Student numbers at UK universities should be reduced 30 per cent, with cuts targeted at institutions whose graduates go on to earn the least and those with the highest dropout rates, a new report has recommended.

Research from right-wing thinktank Policy Exchange has found, for 15 of 34 subject groups, including sociology, creative arts and design, and performing arts, that more than a quarter of graduates earn less than the national living wage after five years.

In findings being used to turn up the pressure on universities, especially from the right, the data also show that, in 27 subjects, median graduate earnings after five years were below the national average for full-time employees. Of the cohort analysed, these 27 subjects represented 87 per cent of total graduates. 

The report, Tarnished Towers: Fixing England’s Broken ����Vlog System, calls for an end to higher education expansion and marketisation, claiming that “the failure of both is displayed in the state of the system today”.

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It says expansion has “served to place people in similar jobs to those they would have been doing before, though now with an additional £50,000 of debt”. 

“Encouraging young people, not yet academically qualified, to spend three years studying a degree of minimal value, that will provide them with no gains yet burden them with a lifetime of debt, is a tragic waste of human potential,” the report says. 

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It goes on to advocate for a “smaller system with higher academic standards”. Specifically, Policy Exchange recommends that student number controls are reintroduced and that places should be reduced by six per cent year-on-year for five years, leading to a 30 per cent total reduction.

“Reductions should be targeted at institutions with the highest drop-out rates, lowest progression to highly-skilled employment or further study and lowest earnings, as well as at providers that have grown rapidly at the expense of their staff-student ratio, local accommodation availability or entry standards,” the report says. 

It adds that the resulting savings should be used to fund an increase in apprenticeships, additional places in further education colleges and an uplift to the higher education teaching grant – which is set to be cut again for the next academic year. 

The report also suggests that there should be tougher entry standards for universities, including the introduction of a new national entry test for applicants who fail to get at least C grades at A level or who hold non-traditional or vocational qualifications. 

According to Policy Exchange, data shows a correlation between non-continuation rates and previous qualifications, with those students whose entry qualifications were BTECs more likely to drop out than their peers with A-grade A levels. Similarly, outcomes are worse for those with poor grades at A level and on franchise courses. 

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Policy Exchange recommends banning franchise courses altogether, saying that the “minimal benefits” are “outweighed by the significant detriment to students and the taxpayer”. 

Among its 40 recommendations are also calls to close the student loan book to for-profit institutions, freeze tuition fees for five years, abolish the postgraduate master’s loan and end government funding for foundation years. 

Commenting on the report, shadow education secretary Laura Trott said: “For too long, too many young people have been pushed into courses that leave them with large debts, limited teaching time and poor employment prospects. Young people deserve far better from a system that is too often failing them.”

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Suella Braverman, Reform UK’s education spokesperson, added that “young people have been sold a lie about university, wasting three years of their lives to get massively into debt, while we have a chronic shortage of nurses, builders and care workers”. 

Responding to the report, Libby Hackett, chief executive of the Russell Group, said universities welcomed a “robust debate” about the future of the system.

She acknowledged that “faultlines” such as unemployment, high debt and the rise of AI meant some young people were being failed.

“As a sector, we can’t shy away from these big questions. We need to cement a strong vision for the central role that universities will play in our society and economy for the rest of this decade and beyond.”

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Hackett said the group “strongly supported” the idea of a “national minimum entry standard to study at university, which we understand the Department for Education is exploring following the post-16 white paper, adding that it “cannot happen soon enough”.

helen.packer@timeshighereducation.com