Higher Education is in financial crisis – and a closure could ruin a northern town
Plus: Defections and scandal in this week's Reform Watch, everything our team recommends in the latest The Lead Digest, and more from the North of England.
Ever since the Conservative government completed the marketisation of higher education by lifting the recruitment cap on student numbers in 2015, there have been fears that a university would go to the wall. It hasn’t happened yet, but now certain politicians have said they would be relaxed if it did.
Universities are in financial crisis. According to the Office for Students, 43 per cent of institutions are forecasting a deficit for 2024-25, mainly because of lower than anticipated levels of recruitment of international students. But the regulator says the value of income from UK students has also declined, with fees only rising marginally from the £9,000 per year at which they were set in 2012.
Blue Labour MPs Dan Carden and Jonathan Hinder appear not to want to let a crisis go to waste. Carden, MP for Liverpool Walton, wrote in the Daily Mail that he would close “half our universities and turn them into vocational colleges” because we need to “renew the skills required for production, not produce an endless stream of graduates for email jobs and human resources.”
Hinder, Pendle and Clitheroe MP, told a think tank “I don’t think we should have anywhere near as many universities and university places”, adding that if universities go bust without overseas students, he would say he was “not that disappointed.”
Only four per cent of 17-30 year olds went to university in the early 1960s. Following a wave of policy interventions – including but not restricted to Tony Blair’s famous 50 per cent commitment – the numbers exploded. Blair’s target was met in 1999.
But just as expansion was planned, so was the possibility that universities would fail. After raising fees to £9,000, the government’s 2015 removal of the cap on student numbers for any single institution led to a free for all.
“Deliberate policy design”
“We’ve never been in the situation before – and it’s almost unique internationally – of talking about deliberately shrinking your HE sector, or at least if not deliberately shrinking it, then allowing it to happen or doing nothing about it,” said Stuart Wilks-Heeg, politics professor at Liverpool University.
“And that’s potentially where we are. It hasn’t shrunk yet, because there are still those numbers of students going. What’s happening is that they’re going in larger numbers to certain institutions and not going to others, which is causing this big imbalance and leading some institutions to be very close to failing.
“That is a consequence of deliberate policy design. The only reason it hasn’t happened is absolutely brutal cutbacks in universities that are struggling.”
There are four universities close to Carden’s constituency. Near to Hinder is UCLan’s Burnley campus, soon to be expanded.
Have the Blue Labour MPs fully considered the impact of a university closure on the social mobility of young people and the local economies in which they sit? Or the electoral consequences for them?
Nine of the top 20 universities in the 2024 English Social Mobility Index are newer institutions created since 1992, often from former polytechnics. Six of them in the index, published annually by the Higher Education Policy Institute, are in the North – the University of Bolton, Huddersfield, Edge Hill, Teesside, Leeds Trinity and UCLan.
A reduction in places would mean telling people they can’t benefit from a university education when it remains a life-changing opportunity for many, despite a tightening labour market. It’s not lost on critics that Carden, educated at LSE, and Hinder, educated at Oxford, are trying to pull up the ladder after they’ve climbed it.
Graduates crucial for economic growth
As well as their benefits for social mobility, these institutions are usually among the major employers in their town or city, often in areas of deprivation. They are often anchors for regeneration and have a large supply chain attached to them, and their students contribute significantly to those economies through rents, night-time spending and more.
“On average, students who received free school meals will earn over a third more than non-graduates from the same background by the age of 31,” said a spokesperson for Universities UK.
“As well as benefitting individuals, graduates are crucial to driving the economic growth necessary so that we all feel better off. Regions with a higher proportion of graduates have consistently higher productivity, and the future high-growth industries in the government’s industrial strategy are all particularly hungry for graduates.
“In short, choosing to go to university is generally a win-win: good for the graduate, but good for the country too.”
The loss of one of those institutions could have an impact as damaging as the loss of a steelworks or a fishing industry. Yet Bolton and UCLan are in deficit and redundancies are even being sought at Teesside, which had a £40 million surplus.
Universities in these places have been a “massive catalyst”, says Wilks-Heeg. “We know it works – it’s a winning formula. And now, if you just took a university out of those urban economies – if you said, too bad, it’s gone bust – the wider economic effects of that would be colossal, particularly in northern cities.”
