The UK government should use its upcoming autumn budget to increase teaching and research grants, according to vice-chancellors, who warned ministers not to progress a planned levy on international fees because of “considerable unintended consequences”.

In its ahead of the 26 November budget, Universities UK said Labour should also finally commit to linking the tuition fee cap to inflation.

Outlining its case ahead of the all-important announcements by the chancellor, the sector lobby group pointed to figures that show universities in England have lost £1.7 billion teaching domestic students and £5.4 billion carrying out research in 2023-24.

“Without government action, the university sector will slide into decline and will be less able to power the UK economy,” the document warns.

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There is a need to “fix the foundations…by increasing critical funding streams in line with inflation”, it adds.

The government therefore needs to address real terms decreases in the value of both fees and the Strategic Priorities Grant, which supports high-cost subjects and widening participation efforts.

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On the research side, the budget for UK Research and Innovation should be increased, the submission adds, and quality-related (QR) funding should receive a real-terms uplift.

“Despite wider fiscal constraints, we believe our recommendations are achievable within the departmental allocations set out at the Spending Review and urge government to see these as an investment in growth and people’s futures.”

Among other asks from universities are a real-terms increase to the student maintenance loan, the establishment of new funds to support transformation projects and educational opportunities and greater “flexibility” over institutions’ participation in the Teachers’ Pension Scheme.

The document commits UUK to supporting a “reprofiling” of student loan payments so that institutions receive more of the money upfront, something some vice-chancellors have lobbied for as a way of managing cash flow.

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However it also warns the government against imposing more “costs and barriers” on universities.

Chief among the concerns is the proposed international student levy that the government has said will be spent on reintroducing maintenance grants for those taking priority subjects.

UUK says it welcomes this aim but “using a levy as the means of doing so will have considerable unintended consequences, including for the most disadvantaged students”.

“In the short term, we strongly urge the government not to score this levy at the 2025 Autumn Budget, and instead take the time to work through the consequences of such a policy in detail to avoid significant, negative consequences,” the submission says.

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“This should also include consideration of the costs to government of implementing the levy, which would reduce its total receipts.”

tom.williams@timeshighereducation.com