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News Made Easy: University Funding

By: Benjamin Jackson, MSc Violence, Conflict and Development


The Browne Review and 2012 changes

Since tuition fees trebled in 2012, there has been much scrutiny on university funding, but less information – the majority of students are unsure on how universities are even funded.

The Browne Review, published in 2010, laid out the coalition government’s new funding system for higher education, signifying a significant drop in government funding.

This tectonic shift was a response to increasing admissions to university, which meant the level of government funding was not sustainable.

The government also argued this would, in theory, ensure universities were bound by less bureaucracy and thus could invest how they wished.

More recently, the Prime Minister launched a government review into ‘post-18’ education and funding. The review stressed that the government deem the system to be accessible to all, representing value for money for students and taxpayers.

Where do universities get their funding from?

Universities UK (UUK), the principal advocacy organisation for higher education providers, provided a comprehensive document explaining university funding in 2016, aggregating data from universities across the UK. UUK data revealed funding comes from a variety of sources, especially because the majority of universities that receive public funding are charities.

What are these sources of income?

  • Government teaching grants: In England, this is managed by the Office for Students (OfS), the successor of the Higher Education Funding Council for England (HEFCE). This is a non-departmental public body of the Department for Education. Scotland, Wales and Northern Ireland each have their own body. It allocates funds through a ‘recurrent funding’ scheme on an annual basis. The amount allocated depends on the costs of the teaching being provided and the number of students (i.e. classroom-based degrees cost less to teach than laboratory-based degrees).
  • Government research grants: These are given by the UK Research Councils. Through a ‘dual support’ mechanism, universities are provided with an annual grant and grants for specific research projects. The latter requires an application to ensure quality research and competitiveness amongst universities. There are seven councils:
    1. Arts & Humanities Research Council
    2. Biotechnology & Biological Sciences Research Council
    3. Engineering & Physical Sciences Research Council
    4. Economic & Social Research Council
    5. Medical Research Council
    6. Natural Environment Research Council
    7. Science & Technology Facilities Council


The University of Sheffield – one of the few universities who provide accessible information on university funding – point out that other government departments, non-departmental government bodies, local authorities and the NHS also fund research in universities, often by way of a research contract under which the sponsoring body obtains rights to use the results of the research.

  • Research grants: Non-public funding for research is provided by charities, industrial and commercial organisations and the European Commission, although this list is not exhaustive.
  • Student fees: Tuition fees represent a significant percentage of university income. Undergraduate fees are capped at £9,250; most universities charge this as a flat rate regardless of course of study. Postgraduates tend to pay upwards of this and non-EU students pay even more.
  • Endowment: Financial assets donated to universities, often for restricted activities. For example, the Paul Webley Wing refurbishment was funded by this.
  • Other: UUK reports that a significant chunk of university income is generated from ‘other’ sources, which may seem rather ambiguous. Generally, this is where universities share their expertise and collaborate with businesses and the wider community – known as ‘knowledge exchange’, which drives innovation and economic growth locally and nationally.

How is SOAS funded?

SOAS’ financial statements reveal that in 2016-17, 72% of its £88.268 million income came from tuition fees; 10% from government teaching and research grants; 7% from other research grants – particularly the European Research Council; 5% from endowment; and 6% from other income.

Does the current funding system work?

In April this year, UUK stated in its Parliamentary Briefing that it considers the current undergraduate system, which shares the cost of education between taxpayers and students, to be working, with “significant benefits” for universities who are presently “sustainable and highly progressive”.

Students are the losers in this current system: graduating with debts of over £50,000 thanks to rising interest rates.

Whilst students will continue to feel aggrieved, UUK emphasises that the income that universities in England receive just about covers the costs of all their activities. Therefore, unless there is a change in government policy, it is unlikely that university fees will be reduced in the foreseeable future.

Photo credits: Benjamin Jackson (using UUK data from 2014-15)

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