Spend on university teaching falls by a fifth since 2012

Public spending on higher education teaching in England has drastically declined in recent years while funding for earlier stages of education has been creeping up, according to a new report by the Institute for Fiscal Studies (IFS)

The influential thinktank’s report on education spending for 2025-26, shows how teaching spend at universities has declined 22 per cent in real terms since a peak just after fees were raised in 2012-2013, falling by about £2,700 per student to £9,900 in 2024-25 – with much of the state spending taking the form of repayable loans to students.

The drop was attributed to successive freezes to the cap on tuition fees, which the paper says have “eroded” the value of the cap in real terms. By 2024-25, tuition fees were worth roughly a quarter less than in 2012-13.

Direct grants paid to universities for teaching specific high-cost courses – universities’ other main source of funding for teaching England-domiciled undergraduates – were also cut by £87 million (8.3 per cent) in 2025-26, further eating into institutions’ budgets.

The report highlights that at 16 providers, once the international student fee levy has been implemented, the exchequer will collect more in revenue that these providers received in grants from the Office for Students in 2023-24.

The situation was described as “particularly stark” at the London School of Economics, where levy revenues could exceed £7 million per year, but direct grant funding totalled just £466,000 in 2023–24.

Meanwhile, the report shows how spend per pupil increased in other parts of the education sector, with spend per child in the early years sector doubling to £5,500 in 2024-25 compared with 2010-2011, and spend per primary school child up 12 per cent, to £7,000, compared with 2010-11.

The IFS said that the government’s commitment to raise tuition fees in line with inflation will therefore provide “welcome certainty to universities attempting to plan”, and could protect against further cuts.

The paper says: “The greatest shift in direction on how higher education is funded under this government has been the move to increase the cap on tuition fees in line with forecast inflation – and a commitment to making these increases the default in future. If the government follows through, then further real-terms cuts to per-student funding are likely to be avoided.”

Overall, total spending on education across early years, primary, secondary, further and higher education has fallen by approximately £14 billion since 2010-2011, with total spend standing at £122 billion in 2024-25. 

The IFS said this represents a 10 per cent decline over this period, with the drop mostly attributed to the shift in the cost of higher education from the taxpayer to graduates. 

Public spending on education as a share of national income is now at historic lows last seen in the late 1990s, late 1980s and mid 1960s, falling from about 5.6 per cent of national income in 2010-11 down to about 4.1 per cent in 2024-25.

Although the government spends about £22 billion each year to fund the education of each cohort of roughly 490,000 England-domiciled full-time undergraduates studying anywhere in the UK, it notes that the government gets back “the vast majority” of this spend as graduates repay their student loans, meaning “the up-front spending is likely to substantially overstate eventual public spending on higher education”.

juliette.rowsell@timeshighereducation.com