In 1998, Tony Blair made university access a reality for a huge swathe of aspirational young people and their families, radically changing the UK’s higher education landscape. But a generation on, our universities face stark choices to ensure the success, and indeed the survival of their institution. Jon McLeod and Freddie Eltringham take a look at how funding troubles, free speech debates and national security concerns could spark immediate challenges for a prospective Labour government.

The financial future of the UK higher education sector is a deeply uncertain one. A 33% fall in study visas compared with the same period in 2023, alongside a seven-year freeze on tuition fees amid high inflation leaves over 100 universities forecast to report deficits by the end of this year.

So, what are the choices available to Sir Keir Starmer as he vies to enter 10 Downing Street on 5 July and grapple with this issue?

Student visas

Should Labour succeed on polling day, the Party will need to reconcile two sets of competing priorities. Starmer must balance the need to obey stringent fiscal rules with a higher education sector in dire need of funding, and a national desire for lower net migration, with the skills, soft power and funding that international students already provide. And he will need to act fast.

For the last two years, UK universities have used the income of international students’ tuition to plug the £1bn annual loss incurred from teaching domestic students. With declining rates of both applications and deposits from international students so far this year, Matt Western, Labour’s Shadow Minister for Higher Education, or his boss Bridget Phillipson, may well be forced to intervene to prevent the unprecedented – a UK university collapsing. Capping the numbers of domestic students or reforming visa rules to encourage international applications are both potential mechanisms available to a Labour controlled Department for Education.

Tuition fees

Tuition fees are a key issue Starmer will need to consider, even after he publicly scrapped the pledge to abolish them earlier this month. There will be an undeniable tension between the shadow front bench’s desire to instate a more progressive funding system, a cause that is of deep personal value to Starmer, and the more alarming reality that many UK universities are undeniably on the brink.

Stark warnings issued by Lord Mandelson and former Universities Minister Alan Johnson, who say increased funding is urgently needed, may well force Starmer to intervene in the next Parliament. A direct increase in tuition fees would cost Labour huge political capital, meaning he may be more likely to attempt to stabilise the plummeting rates of international applications, or offer a centrally funded uplift for domestic students.

An arm of Labour’s industrial strategy?

Higher and further education will both play a critical role in the deployment of a Labour government’s industrial strategy. In their key strategic publication, “Labour’s Business Partnership for Growth” (which crucially received the endorsement of 121 business leaders on 27^th May), Labour commits to “a new generation of Technical Excellence Colleges” and reform of the Apprenticeship Levy as a “more flexible” Growth and Skills Levy. The latter, which would allow businesses to use up to 50% of funds to pay for non-apprenticeship training, is indicative of a clear intent to build a community-tailored skills force for a modernised economy.

Shadow Minister for Skills Seema Malhotra could be minded to direct more students into vocational and technical education, as Labour seeks to train new “plumbers to fit heat pumps, engineers to lead the application of AI, and solar power fitters to harness renewables”.

Free speech on campus

UK universities continue to endure a tumultuous period on matters of free speech and academic freedom. New freedom of speech guidance from the Office for Students (OfS) for universities, colleges and students’ unions, following the Freedom of Speech Act 2023, which gave the OfS greater scope to scrutinise and compel universities to enforce freedom of speech on campus, is expected to be implemented just weeks after polling day. Domestically, the new guidance arrives at a sensitive time for universities, given growing support among student groups for divestment in companies that support Netanyahu and encampments on 14 Russell Group campuses. However, if Starmer is successful on 4 July, the OfS’ guidance may open up a far bigger can of worms on one of the most defining foreign policy prerogatives for any UK government – China.

The threat from Beijing

Under the OfS guidance, which is currently under consultation, scholarships funded by foreign governments and partnerships that require academic staff to pass ideological tests may breach rules on freedom of speech. While these rules will apply to all autocratic nations, China is likely to be the principal target. A July 2023 report by the Intelligence and Security Committee warned that the CCP is actively seeking to exert influence over UK universities through engendering a reliance on fees from Chinese students.

With over 100,000 Chinese nationals reported in the 2023/24 cohort of first year undergraduates, Starmer would have to act quickly to ensure that risks to both university financing and national security are negated. Whilst Labour has promised a “full audit of the UK-China relationship”, neither Starmer nor his Shadow Foreign Secretary David Lammy have articulated how they will insulate UK universities from Chinese intervention.

In light of the dire state of the sector’s finances, and the increasingly politicised public view of its operations, if Labour succeeds in forming a government it will quickly need to comprehend how its policy can possibly protect academic integrity, secure university funding, and address national security, all at once.