If universities sink, then so will Starmer

New European

27-05-2025

Universities, left to find new ways to pay the bills, aggressively recruited foreign students, who pay much higher fees – meaning most universities now rely on overseas students to stay afloat, a business model created with the full knowledge of successive governments.
The UK's universities have had a tough few decades, in both political and financial terms. The Conservative-led coalition transformed their funding model by tripling tuition fees, destroying the Liberal Democrats' credibility for a generation in the process. But the toxicity of that decision, combined with the choice not to have tuition fees increase with inflation, meant the government went nowhere near increasing fees for more than a decade, while education was not immune to austerity cuts and belt-tightening across government.
Despite that, unis have been relentlessly attacked by MPs and ministers for that model, with some suggesting foreign students are 'taking places' that would otherwise be filled by Brits (in practice they are subsidising places for UK students), or else that they are serving as a gateway for unwanted immigrants to enter the country, contributing to that 'crisis'.
Fold in universities' place at the centre of the culture wars – as if either left wing academics or student activism were anything new – and by the time Labour re-entered government last year, British universities were exhausted, demoralised, and several were on the verge of financial collapse.
No one thought Labour would enter government and scrap tuition fees while lavishly funding universities, but academics and university bosses alike hoped for some improvement – at least an end to universities being endlessly dragged into the culture wars, caught in the middle of battles between the Home Office and Treasury on immigration, or told to find 'efficiency savings' as if it's a new idea, rather than something that has been demanded of them every year for a decade.
Needless to say, they have been disappointed. Skills minister Jacqui Smith ruffled feathers in the sector when she accused universities, in the pages of the Telegraph, of having 'lost sight' of their responsibility to spend public money wisely, launching into attacks on vice chancellors' salaries and demanding they cut 'wasteful spending'.
But Blue Labour MPs have gone much further. Dan Carden, who was head boy at one of the North West's most prestigious grammar schools, St Edward's College, before studying at the LSE, said in the Daily Mail that he 'would close half our universities and turn them into vocational colleges' because 'we need to renew the skills required for production, not produce an endless stream of graduates for email jobs and human resources'.
Carden's Blue Labour colleague Jonathan Hinder – who also attended one of the North West's most prestigious grammar schools, before going on to study history and politics at Oxford – expressed similar sentiments, saying 'I don't think we should have anywhere near as many universities and university places'. He added he would be 'not that disappointed' if several universities collapsed as overseas student numbers fell.
To say such comments are testing the patience of academics would be the understatement of the century. Backbenchers could be easily ignored were it not for the fact that No 10 seems highly attuned to the concerns of Blue Labour, hyper-focused on Reform, and blind to what they see as a simple fact – that if universities started failing, Labour's prospects of re-election would collapse with them.
'None of that sentiment would survive contact with the reality of even one university going bankrupt,' says Professor Rob Ford of the University of Manchester. 'Because the fallout from that in the place where it happened would be catastrophic, and the MPs that represent that place would experience it like a meteorite hitting in terms of the local economy.'
The impacts would be direct and indirect, he explains. 'Universities don't just employ lecturers, they employ thousands of people at all sorts of levels. They have huge estates, lots of buildings. People have to maintain those buildings. They have lots of administrative staff. Even at a modestly sized university, you are talking about thousands of people, at every rung of the career ladder.'
Beyond that, though, universities support thousands more jobs in their local areas – some through contractors, such as caterers or student housing, but many more in the wider local economy. The nightlife in university towns, many of the private rentals, town centre shops, cafes and more rely on students.
The majority of UK students still study away from home, and so are bringing money into an area. An overseas student is essentially bringing money into the country with every penny they spend – it is not just their fees, but their rent, food, and everything else that is essentially a UK export.
This is backed up by data: research for Public First has found universities are among the top three exporters in more than 100 constituencies – something which isn't true for any other sector of the economy. Of those 100 seats, Labour holds 85. One of the study's authors put it starkly: 'In a lot of towns, your university is your car plant, it is your steel mill'.
University WhatsApp groups swirl with rumours about which institutions are on the brink, and which university might fail first. Some look to what happened with local councils, where for years there were warnings councils would go bankrupt that never quite materialised – as no one wanted to be first. But at least nine councils have declared bankruptcy since 2020, and dozens more are at risk.
If universities start to fail, it will be disastrous for Labour MPs and their constituents. It would be the modern equivalent of the factory closure, or the end of the pit. And despite how some Labour MPs seem to imagine their voters, it would be Labour's core supporters who were most affected.
Some Labour MPs still seem to imagine the party's voters are the kind of mass manual working class that largely hasn't existed in this country for decades. The data is very different. A large-scale post-election survey by YouGov found that Labour won university graduates by more than two to one, securing 42% of them versus the Tories' 18%. But even in an election where the Conservatives resoundingly lost, among people with GCSE education or lower, Labour lost out to the Tories by 28% versus 31% (Reform got 23% of these voters).
Blue Labour isn't trying to appeal to Labour's actual voting base – it is arguing that the party should give up on these voters in a bid to secure a new core. This was not seen as a credible argument when the hard left made it, and should not be seen as one now.
That the tactic to appeal to this imagined new voting base relies on degrading a sector vital to the UK's economic fortunes, and to the future of the towns many Labour MPs represent, is gross recklessness.
Universities have certainly made mistakes – so many years of education being seen as such a good thing means they have got out of the habit of making the economic case for their existence, some vice chancellor salaries are obviously ridiculous, and the sector has cried wolf too many times. But the numbers on the account books are clear: this time the crisis is real.
Some senior university leaders still think the government has more sense than to allow a university to collapse – probably. Professor Sally Wheeler is the vice chancellor of Birkbeck, University of London, an institution founded to provide part-time evening education for the working classes. She thinks if it came to the crunch, the government would step in – at least for some.
'I question: would Labour let a uni go bust? Well, they might within the M25 – that's what everybody says, where there are an awful lot of them. Would they in a red wall seat? I doubt it,' she says.
She doesn't expect transformational new money from Labour – people in her job are having to be ever more creative to keep the lights on, she says, from making commercial partnerships to looking at campuses overseas.
But she expresses frustration that a lack of insight creates problems no minister would likely ever intend. These range from the mundane, such as small universities like hers facing as much compliance cost as those five or 10 times larger, to the ridiculous.
She highlights an issue with hybrid teaching, in which some students learn in person and some dial in remotely. The tech is there, the students love it, and for an institution like Birkbeck designed to help people with other commitments to study, it's ideal – but overseas students aren't allowed to use the tech. They can't even install it. This is because of restrictions to crack down on dubious visas. The sector is beset by issues like this, she explains.
Ultimately, universities don't expect miracles from Labour. After a dubious first year in government, they don't expect much. On a pragmatic level, senior figures hope that ministers will engage with the practical issues that could be fixed with little cost, which might make a hard job slightly easier.
But the big hope is a philosophical one – that Labour won't get so preoccupied in a battle with Reform over the souls of a largely imagined working class that it ignores, or even cheers on, a potential economic calamity in its new political heartlands.
Higher education might have been bad at making the arguments, but its campuses are the new factories, or even the new mines, supporting thousands or tens of thousands of jobs. Closures could devastate communities for a generation. Surely, they hope, Keir Starmer won't let himself be sleepwalked into being the 21st-century Thatcher?