As the dust settles on the 2025 spending review, many in the UK’s university sector are left wondering whether the path ahead is any clearer…
For those unfamiliar, the spending review is the UK Government’s process for setting budgets for all its departments. Typically, spending reviews provide multi-year settlements – like this year’s which has set day-to-day spending limits through to 2028–29 and capital investment budgets through to 2029–30.
The last multi-year spending review in the UK took place in 2021 under the previous Conservative government and in the wake of the global Covid-19 pandemic. This year’s spending review, therefore, marked a significant moment for Chancellor Rachel Reeves: her first opportunity to align the national budget with Labour’s “Plan for Change” and its ambitions for economic growth.
While the Chancellor’s spending review speech is usually a headline event, this year’s announcements were heavily trailed in advance – perhaps to soften the blow for sectors like higher education, where little new support was forthcoming.
Prioritising or plateauing?
In the run-up to the speech, much was made of the government’s prioritisation of research and development (R&D), a cornerstone of excellence in UK universities. However, the promised “above-inflation increase” in R&D funding seems to amount to little more than a real-terms freeze on government research expenditure, raising doubts about its commitment to enhancing the global competitiveness of UK science.
Despite referring to UK universities as “world-class” and reaffirming the government’s pride for them, the Chancellor made no further mention of higher education in her speech. This omission is striking, especially given the government’s stated intention to reform post-16 education in England later this year. In fact, some of the most telling messages for the sector came not from what was said, but from what was left unsaid on the day.
Where have the students gone?
One glaring omission was any reference to students. Without additional funding for student maintenance packages – which are already insufficient to cover the full cost of living while at university – the financial pressures on domestic students remain unaddressed. While the Chancellor looked pleased to announce a ban on zero-hours employment contracts, she failed to acknowledge that such contracts often provide students – both domestic and international – with the flexibility to balance work and study. This need was underscored by the 2025 HEPI/AdvanceHE Student Academic Experience Survey, which revealed that 68% of students at UK universities now work for pay during term time to subsidise their living costs.
The growing financial pressures on students may also explain the government’s “intention” – buried in the spending review documents – “to explore introducing a levy on higher education provider income from international students”. While the accompanying spending review document confirms the government is committing to reinvest the proceeds into the higher education and skills system – thereby allaying fears that any income generated could be lost to education altogether – the proposal still raises several concerns.
A divisive proposal
First, the use of the term “provider” suggests the levy would apply only to English institutions registered with the Office for Students. Unless the devolved administrations in Scotland, Wales or Northern Ireland plan to follow suit and adopt similar measures, this could create a pricing imbalance across the UK’s higher education sector, putting English institutions at a disadvantage for price-sensitive students.
Second, if the levy is applied by the treasury UK-wide but the income is to go to the Department for Education to be redistributed solely within England, then it risks being seen as both unworkable and unfair. It doesn’t take much to work out why the Government has given itself until the autumn to work through the details of this divisive proposal.
The waiting game continues
In sum, the 2025 spending review offered few surprises but plenty of signals. For UK universities, the message is clear: while the government continues to praise the sector’s global standing, meaningful investment and reform remain elusive. The lack of attention to student support, the ambiguous approach to international student income and the effective flatlining of R&D funding all point to a growing disconnect between rhetoric and reality.
As universities in England, at least, await further details on post-16 education reform, it seems they must prepare to navigate a landscape shaped more by omission than ambition.
