Universities brace for another cut in government teaching grants

The amount of money the government directly spends on teaching at universities is about to be cut for the second year in a row, Universities UK (UUK) has warned. 

Speaking to the House of Commons Treasury Select Committee on 2 June, UUK chief executive Vivienne Stern said she believed that the Department for Education (DfE) is planning to cut next year’s Strategic Priorities Grant (SPG), with details expected imminently.

“The government has almost entirely withdrawn from the upfront contribution towards the cost of teaching…and it’s important that I say, the government is about to cut it again,” she told the committee. 

“There is a letter sitting in DfE which will be sent to the [Office for Students] maybe in a matter of days, and it will hand a further cut to this little residual Strategic Priorities Grant. 

“That’s currently about £1.3 billion. The total higher education sector income is about £46 billion, so you can see the government’s putting a tiny amount of money into the system as a whole to pay for teaching.”

Universities were disappointed when last year the government cut the grant by £100 million, with education secretary Bridget Phillipson blaming “the extremely challenging fiscal context inherited from the previous government”.

The grant typically supports the teaching of high-cost subjects and some universities saw their funding fall by up to 65 per cent. 

At the time, Phillipson said the SPG would be reformed so that funding “can be more effectively targeted towards priority provision which supports future skills needs and the industrial strategy”.

In May 2026, UUK warned that further cuts would undermine the positive impact of last year’s decision to uplift tuition fees.

Stern was speaking to the Treasury committee as part of its inquiry into student loans. She told MPs that government spending on teaching must be considered when looking at reforming the loan system.  

“Part of the response has to be to try to recover the government investment in the cost of teaching, particularly for subjects that are very high cost to teach,” she said. 

She gave the example of veterinary courses, where universities can charge students £9,500 each year and receive around £11,000 through the SPG. 

“That’s the highest contribution you get for any subject – those high-cost lab-based subjects. The rest of it is a gap that the university has to make up through other sources, typically by attracting international student fees,” Stern said. 

“If you look at other subjects, things like modern foreign languages, there’s next to no subsidy, so the fee is what you get and there’s nothing to make up the gap between what it costs you to deliver and what…you get from the income from tuition fees. I’d love the committee to throw a bit of light on the history of investment in the upfront costs of teaching.” 

The DfE has been contacted for comment.

helen.packer@timeshighereducation.com