Universities in England are receiving over £6 billion less each year for teaching students than they did a decade ago, new analysis shows.

Ahead of the autumn budget on 26 November, Universities UK (UUK) has calculated that funding per student for teaching in 2025-26 is at 64 per cent of the level it was in 2015-16.

The membership body said because both tuition fees and government grants have failed to keep up with inflation, today universities receive £6.4 billion a year less in real terms for teaching home students compared with 10 years ago.

It follows recent modelling from the Office for Students that warned 45 per cent of universities could face a financial deficit this academic year.

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Despite these concerns, little positive news is expected for universities in the upcoming budget. With a commitment to link tuition fees to inflation already made in a recent skills White Paper, the focus will instead be on the proposed international student levy, which would result in universities being taxed on their income from overseas students.

UUK said the promised tuition fee uplift would “only prevent the gap that has grown in funding the teaching of domestic students from growing further”, rather than fixing the sector’s mounting problems.

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“The yearly £6.4bn shortfall is effectively ‘baked in’ to higher education funding in England without increases in direct grant funding,” the group said in a statement.

UUK also warned that the international student levy could add £780 million in additional costs to universities each year, while the uplift to tuition fees would raise just over half of that, at £440 million.

However, the government looks set to forge ahead with the levy, with skills minister Jacqui Smith recently defending it as a tool to fund maintenance grants.

Vivienne Stern, chief executive of UUK, described the levy plans as “beyond disappointing”, saying a “new tax on international students” is “the opposite of helpful”.

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“This budget has to be about growth,” she continued. “The government has rightly identified universities as fundamental to this aim.

“The secretary of state for education was right to set the goal of putting universities on a firm financial footing,” she continued. “If that’s the goal, this research shows just how far off achieving that we are. Universities are cutting costs hard, losing jobs and courses as a result.”

Joanna Burton, head of higher education policy at the Russell Group, said the analysis shows the tuition fee uplift “is not enough to resolve the structural pressures facing the sector”. 

She continued: “With the budget approaching, government must recognise these challenges and rethink the proposed international student levy; a tax on universities that would add further burdens and restrict investment in students, research and communities."

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helen.packer@timeshighereducation.com