Adam Powell-Davies, Socialist Party youth and student organiser
The risk of universities going bankrupt made it onto Keir Starmer’s pre-election ‘shitlist’ of major immediate challenges facing a Labour government.
Will Starmer’s Labour government raise tuition fees? Will it be the first to let a university go bankrupt on its watch?
Following the election of the new Labour government in particular, university vice-chancellors and higher education thinktanks have wasted no time speculating on what a university bankruptcy could mean – and setting out their views on what an adequate government response would look like.
Clearly a university going under would have catastrophic consequences. In many towns and cities, universities are the one of the biggest employers, often second only to the NHS. Many thousands of jobs would be lost. Potentially tens of thousands of students would be without a course. There are fears that if one university went, it would trigger a domino effect throughout the sector.
That’s why Labour would be likely to intervene – for example, by providing emergency funding, with strings attached. In 1987, Thatcher’s Tory government found £20 million to save the then University College Cardiff, but only while mandating its takeover by the neighbouring University of Wales institute of Technology to create Cardiff University.
At the same time, state intervention to save a university would raise the sights of workers and young people to demand similar intervention; for pay rises, public service funding and more.
Labour would much rather take short-term measures to prevent the chaos of a university bankruptcy being posed in the first place.
A recently published review by the Office for Students (OfS) – the university regulator – concluded that financial challenges are “rapidly crystalising” with budget deficits, redundancies and course closures. Failure to manage these risks will “undoubtedly lead to a market exit, potentially in the near term, of one or more large providers”.
The government has accepted the recommendations of the review, putting out a statement that “the role of the Office for Students will be refocused to prioritise the financial stability of the higher education sector”. Crucially, however, the government is yet to respond to the recommendation to “clarify its position on market exit”. The University and College Union immediately put out a statement calling for new funding for the OfS to be able to directly intervene to support struggling universities. Key for students and workers is not just more funding, but control of how the money is spent.
How did unis get to this point?
In 2017, the Tories were forced to freeze tuition fees in England at £9,250 a year – a concession made under pressure of Jeremy Corbyn’s call for free education.
The real value of tuition fees has fallen dramatically due to inflation, to the point that universities now lose roughly £4,000 on average for every UK undergraduate.
This funding shortfall has driven a trend towards universities relying on international students, in effect using these students’ much higher tuition fees to subsidise the cost of teaching UK students.
However, international student applications are reportedly down by around one-third on last year. This recruitment crisis is a major reason why 40% of universities are predicted to run deficit budgets this coming year. The real value of higher education funding is at its lowest point since fees were trebled in 2012.
What will Labour do?
With Starmer abandoning his pledge for free education last year, Labour could complete the U-turn by increasing tuition fees. New education secretary Bridget Phillipson has more than once refused to rule this out when asked. New Labour linchpin Peter Mandelson went as far as calling for an “immediate uptick in fees” at a reception in Westminster this July.
Unfreezing the tuition fee cap would mean fees rising every year with inflation. That was how it was supposed to be, before Corbynism became a meddling factor in the plans of capitalist politicians.
Another option is to undo the visa restrictions brought in this year by the Tories, which prevent international students from bringing family members to the UK.
Labour’s approach may well be a combination of these things. But whatever they decide, clearly it will not involve any substantial increase in direct public funding for higher education, let alone free education. Phillipson has previously boasted about her plans for universities that could be implemented “without adding a penny to government borrowing or general taxation”.
And Labour will also want to cut back on the indirect public funding given to universities in the form of student loans. Despite the Tories’ attempts to overhaul the loan repayment system, most student loans continue to go unpaid and become government debt. The current figure for outstanding student debt is about £250 billion, equivalent to over 10% of GDP.
Appearing on Sky News last week, the new Labour skills minister Jacqui Smith declared that “it’s first of all in the hands of universities to take the action necessary in order to be as efficient as possible”. This is Labour’s warning to universities: “Even if our government does something on university funding, you will still have to make cuts if you want that money to go far enough”.
Fight Labour attacks
Overall, it looks like Labour will squeeze students for extra funds, which they hope will be enough to stave off bankruptcies in the short term, but not enough to remove the incentive on universities to make ‘difficult decisions’ over the longer term.
Any attempt to make students pay higher tuition fees would be met with widespread anger, not just among current university students but also school and college students planning to attend university.
Given that over half of under-30s in Britain now go to university, an attack on university students would be widely seen as an attack on young people’s futures in general.
There is already huge discontent among millions of young people, who see little to nothing positive about society as it is currently organised. They see themselves growing up in a world that allows uncontrolled war, poverty, climate degradation – all overseen by a tiny elite at the top, who get richer and richer while everyone else gets poorer.
In this context, the announcement of even a small fees increase could spark explosions on campus and among young people in general. Students would have to respond by calling mass meetings in every university, as well as colleges and schools, to collectively debate and discuss how to build a movement to fight Labour attacks on education, on young people and the working class as whole.
When Tony Blair introduced tuition fees in 1998, it sparked a big student movement. When the Tory-Lib Dem government trebled fees in 2010, it was the same again.
In 2024, the marketised fees model of higher education is in limbo. Labour want to keep it on life support while making students and the working class pay; socialists have to fight for a real alternative – a free and fully funded education system, run democratically by students, university staff and the local community for all to enjoy, as part of a socialist society organised to meet people’s needs, not profit.
