that space as being the stable, welcoming country out of the four.

I agree with Andrew that that opportunity definitely exists, but that only happens if we genuinely do create a welcoming environment and a set of policies that match that rhetoric as well. If you look at some of the countries mentioned, particularly America, even pre this Administration there have been a lot of concerns from American students coming to the UK because of how high the fee is in America. We need to be very careful when we talk about endlessly increasing not just the home fee, but the fees for international students, because one thing that is actually semi-appealing is, within the context of the global scale, the fact that international student fees are not quite as high as they are in America. Endlessly increasing fees is not always the solution.

Could we take advantage of what is happening elsewhere and recruit more international students? Yes, of course we could, but I would offer a cautionary note. When you look at the sheer scale and extent of industrial action that we have had in UK higher education over the past six years, that is a powerful signal that something is wrong. The working conditions of staff are the learning conditions of students. We have a workload crisis in higher education because of the sheer number of students institutions are forced to recruit in order to ensure that they have enough revenue. I just wanted to read you a quotation from one of our members talking about the impact of job cuts, the impact of job losses and what that has on people who remain in institutions. They said, “It is a massive loss for the students. It becomes less and less personal, to the point where there is not really a person who is marking their essay, because it is all just general comments”. I would not want us to rush to recruit or over‑recruit when we cannot resolve the issues that this crisis is causing in the UK.

This question is for Jo. I need to declare that in the past I was a member of UCU. You touched upon the current environment, the workload and the relationship between staff and students. What are the impacts on the working environment of staff in higher education right now?

There are three things I really want to emphasise here: the scale of the job losses, the viciousness of the cuts and, in some cases, what I would describe as the opportunism of those cuts. In terms of the scale, just this academic year employers have already announced the intention to slash 5,400 jobs. We calculate that there are roughly 5,000 more jobs at risk, so we are looking at 10,000 jobs altogether. In terms of the viciousness, I would say that these attacks are needlessly cruel, indicating to lots of staff that they may end up being in that pool. Some of them seem gratuitous. I am going to take this moment to highlight Coventry University; it is not just more than 100 staff facing the sack, but hundreds more being threatened with fire and rehire, to be re-employed by a subsidiary company on a far inferior pension scheme. It is worth pointing out that John Latham, the man who banked an £80,000 bonus last year, is on a £312,000 salary, which is important when we are talking about financial problems in institutions. The last one I wanted to mention is opportunism. I am in no doubt that there are some institutions that are genuinely financially struggling—that is not being called into question in any way—but we have lots of very rich universities that do not have even a vague pretext for slashing jobs, yet are choosing to exploit the sense of crisis to push through so-called restructures. I will point out here that Edinburgh is making £140 million of cuts, but has an operational surplus of 6%. I would put Cardiff in the same position. The impact, of course, is huge. It is the livelihoods of people who, as you know yourself, have trained for years to get a doctorate, who are dedicated researchers and are dedicated to their students, and who are potentially just going to leave the sector. It has detrimental consequences for students whose courses disappear. That is before we think about the many staff who are on fixed-term contracts, so as a student you never really know who is going to be teaching you from one semester to the next. The impact is huge.

This is probably mostly for you, Alex, but other panellists can feel free to chip in. You have spoken a little bit about how students have been affected by this crisis. Much as Jo has just commented on staff, do you want to say a bit more about what you are hearing about the impacts on students? In particular, could you cover students with special educational needs, housing, debt advice, English language support and those kinds of things? Is there anything that you are hearing?

