New choices: Revisiting futures for higher education in England

English universities face ‘unstable hybrid’ future as funding model collapses faster than predicted, warns new report.

English higher education is heading into a future nobody planned, according to a new paper from the Higher Education Policy Institute written by Professor Sir Chris Husbands.

New Choices: Revisiting Futures for higher education in England (HEPI Debate Paper 48) is a follow-up to an earlier paper, Four Futures (HEPI Debate Paper 37) by the same author from 2024, which set out four potential scenarios for how the sector might resolve its financial challenges.

Two years on, Sir Chris argues that higher education faces long-term strategic choices. The financial pressures previously identified have arrived faster than expected and have been compounded by three further disruptive forces:

1. the rapid spread of generative AI into teaching and assessment;
2. a fundamental shift in student expectations, as more students study from home, work part-time and manage mental health pressures; and
3. eroding public trust in the higher education sector’s value and purpose.

The report warns that England finds itself in an unplanned mix of decline, quiet research concentration and stalled regional reform, ‘less stable than any of the original scenarios’, and none of it is being managed as deliberate policy.

The final chapter concludes:

The sector as it currently exists, and institutions within it, are unsustainable in any plausible funding model.

The sector’s current challenges include:

• The Office for Students projects 45% of providers will be in deficit in 2025/6, with 45 holding fewer than 30 days of liquidity.
• Severance costs across the sector rose 71% year-on-year to £303 million, and the academic workforce shrank for the first time in over a decade.
• The 2025 rise in the undergraduate fee cap to £9,790 delivered a net gain of only around £18 million sector-wide once increased employer National Insurance costs are factored in.
• Generative AI use is moving faster than institutional capacity to manage it, with strains on assessment and teaching as a result.
• Public confidence is sliding: the proportion of Britons who think a degree isn’t worth the time and money has risen from 14% in 2005 to 34% today.

Given these challenges, the report sets out a possible future typology for the sector, with a small number of globally competitive research universities, a larger tier of regionally-anchored institutions, more networked ‘local’ universities increasingly working alongside private providers and specialist institutions built around single disciplines or distinctive teaching models.

Sir Chris sets out an agenda for individual universities and for government. He argues universities need to ask hard questions about their operating models, relationships with other institutions and their place in their communities. Additionally, he argues the new Government should articulate a vision for the sector, with policy clarity on: funding for teaching; the Lifelong Learning Entitlement; the contradiction between international student policy and immigration policy; the future shape of research funding; a rebalanced approach to regulation; and a proper framework for orderly mergers and institutional exits before failures happen.

Professor Sir Chris Husbands said:

Four Futures argued there were painful choices in every direction. Two years on, the cost of not choosing is demonstrably higher. Simply increasing income is no longer a viable strategy for institutions and simply hoping the market sorts itself out is no longer a viable strategy for government. What the sector needs now is a combination of government activism and institutional courage.

Reports:

Read the full report (PDF)

Note for Editors

1. HEPI was founded in 2002 to influence the higher education debate with evidence. We are UK-wide, independent and non-partisan. We are funded by organisations and higher education institutions that wish to support vibrant policy discussions, as well as through our own events. HEPI is a company limited by guarantee and a registered charity.
2. Professor Sir Chris Husbands undertook senior roles in universities for more than two decades, most recently serving as Vice-Chancellor of Sheffield Hallam University (2016 to 2023). Sir Chris was Chair of the Teaching Excellence and Student Outcomes Framework (TEF) between 2017 and 2023. He is a member of the Jisc Board, a Trustee of HEPI and was on the Board of Universities UK between 2019 and 2023. He is a Founding Partner in Higher Futures, which supports strategic development in higher education institutions. Sir Chris is an Honorary Fellow of Emmanuel College, Cambridge. He was knighted for services to higher education in 2018.