Labour’s first year in power – promises and pitfalls

Before the General Election in July 2024, Bridget Phillipson – now education secretary – promised that stabilising universities would be a “day one priority”. A year on, the sector is still waiting for that promise to materialise.

Yes, there has been an inflation-linked fee rise in England – bumping the fee paid by domestic undergraduate students to £9,535 from September 2025 – but the government maintains this is a one-off fix, not a long-term solution.

While the higher fee level undoubtedly offers the sector a lifeline, many institutions are still flying into the next academic year on a wing and a prayer, hoping that increased income from the autumn intake will help them plug the gap for a little while longer.

More take, less give

In reality though, the UK government has already clawed back from universities more than it has pledged.

First, hikes to employers’ National Insurance contributions and the minimum wage threshold, which came into effect in April, have inflated institutional payrolls and left many universities struggling to meet rising staff costs.

Second, the decision to exclude universities enrolled in the Teachers’ Pension Scheme (TPS) from government support has left several major higher education institutions facing a 28.68% employers’ contribution rate. This is a heavy burden for those institutions which are arguably some of the least resourced to shoulder it.

Third, reduced fees for “classroom-based” foundation year courses (now standing at £5,760) and the decision to axe funding for Level 7 degree apprenticeships for over-22s have upended university business models across England and closed vital access routes to higher education, especially for older learners.

Storm clouds ahead

And the changes for universities do not stop there. The immigration white paper released in the spring floated the prospect of a levy on international student fees, which have become a vital income stream for universities across the country. While details are still pending – promised in the autumn budget – the sector would do well to brace for impact now and articulate to government the important research, teaching and civic activities that will have to give if this tax becomes a reality.

Meanwhile, the delayed post-16 education and skills white paper threatens to introduce a more narrow and prescriptive vision for skills in England. Given the recent release of the modern industrial strategy, it is likely that the UK government will focus its support on the industrial strategy’s eight core areas – the “IS-8” – plus construction and healthcare in an attempt to reboot the economy and fix public services.

Cracks are showing

Despite four UK universities continuing to maintain their position among the global top 10 institutions this year, the shine of the UK’s higher education sector is beginning to fade. Earlier this month, London lost its title as the world’s best student city, overtaken by both Seoul and Tokyo taking the number one and two positions respectively.

While the rankings show the rising costs of studying in London were largely responsible for the UK capital losing the title it has held for the past six years, recent immigration policies may also be having a negative influence on applicants’ perceptions and experiences of studying at UK universities.

With all 16 UK university cities dropping in the rankings, questions should be asked about the effect of this government’s curtailment of the post-study work visa to 18-months from two years and reluctance to revoke the past government’s ban on dependants’ visas. The Prime Minister’s decision to declare publicly that the UK risks becoming “an island of strangers” may also be contributing to perceptions of an unwelcoming environment for overseas students.

A year of charges, not changes

For a government elected on a platform of “change”, it has mostly brought new charges to universities rather than any significant promise of reform. Developments in the security and defence arena in response to growing geopolitical threats, together with recent welfare spending U-turns, have also drained the public coffers, pushing higher education further down the priority list heading into the new academic year.

The challenge for the sector now, then, is not merely about surviving, but staying relevant and visible. With public funding diminishing and policy uncertainty mounting, UK universities will have to work harder than ever to stay on the political radar and defend their value in an increasingly fraught and factious landscape.

If Labour’s first year was about setting the tone for its time in office, then its message to universities has been loud and clear: adapt, absorb or be overlooked. The sector must now fight not just for funding, but for its future – before the next wave of policy changes in the autumn could leave it even further adrift.

The post Labour’s first year in power – promises and pitfalls appeared first on The PIE News.