Recent HESA Data Highlights Persistent Financial Pressures in UK Higher Education
The Higher Education Statistics Agency (HESA), the official body responsible for collecting and publishing data on UK universities and colleges, released its Higher Education Provider Data: Finance for the 2024/25 academic year on May 14, 2026. This coincided with an update from the Office for Students (OfS), England's higher education regulator, on financial sustainability. Together, these reports paint a picture of a sector under strain, with modest improvements in past performance overshadowed by looming deficits and a notable downturn in student numbers.
Combined income across higher education providers reached £53.9 billion in 2024/25, up from £52.5 billion the previous year, while expenditure climbed to £53.1 billion. Despite 60 percent of providers posting surpluses—up slightly from 58 percent—a significant portion continues to grapple with deficits. The OfS analysis reveals that 35.8 percent of English providers recorded deficits last year, better than the 44.2 percent previously forecasted, but projections indicate a worsening to 42.7 percent for 2025/26.
Breakdown of Income and Expenditure Trends
Tuition fees remain the lifeblood of UK higher education, accounting for 52 percent of total sector income in 2024/25. International student fees contributed a substantial 23 percent, underscoring the sector's heavy reliance on overseas enrolments. Domestic undergraduate fees, capped at £9,535 in England following an inflation-linked increase, provide stability but have eroded in real terms due to rising costs.
Staff costs, a major expenditure category, have surged amid pay inflation and national insurance hikes. Other pressures include pension contributions and maintenance backlogs estimated at £10 billion sector-wide. While operating cash flow improved to 4.3 percent of income, net liquidity dipped, signaling cash flow vulnerabilities for many institutions.
| Category | 2023/24 | 2024/25 | Change |
|---|---|---|---|
| Total Income | £52.5B | £53.9B | +2.7% |
| Total Expenditure | £43.4B | £53.1B | +22.4% |
| Surplus Providers | 58% | 60% | +2 pts |
This table illustrates the narrow margins many universities operate on, with aggregate surpluses rising 14.7 percent but masking declines in larger research-intensive institutions.
Student Downturn: A Key Driver of Deficits
Student numbers tell a stark story. Total UK higher education enrolments fell 1 percent to 2.86 million in 2024/25, per HESA's January release. Postgraduate taught programmes, heavily reliant on international students, saw a 10 percent plunge. Non-UK entrants dropped 7.7 percent—9 percent below forecasts—while domestic recruitment grew 3.5 percent but missed targets by 8.6 percent.
India, China, and Nigeria, which comprise 47 percent of non-EU students, showed declines amid visa restrictions like the postgrad taught dependants ban. This has hit tuition income hard, as international fees subsidize research and domestic teaching.
Variation Across Provider Types
Financial health varies widely. Small, medium, and specialist providers drove surplus gains, offsetting deteriorations in larger research-intensive (e.g., Russell Group) and teaching-intensive universities. Level 4 and 5 providers also struggled. Nearly half in these larger cohorts saw surplus increases, but aggregate performance lagged.
- Research-intensive: Deteriorating surpluses due to research funding shortfalls and recruitment volatility.
- Teaching-intensive: Hit by domestic fee caps and international declines.
- Specialist: More agile, with quicker adaptations to market shifts.
The OfS notes substantial intra-group differences, urging prudent forecasting over optimism on recruitment growth.
Photo by Vadim Sherbakov on Unsplash
Universities Facing the Largest Deficits
Several institutions posted eye-watering shortfalls. Bishop Grosseteste University led with a -31.5 percent deficit relative to income, followed by Coventry University at -18.4 percent, University of Bedfordshire (-17.5 percent), and University of Derby (-12.2 percent). Welsh universities like Bangor (-12 percent) and Swansea (-11.8 percent) also featured prominently, alongside De Montfort (-10.6 percent) and Queen's University Belfast (-9.8 percent).
| University | Deficit % of Income 2024/25 |
|---|---|
| Bishop Grosseteste University | -31.5% |
| Coventry University | -18.4% |
| University of Bedfordshire | -17.5% |
| University of Derby | -12.2% |
| Bangor University | -12% |
These examples highlight how post-1992 universities and regionals are particularly vulnerable. For details on HESA finance tables.
Government Policies and External Pressures
Visa curbs, a proposed 6 percent levy on international fees, and NI/pension hikes exacerbate woes. Real-terms teaching grant cuts and stagnant domestic fees compound issues. Universities UK warns against further DFE grant reductions, calling for funding aligned with societal value.
Geopolitical tensions, including Middle East conflicts, add uncertainty to international recruitment. OfS director Philippa Pickford cautions against short-term fixes, advocating vigilant, long-term planning.
Sector Responses: Restructuring and Cost Controls
Institutions are acting: job cuts at Nottingham (projected insolvency by 2031 without more), redundancies at Central Lancashire (£25M deficit), and restructures at Leicester and Cambridge (second-year deficits). Mergers, course rationalization, and shared services are emerging.
- Staff freezes and voluntary redundancies.
- Reduced capital spend amid £10B maintenance backlog.
- Diversification into transnational education.
Russell Group CEO Libby Hackett stresses collaboration for stability. Read the OfS sustainability report for modeling scenarios.
Implications for Students, Staff, and Research
Students face course closures, reduced support, and quality risks. Staff endure uncertainty with strikes over pay and pensions. Research suffers as international fees cross-subsidize grants not covering full costs.
Long-term, underinvestment threatens UK competitiveness. HEPI warns of 'excessive' risks from borrowing and expansion.
Photo by Iulia Topan on Unsplash
Pathways to Recovery and Future Outlook
Recovery hinges on recruitment rebound—26 percent UK, 19.5 percent international by 2027/28 per forecasts. Solutions include:
- Policy reversal on visas/levies.
- Increased grants for high-cost subjects.
- Efficiencies via AI, mergers.
- Fee reforms reflecting graduate premiums.
OfS scenarios show deficits for 62-80 percent without growth, but baseline predicts stabilization at 3.6 percent surplus by 2027/28. Prudent action could avert crisis. Explore Times Higher Education analysis.
Stakeholders urge joined-up policy to safeguard this vital sector.