The Department for Education (DfE) has confirmed that the Office for Students (OfS) will face a £108 million reduction in its Strategic Priorities Grant for 2025–26, cutting the higher education funding pot to £1.348 billion.
A further £84 million in capital funding will be made available for growth in priority subject areas.
Whilst the funding is aimed at supporting strategically important high-cost subjects such as nursing and midwifery, promoting equality of opportunity, and backing world-class specialist institutions, the overall reduction adds further strain to an already embattled higher education sector.
“This funding… supports nationally important subjects… and helps ensure students from all backgrounds are able to access higher education and succeed in their studies.”
John Blake – Director For Fair Access & Participation, OfS
However, sector leaders are sounding the alarm over long-term sustainability.
Vivienne Stern MBE, Chief Executive of Universities UK, described the situation as unprecedented:
“Funding per student has declined by about a third in the last decade… Today’s announcement removes a further £100m from the English sector, making an already difficult situation worse.”
Stern also highlighted that this latest reduction follows last week’s proposal of a potential £600 million tax on international student income, a critical revenue stream for many institutions.
With mounting pressures from falling international recruitment, rising employment costs, and research underfunding, institutions are being forced to make significant cost-cutting decisions.
This latest funding news underlines the urgent need for universities to explore efficiencies, embrace digital transformation, and seek partners who can help them adapt to changing landscapes, without compromising on the quality of education or student outcomes.
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