Fee hikes will not solve ‘financial pressures’ faced by universities due to NI rise

Raising tuition fees will not ease the “serious” financial pressures facing universities as rising National Insurance contributions will lead to further cuts to budgets, sector leaders have warned.

Education Secretary Bridget Phillipson announced on Monday that undergraduate tuition fees in England, which have been frozen at £9,250 since 2017, will rise to £9,535 next year.

She said there was a need to “secure the future of higher education” amid financial challenges.

But Professor Robert Van de Noort, vice-chancellor of the University of Reading, said raising tuition fees in line with inflation would only stop their real costs from falling further than they already have.

He said: “This may help prevent the situation from deteriorating further, but will not fully alleviate the severe financial pressures facing the sector, which have intensified this month with an increase in employers’ national insurance contributions.”

Last week the University and College Employers’ Association (UCEA) warned that changes announced in the Budget to employers’ National Insurance (NI) contributions would cost the sector £372 million and worsen the funding challenges facing institutions.

University leaders have repeatedly warned of serious financial problems as a result of tuition fee freezes for domestic students and a drop in the number of international students.

Nick Hillman, director of the Higher Education Policy Institute (Hepi) think tank, said universities need fee increases that are “well above inflation even to stay in place” due to the extra costs they face as a result of the NI changes.

He added that “concerns about financial instability will continue” in light of the 3.1% fee increase.

Raj Jethwa, chief executive of UCEA, said: “Any increase in income is helpful, but higher education employers will continue to face very difficult cost challenges due to the recent increase in NI employer contributions, in addition to the staggering overlooked increase in TPS pensions. cost”.

The Department for Education (DfE) has said long-term funding plans for the higher education sector will be developed in due course.

If the government decides to increase tuition fees annually in line with inflation, the maximum tuition fee could reach £10,680 in 2029/30, according to the Institute for Fiscal Studies (IFS).

Kate Ogden, senior research economist at the IFS, said: “If the government plans to continue raising the fee cap to account for inflation, it should say so – and provide some certainty to both universities and future students.”

Professor Shitij Kapoor, vice-chancellor of King’s College London, previously estimated universities would need between £12,000 and £13,000 a year in tuition fees to cover costs.

On Tuesday, Health Secretary Wes Streeting defended the Government’s decision to increase undergraduate tuition fees, saying it was a “proportionate and sensible decision”.

Labor has faced criticism for raising the charges for the first time in eight years after Sir Keir Starmer backed scrapping them during his 2020 leadership campaign.

The Universities and Colleges Union (UCU) called the tuition fee rise “morally wrong” and the National Union of Students (NUS) said students were being asked to “pay the bills”.

Mr Streeting told Sky News: “I think the risk is that if we don’t bring the price of fees and maintenance support in line with inflation, then students will really be undervalued because the investment in their education won’t keep up.” height.” price pressure.”