Fundamentally, all students are struggling in this situation. As Jo says, so many of the issues that staff are facing are inextricably connected to the ones that our students are facing. There is a basic issue of there not being enough maintenance support for students. We absolutely welcome the 3.1% increase to the loan for next year, but that is going to be swallowed by what should be about a 6% increase to student accommodation costs on average. Even for those students receiving that maximum loan, the number of those students who are receiving that support is restricted because of the thresholds, which have not been updated in years. Currently, you receive the maximum maintenance loan only if your family income is below £25,000. If that had been adjusted in line with inflation, it would be nearer £41,000. There is a significant proportion of the population that we are currently making a decision to keep in poverty. That is part of why the levels of part-time work are so high among students, and why so much of that part-time work is literally to keep students afloat. When you talk about groups such as SEND or care-experienced students, it is already a lot harder for students with additional access needs to get to university in the first place. In 2021-22, 14% of 19-year-olds from a care-experienced background were in higher education, compared to 47% of non-care-experienced students. There is definitely a conversation needed about ringfenced funds to support students who may have additional learning needs or support throughout their time at university. The fundamental conversation has to be about more maintenance support, but that does not mean that there are not also issues around things such as housing. We have done a lot of work on the Renters’ Rights Bill. One of the big concerns that we have had flagged to us time and time again by care-experienced students, estranged students and international students is the fact that they do not have the ability to access a guarantor. For many students, this means they are forced to pay their rent up front for the entire year. That is completely unacceptable and completely unaffordable. We have been working with a variety of groups to help to table an amendment banning rent up front for up to one month, which should be a really positive step in the right direction if passed through the Lords. We are also looking at things such as early sign-on and the impact that that might have where landlords may be able to exploit students early in their time at university. There are definitely some positive steps in the right direction, but there are still barriers such as financial costs, a lack of ringfenced support and the guarantors, where an amendment has not yet been passed.

Alex, you have already covered a lot of what I was going to ask you. If I could particularly touch on care-experienced students, are there any particular challenges that they are facing that you have not already covered? Obviously the accommodation thing and the guarantor are huge, but is there anything else that you would like to raise?

The primary things that I would raise are the problems around genuine access to accommodation, access to university or higher education in the first place, and also that ringfenced support. That is incredibly important—not just the fact that that support is ringfenced, but the fact that that support should be across the entire year. One of the main recommendations of the Unite Foundation, which did some work recently and published a report, is that there should be some form of maintenance support for care-experienced students throughout the year, because they do not just suddenly stop being care-experienced during their time off university. We have to be hyper-aware of the experience of care-experienced students in that space. Q47            Darren Paffey: Thankfully a lot has been covered, but I just want to raise the issue that, in the Children’s Wellbeing and Schools Bill, the Government have now put in their own amendment saying that they will introduce corporate parenting responsibilities, which will cover the care-experienced, particularly where some aspects see them at the age of 21 and above, but at the moment that will not apply to universities. It applies to councils, youth justice and so on, but housing associations, universities and the police will not be covered by that. In your view, would introducing that responsibility to universities deal with some of the issues that you have raised that care-experienced young people are currently facing? Would that help to solve it, essentially?

To be honest, that is not something that I am an expert in. I would have to go back and have a look. I am sure I will be following up with more information on a variety of topics, so I can include our response in that. Q48            Manuela Perteghella: If we have a scenario where a higher education provider becomes insolvent, what do you think should happen in that case? Also, do the reforms to the Office for Students registration requirements proposed in February 2025 go far enough to protect students?

We need the Labour Government in Westminster to follow the lead of what we have seen in Wales and Scotland, and make emergency funds available to stabilise institutions that are genuinely at risk of going under. The Treasury seems to be refusing to countenance even those sticking plasters. That is the mood music we are getting, yet Labour was right to promise the end of sticking-plaster politics. Unfortunately, wherever people sit politically, in higher education this means facing up to the reality that the precondition for any sustainable resolution is massively increased direct public funding. I do not think you are going to get away from the boom and bust that I have already outlined, and that was outlined earlier, if we do not have more regulation of student numbers or establish better funding, ultimately supplanting this fee-based model that has been so detrimental. This is not me coming and special pleading for higher education. A real test case for whether Labour will deliver on its decade of national renewal is whether it is willing to invest in higher education and get us out of the crisis that we are in. The alternative is more student debt, but it is also more decline for Britain and its universities. Do you want me to say something now as well about the other issue that you asked about?

Yes, the registration requirements.

Is this in relation to the work of the Public Accounts Committee and the Sunday Times, or have I misunderstood the question?

No. In February 2025, the Office for Students announced a new approach to treat students fairly. These proposals include changes to criteria for new higher education providers to enter the Office for Students register. These providers can also access funding. I do not know whether this would make a difference to governance.

