British higher education may be world-leading, but it’s also facing a funding crisis. To stave off catastrophe, the whole sector must embrace the lifelong learning revolution, argues Marius S. Ostrowski.

Up to now, the UK has led the world in teaching the workforce of the future. Our universities routinely come first in Europe and second only to the US in ranking after global ranking. Whether in terms of Nobel prize winners, levels of philanthropic donations, or numbers of international campuses, higher education has established itself as one of the UK’s most successful and lucrative lines of business.

But this status is increasingly under threat. With the rise of tuition fees, universities have come to rely more and more on students as exploitable income streams. They have dialled down investments aimed at turning their campuses into liveable community spaces for students and residents. Instead, they have poured spending into eye-catching capital projects—often more symbolic than functional—as well as advanced research centres and institutes reserved for a highly exclusive academic elite.

The cracks in the current higher education model

A number of recent developments have exposed the flaws in this model of higher education management. An escalating funding crisis has hit the sector, caused by the freeze in the tuition fee cap at £9,250 since 2017, and the loss due to Brexit of around £800m per year of EU funds. This alarming situation has been exacerbated by the period of high inflation since 2021, which has cut the real-terms value of fee income by over a quarter since the government first implemented the cap.

Universities cannot simply hope to turn the clock back to a time before the current crisis. Instead, they must recognise that their export-driven financial model is a thing of the past.

At the same time, geopolitical headwinds have hit the UK’s economic model as a services exporter—of which higher education is a key part. The honourable mission to attract global talent has transmogrified into a chronic reliance on international student fees—now £22,000 on average—for 20 per cent of the sector’s income. This has left universities vulnerable to fluctuations in the number of internationally mobile learners, which have become the focal point for recent controversies around course entry requirements and migration targets.

Taken together, this means that there is now a baleful amber warning light flickering over the university sector. For some institutions, it has already turned a lethal red. So far, UK institutions have been forced to cut courses and even entire departments, and issue over 3,000 redundancy notices—with dire warnings of more to come. Coming off the back of several years of pay, pensions, and working conditions disputes, this threatens to overwhelm an already demoralised sector, and turn the exodus of university staff from a trickle into a flood.

Universities cannot simply hope to turn the clock back to a time before the current crisis. Instead, they must recognise that their export-driven financial model is a thing of the past. Universities face increasing questions over the purpose of academic education, given the UK economy’s persistent dearth of technical and vocational skills—traditionally the preserve of the further education sector. Meanwhile, efforts by the UK’s global competitors to hothouse their own research and teaching capacity are eroding the UK’s ability to export into foreign knowledge markets with increasingly satiated demand.

An alternative strategy for universities

To strategise effectively in this emerging landscape, UK universities need a complete shift in mindset. Their future opportunity lies in the recent renewal of the lifelong education agenda, and the tilt towards greater flexibility and modularisation in curriculum development. By opening up a new pathway to higher skills for the two-thirds of the UK population who left school with at most A-levels, BTECs, or other level 3 qualifications, this latest development has unlocked a vast new pool of potential students.

Universities looking to shore up their financial positions should be straining every sinew to recognise, grow, and cultivate ties to their local labour markets.

The audience for new modular lifelong learning provision is anyone in universities’ localities who needs relevant, targeted in-work training and upskilling that can help them meet the changing demands of their industries. Workers who need to master new techniques and technologies that have emerged since they were last in education—such as AI and digital, green and sustainable knowhow. Or the nearly 70 per cent of mid-level staff who have no experience of managerial or supervisory skills training.

Crucially, it is these learners that will benefit from the Lifelong Learning Entitlement as the new model of student finance. Universities looking to shore up their financial positions should be straining every sinew to recognise, grow, and cultivate ties to their local labour markets. The skills their qualifications supply must be those that businesses in nearby specialised industries demand—from existing areas of comparative advantage to projected growth sectors. They need to reshape their learning provision so they can deliver it in a way that fits with the personal and professional responsibilities of the local adult working population.

By 2030, every UK university must have taken steps to develop a dedicated lifelong learning department, an internal body to coordinate its efforts to engage its ready-made local audience of lifelong learners.

Of course, this approach is already familiar to the cohort of “post-92” universities, many of whom have continued their former polytechnic legacy of vocational and technical learning. Rooted in ex-industrial towns and cities, with close connections to their local communities, they are the standard-bearers for how to restore adult learning as part and parcel of the working experience.

But for the rest of the sector, for those universities who are lagging behind this trend, we can set a clear barometer of success, a criterion to measure how far the UK has turned the page on the tired nostrums of higher education. By 2030, every UK university must have taken steps to develop a dedicated lifelong learning department, an internal body to coordinate its efforts to engage its ready-made local audience of lifelong learners. Only that level of commitment will do what is needed to avert the current crisis. Only by grasping this opportunity can UK higher education usher in a new era that will enfranchise the UK population as well as those who visit from abroad.

All articles posted on this blog give the views of the author(s), and not the position of LSE British Politics and Policy, nor of the London School of Economics and Political Science.

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