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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is vice-chancellor and president of King’s College London
British universities are envied for their excellence and widely emulated around the world. After studying and working in five countries and four continents before returning to the UK to lead King’s College London, I have seen that for myself. This personal experience is confirmed by more objective measures: UK universities achieve the highest graduation rates in the world, and 17 British institutions make the top 100 of QS World University Rankings, second only to the US.
But the UK’s universities are trapped in a “triangle of sadness” between aspiring students who feel burdened with debt and uncertain prospects, a stretched government that has allowed tuition fees to fall far behind inflation, and beleaguered university staff. This pressure is increasing — a demographic bulge means over 100,000 more young Brits will be seeking a university education by 2030, when there is little space or incentive to accommodate them. It needs urgent attention.
The UK has opted for an undifferentiated university system, where nearly 150 institutions charge a uniform undergraduate fee and attempt to teach most subjects. A single regulatory body treats all universities — from the research-dominant world leaders to regional talent providers — in a single framework. It is neither a free-market system, nor a strategically managed one. Contrast this with California, with a gross domestic product the size of the UK and as many world-leading universities, but with a differentiated system of research institutions, teaching universities and community colleges. This range serves the economy and individuals rather well.
As funding becomes more limited and international competition intensifies, it is time for greater specialisation across the UK’s institutions and better cost-effectiveness within them. The objective is to maintain research universities that compete with the best in the world alongside those that supply their local communities and industries with the training and talent they need.
UK universities charge the same fee for all courses, regardless of the actual cost in delivering them, the demand for the subject or the economic advantage to the graduate. As a result, their managers are busy moving subsidies across subjects to make ends meet. A nurse and a dentist pay essentially the same for their education — even though the annual cost of educating the latter is nearly twice as much. The dentist is likely to end up with a far better income than the nurse while paying back an equal level of student debt.
This would not matter if the fees were merely a symbolic, token contribution. It does matter greatly when one student is taking out a personal loan to subsidise the economic outcomes of another.
A better solution would split the fees that a university receives for any individual subject between the student and the public, depending upon the expected personal versus public gain of a particular education. Australia and Canada have already implemented such a system. For example, in Canada, tuition for nursing and education costs to the individual are about C$6,000 and C$5,000 respectively per year, whereas for law it is C$13,000 and dentistry C$24,000.
One group who already pay a “premium” fee in the UK are international students. As the original £9,000-a-year fee for domestic students set in 2012 has been eroded to its current value of around £6,000 in 2023, the surplus income from overseas students who are charged an average of £22,000 a year has been critical in allowing UK universities to maintain their research programmes and international rankings.
This extra resource is needed because UK research-funding bodies calculate the full cost of research but deliberately pay only 80 per cent — the other 20 per cent must be found from teaching income and other resources. Universities find themselves doing even government-supported research at a discount.
Funding the nation’s research at an intentional deficit, hoping the gap will be filled by international student fees, is inherently precarious. The UK’s ambition to become a “science and technology superpower” cannot be left to the decisions of well-off parents in foreign nations. The government should fund the complete cost of research it sponsors, and ensure that whatever domestic fee is agreed is not eroded by inflation.
Fully funding individual research projects may mean choosing fewer to back; we will need to become more selective. But a sustainable research base will do better with a properly funded, competitive system rather than a precarious, expansive one.
The UK higher education system is a jewel in the nation’s crown — sometimes jewels don’t just need a polish, they need to be reset.