It might make it worse. For me, the development that we have seen in these organisations stepping in to help to plug the market is yet more of a manifestation of what we do not want to see in the sector. We have had a number of proposals put forward on the way in which the OfS could better regulate what we have. I do not really want to see more providers propping up to plug the gaps in the market. It is not where the sector needs to go. For people who work in the sector, having to invest time and energy into these initiatives is a drain. It is not something that benefits the students who come in or the ones we already have. That would be my ultimate point on that.

I completely agree with Jo that an emergency funds pot is pivotal where there are institutions struggling that are key to growth in the local area and to access jobs in the local area. That is essential. In terms of the student side of things and the impact that this is likely to have, we can look back to the case of midwives at Canterbury: they got moved to study at Sussex, where course closures meant that they were then forced to be taught elsewhere. The lessons learned from that are definitely about the cost impact, the travel impact and the impact on quality of life, because full-time education should not mean 24 hours, seven days a week. That comes back to the fact that the idea of a student now should not just be this independent, middle-class 18-year-old whose only focus in the world is higher education and getting their degree. One of the many benefits of the expansion in the numbers of young people going into higher education is the fact that we have a more diverse student body. When we come to supporting students through difficult circumstances, anything in this area really needs to take account of that. In the support that does exist, student protection plans are incredibly hit and miss. We saw that when it came to industrial action and the marking and assessment boycott. Some student unions felt that there was adequate support, whereas others felt that they had not been consulted properly or, more importantly, that students were not actually aware of what their rights were in line with their student protection plan. When it comes to the Office for Students and its new strategy, one of the key areas in this is around protecting the student interest through a more formalised contract. I am not entirely sure what that is going to look like. I am also not entirely sure what implementation of it is going to look like. On a very fundamental level, if the regulator’s means of holding institutions to account is to fine them, how do you fine an insolvent institution?

The numbers show that it is making an impact. As other colleagues have said in earlier panels, we are down on where we were in terms of our attractiveness. On international student numbers, we are down by about 20% versus 2022-23, and we are looking roughly flat at where we could be for this September. It has already had an impact, and it will continue to have an impact while there continues to be uncertainty with regards to various policies, including graduate immigration routes and other government policies that directly impact international student recruitment and the financing of universities. It is already in there. We have seen a decline, and we are seeing a further decline. That is a real shame, because the UK has a great global position: 25% of the world’s leaders were educated at UK universities. As I have said before, we have an opportunity here to be seen as the global leader in a managed and sustainable fashion. If we do not get this right, that decrease will continue.

The global reputation of UK higher education has been damaged by the previous Government. There is no disputing that. If you want some cost-neutral things that can be done to get us back to where we want to be, we need to lift the restrictions that were introduced on international students. I would also go further in the reintroduction of student number caps in the UK. If you are willing to spend a little bit of money, it is essential that we have a governance review of UK higher education. There cannot be a more urgent thing that needs to happen in our sector. I would also support the suggestion from an earlier panel member that we look at VC pay and senior pay in higher education—not just the level that it is set at, but whether we are rewarding failure by allowing the entirety of that very high pay to be paid up front, or whether any of it should be held back, to ensure that vice-chancellors do not just leap from institution to institution with these huge salary packages.

If we want to see our reputation get back to where it was on that global scale, we need to treat international students fairly. We need to see a reversal of dependant policies. We need to make it easier for international students to access housing. We need to have some serious conversations about the direction of certain visas and what the White Paper might look like. There is also a lot the Government should be doing in trying to temper the hostile environment that has plagued not just international students, but migrants in the country for years now. Universities need to be able to focus on international students not just as a cash cow, but as humans, because we need to inject a bit more humanity back into this system. These are people who have come from all over the globe to study in our country and to experience this country. We should celebrate that, rather than just ticking international students off as a box who plug that funding gap.

Thank you very much. By some miracle—and by running over time a little bit—we have managed to ask you all the questions that we wanted to. Thank you very much for coming to give us your evidence today. If there are further topics that you think the Committee should be aware of or take account of that we did not manage to cover today, please feel free to write to us as soon as you can after this session; we will certainly take note of any further evidence. Thank you very much this morning, and thank you to Committee members for your questions as well. [1] Sir Philip Augar has asked to clarify that this is a shorthand for ‘unit of resource’ since the Augar Review advocated cutting the fee to £7500 and then topping it back up by the equivalent amount of government grant paid direct to the university.