Falling Giants: The Implosion of Britain’s University Business Model

 

If British universities are “world-class,” then the world is setting the bar embarrassingly low—these institutions are running on fumes, held together by outdated models and political cowardice. Simply put, by treating education like a business, British universities are churning out degrees as if they were fast food meals—cheap, convenient, and devoid of real substance.

British universities are no longer the ivory towers they once were—they’re crumbling under the weight of their own business model. The very structure that once promised academic excellence now seems more like a house of cards, wobbling under the weight of frozen tuition fees, a steep decline in foreign students, and financial instability that could see some universities go bust. The problem is deeper than just numbers on balance sheets; it’s a symptom of a larger failure to adapt to a rapidly changing world, where higher education’s value is constantly being questioned. As the saying goes, “When the well’s dry, we know the worth of water,” and in this case, the well of British universities is drying up fast.

Universities have been stuck with the same £9,000 cap on tuition fees since 2012, barely enough to keep up with inflation. What seemed like a hefty sum over a decade ago has lost its value, now worth less than £6,500 in 2012 prices. It’s the same old story: costs go up, but fees stay frozen, leaving universities strapped for cash. While this might have worked if the government had increased grants or other forms of support, that hasn’t happened. Instead, universities are left to do more with less, all while trying to maintain their reputations and facilities. The outcome is predictable—financial chaos.

At the heart of this issue is the fact that British universities are not just institutions of learning; they’re businesses, and like any business, they need to turn a profit. The influx of international students over the past five years briefly saved them from disaster. These students, particularly from countries like India and Nigeria, were willing to pay twice or even three times as much as domestic students, all in exchange for the opportunity to work in Britain after graduation. But even that well is now running dry. Thanks to new visa restrictions and global economic downturns, foreign student numbers have plummeted. A 17% drop in visas issued this year alone is no small matter. For universities that built their financial models on attracting these high-paying students, the fallout could be catastrophic.

The irony here is palpable: the very policies that once boosted foreign student numbers are now strangling them. The Conservative government’s 2022 decision to forbid most foreign students from bringing their families with them has had a larger-than-expected impact. The ban was an effort to reduce net migration, but it ended up deterring international students who saw Britain as a place not just to study but to build a future. Universities that once thrived on these students are now staring down the barrel of a 30-50% decline in foreign enrolment.

The consequences are already being felt. According to the University and College Union, 70 institutions are cutting costs in one way or another, and the Office for Students reports that 40% of universities expect to be in deficit by the end of the 2023-24 financial year. In a worst-case scenario, that figure could rise to 80% in just three years. It’s not just the small, regional universities that are at risk, either. Even some prestigious institutions are being forced to reconsider their financial strategies as they face an uncertain future.

Yet, despite the writing on the wall, there seems to be little political will to address the problem. Labour’s Prime Minister Keir Starmer, in his speech on September 10th, acknowledged the issue, listing universities among the public services that are “crumbling” and “worse than expected.” But beyond acknowledging the problem, there’s been little in the way of concrete action. If a university does go bankrupt, the official government line is clear: no bailouts. In August, Skills Minister Jacqui Smith stated that failing universities would be left to fail, suggesting that the market should sort itself out. This sounds bold on paper, but in practice, it’s a risky game. A university collapse could devastate local economies, especially in regions where these institutions are among the largest employers.

Let’s not forget, this isn’t just a question of business—it’s a question of public good. Education should not be treated like a market commodity, where the highest bidder gets the best service and everyone else is left scrambling. Yet, that’s exactly what’s happening. Universities have been forced into a system where they must compete for students as if they were customers, not scholars. When foreign students stopped coming in droves, universities tried to offset the loss by admitting more British students. But even that has its limits, especially for lower-ranking institutions that struggle to attract enough domestic students to fill their seats.

One proposed solution is to raise tuition fees. The Institute for Fiscal Studies suggests that increasing fees would cost the government far less than expanding grants. But in a country where Labour was, until recently, promising to abolish tuition fees altogether, such a move would be politically toxic. It would also put even more financial burden on students, many of whom are already drowning in debt. Another option, perhaps more palatable, is to reform the loan system. Labour’s Education Secretary Bridget Phillipson has floated the idea of reducing monthly repayments for new graduates, giving them more breathing space in the early years of their careers. But such reforms would take time, and universities need help now.

It’s not just about the money, though. There’s a deeper issue at play here: the commodification of higher education. Universities have become more about generating revenue than fostering knowledge and critical thinking. They’ve been forced to operate like corporations, cutting corners and slashing budgets just to stay afloat. And when education becomes a business, the first thing to suffer is quality. Fewer resources mean fewer faculty, larger class sizes, and a diminished student experience.

Without putting it in so many words, the British university system is a sinking ship. It is a broken business model that’s been held together with duct tape for too long. The question is no longer if it will collapse but when. And when it does, the fallout will be immense—not just for the universities themselves but for the students, the staff, and the local communities that rely on them. If the government doesn’t act soon, they may find themselves dealing with an academic Armageddon of their own making. But, perhaps that’s the plan all along—after all, if you can’t fix the problem, just let it crumble.