A new report from The Higher Education Policy Institute entitled How Should Undergraduate Degrees be Funded? sets out to breathe “new life” into the ongoing debate on the future of university funding in the UK.

The report analysed different options, including how the cost of higher education could be split between graduates, the state and employers.

“Higher education institutions across the UK are under financial strain. In England, the cost of higher education is disproportionately borne by graduates, and in Scotland, it is disproportionately borne by the state,” said Rose Stephenson, director of policy and advocacy at HEPI.

“There seems to be little public or political will to change the current system; however, without change, the financial future of the higher education system is at risk,” Stephenson added.

“The timing of this report is crucial to stimulate debate ahead of the upcoming general election. Politicians don’t want to talk about university funding – it’s toxic and there are no easy solutions,” Stephenson told The PIE.

“But ensuring that our higher education system is funded sustainably is key to the UK’s growth and productivity. Approaches to funding and supporting higher education – and students – must be included in manifestos ahead of the general election.”

The report highlighted that the the sector is anticipating reliance on international student fee income to become between 33-66% of all course fee income by 2026/27, with a PwC report earlier this year warning about the risk of financial difficulties universities face if international enrolment declines.

It added that international student fee income has become “the most significant reliable source of surpluses” for UK higher education providers, with the cross-subsidisation “at the core of many university business models” in major study destinations. International students create a net economic benefit to the UK of £37.4 billion, it noted.

Although overseas students enhance learning environments, make significant social, cultural and economic contribution and add to the UK’s soft power, geopolitics, global competition or domestic political pressures could all threaten the increasing reliance on a single income stream, it indicated.

A review of the calibration of the scheme is a way to “avoid political traps now” and give parties maximum room for manoeuvre after the election, noted David Willetts, who was minister for universities and science from 2010 until 2014.

The latest publication from HEPI includes proposals from student leaders, leaders of higher education and two former university ministers.

Within it, suggested funding models include dismantling the marketisation of higher education, differentiated tuition fees tied to Teaching Excellence Framework outcomes and proposals such as a graduate employer levy.

Each model put forward has been analysed by London Economics to assess its economic impact on students, institutions and the public.

Potential students were polled by UCAS on each model to understand how each suggested model might impact application rates.

The report found that abolishing tuition fees would cost the public £10.5 billion per cohort and would result in only a “tiny rise” in the percentage of potential students who would be likely to apply to university.

The most popular proposed alternative model with potential students is the graduate employer levy – which would see employers pay a small percentage of graduate salaries to fund higher education.

“If employers do not think graduates are worth a 3% premium, they can save money by employing non-graduates – perhaps investing more in training staff instead,” wrote Johnny Rich, chief executive of the Engineering Professors’ Council and chief executive of outreach organisation, Push in his proposal.

The report also found that half of potential students don’t intend to apply to university if fees rise with inflation.

The financial strain on UK higher education highlighted by Stephenson and the report’s contributors can be felt in the cuts announced across the sector, including at the University of Surrey where up to 140 jobs have been put at risk.

“Higher education institutions are not immune from increasing costs and should be making efficiencies and diversifying income streams where possible,” Stephenson told The PIE.

“Institutions are running out of road to make more efficiencies”

“This is already happening, and institutions are running out of road to make more efficiencies – we’ve seen this with the number of redundancies being made across the sector,” she continued.

“These financial challenges do pose a risk to the sector. The UK is known for its world class higher education system and this needs to be protected.”

Meanwhile, a petition to save a number of courses in arts, humanities and others at the University of Kent is garnering attention. Over 16,000 people have signed the petition and staff have voted to strike against the cuts.

Vice-chancellor of the university, Karen Cox, announced the cuts in March, before announcing in April her plans to step down from the role.

In a statement announcing her departure, Cox said “the sector faces well-known challenges”.

The university also proposed a cut to some 58 jobs in response to “financial challenges”.

University and College Union general secretary, Jo Grady, said the cuts “amount to a bonfire of undergraduate courses”, saying that Cox “looks like an arsonist trying to flee the scene”.

Goldsmiths, University of London is one institution recently criticised for its handling of redundancies, after Research Professional News outed them for borrowing parts of a similar document from the University of Kent, but failing to change the text, resulting in staff receiving communications referring to the wrong university.

Union members at Goldsmiths have voted overwhelmingly to take industrial action over the “disastrous” compulsory redundancies, equivalent to 130 full time jobs.

Last week, UK education secretary, Gillian Keegan, announced cuts to funding for performing and creative arts courses in England.

In her guidance to the Office for Students, Keegan advised a freeze on grants intended to meet the extra costs of undergraduate music, drama, fashion and other arts courses, as well as a cut to grants for postgraduate teaching in these subjects.

She also instructed reduced funding for widening-access program Uni-Connect, which has engaged 1.3 million young people from underrepresented groups, helping them to enter higher education. The funding has been reduced to £20m, which translates to one third of its budget for 2020-2021.