Whether the government would allow a university to go bust remains unclear. The possibility was one item on Sue Gray’s famous “shit list” of crises the Starmer government might face on coming to power, so there will be behind the scenes planning, but ministers will want to play their cards close to their chest in case everyone wants a bailout.
There’s a culture war element to the current criticism of universities. Higher education expert Jim Dickinson, associate editor at Wonkhe, says part of the problem is a lack of recognition of the higher level technical degrees that newer institutions offer, such as engineering. These are exactly the sort of qualifications unanimously agreed to be necessary for the economy, and yet that lack of awareness of them allows critics to lift from the Trump playbook and insist the universities are only focused on churning out ‘woke’ beliefs.
“We’re backed into this weird corner where all these brilliant degrees are going on but the public don’t recognise them as important,” said Dickinson.
In the meantime, better planning is also needed, adds Dickinson. There is co-ordination and planning over education up to the age of 18 but scarcely any after, he says, and the result is not so much too many students, but the wrong students in the wrong places.
“What you need is a bit more grip from government to say – we don’t want to ignore student choice but we do need to think about some level of regional planning. We need to think about what sort of skills we need not necessarily in a town or a city but in a region, and what sort of controls do you therefore put on places? And if there is any money in government, where do we invest it in terms of capital?”
About the author: Kevin Gopal is a Manchester-based journalist who has returned to freelancing after editing Big Issue North from 2007 until its closure in 2023. Prior to that he was assistant editor of Chinese community magazine SiYu, international editor of Pharmaceutical Executive, and deputy editor of North West Business Insider before freelancing widely on business, politics and policy for a number of titles. He is a leader in residence in journalism at the University of Central Lancashire.
The Lead is keeping an eye on Reform UK and their fellow travellers. Get in touch on X, Bluesky and Instagram or email ella@thelead.uk with tips and stories. We especially want to hear from readers whose local council is now run by Farage’s followers.
Former Conservative MP and party chairman Sir Jake Berry, knighted by BoJo himself, has defected to Reform UK in an attempt to “challenge the old order”. Sir Jake backed Liz Truss, too, so he must be onto something with this one.
Sir Jake is the fourth former Conservative MP to switch to Reform in the last two weeks, after Sir David Jones, Ross Thomson and Anne Marie Morris, who was suspended for using the N-word in 2017.
Concerns have also been raised about Boam’s appointment as the cabinet member for social care. As our friends at Hope Not Hate reported, he has frequently shared support for Andrew Tate online, and on the same account, said that “depression isn’t real” (he has, of course, dismissed this as fake news). But the real worry stems from his lack of experience. Julia Ross, the chair of the British Association of Social Workers, said: “While we recognise and value the fresh perspectives that youth often brings, ideally, candidates should have experience in administrating such complex departments, as well as a working knowledge of their statutory duty to support what are often the most vulnerable people in our society.”
Finally, Reform literally couldn’t organise a piss up in a brewery, as our sister title The Lancashire Lead pointed out last week. The party attempted to host a “summer bash” at Lancaster Brewery, but the venue quickly cancelled upon realising who had booked, leading to a wave of negative reviews and online comments. As one of our readers Graham pointed out, a similar thing happened in Norfolk. Redwell Brewing had initially agreed to host a BBQ for the Norwich branch of the party, but cancelled after receiving backlash from staff and customers. (Reminder: We’ll be closely following the new Reform administration in Lancashire with our dedicated title The Lancashire Lead. Make sure you subscribe to stay in the loop.)
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Thanks for reading our Thursday newsletter, it’s great to have you with us. We’ve got more fascinating reads heading your way very soon – keeping a focus on education as the end of term looms. Tomorrow, Lauren Crosby Medlicott will be getting to the heart of what could be the next big Labour rebellion – proposed changes to special needs education. It’s an issue we’re passionate about here at The Lead and we have been covering the crisis in SEND for many months, from Lauren’s reporting on the children with poor mental health being pushed back into mainstream schools, to Hannah Fearn writing about the rise of home-educated children as families run out of options. If you’re reading this and you’re not signed up, consider subscribing to The Lead below so you don’t miss tomorrow’s edition.
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