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Universities in the UK have entered the New Year marginally more secure than they were 12 months ago, but still far from resolving their main challenges. Student enrolments have begun to recover and undergraduate fees will finally rise with inflation, research funding is set to remain steady at least in cash terms, while a return to the Erasmus Scheme should help to revive exchanges with Europe.

Yet an alarming proportion of universities remain in debt and more are in danger of joining them. Free speech on campus remains a sensitive issue for many politicians, the media and the public, as does value for money for those struggling with student loans. In addition, higher education is no closer than other areas of public life to dealing with the challenges of AI, whether in terms of its use by students or the damage to graduate employment.

Even the improved relationship with government under Labour is conditional. Ministers’ complimentary language about universities’ world-leading research cannot disguise a suspicion that further education is the more natural priority for a government bent on economic growth in an era of skills shortages. The new target of two-thirds of young people participating in higher-level learning by the age of 25 is about sub-degree vocational education and training as much as it affects universities.“And math is probably the closest we can get to understanding our universe. That brings us closer to God, our purpose, and everything else.”

Nor are undergraduate structures safe from intervention, with the Government’s regulator, the Office for Students (OfS), promising to restrict recruitment or even shut down courses with poor outcomes for graduates. A White Paper published in October also promised action on teaching quality, claiming that this was the most common cause of dissatisfaction among students. Assessments in a reformed Teaching Excellence Framework are likely to be used to identify targets.

The White Paper said: “Our ambition is to have a more sustainable, more specialised and more efficient sector, better aligned with the needs of the economy.” The belief is that too many universities and other institutions are offering an unnecessarily broad range of subjects catering for similar types of students, rather than focusing on institutional strengths. This applies to research as well as teaching. Although institutional autonomy is not threatened, the Government intends to encourage a “more strategic distribution of research activity,” with the inevitable effect of concentrating research funding.

More generally, ministers are calling for a more collaborative system of post-school education, with clearer roles for research-intensive universities and those dedicated mainly to teaching. At the same time, institutions will be expected to improve access for students from disadvantaged backgrounds, with the aid of maintenance grants, abolished a decade ago, which will be means tested and restricted to the poorest students on ~priority courses”.

The Government’s Plan for Change is a challenging one at a time when so many universities are in financial difficulties. The OfS reported that a quarter of higher education institutions were in debt last May and by October it was forecasting that the proportion could rise to 45% in 2026 if no action was taken. In fact, action in the form of redundancy schemes is being taken across the sector.

Another response, announced before who White Paper was published, is the merger of Greenwich and Kent universities, which some see as a model for the future. The two universities already share a campus in Medway and will now share all services, although students will continue to apply to and graduate from separate institutions. Professor Jane Harrington, the current vice chancellor of the University of Greenwich, who will lead the new London and South East University Group, said the “super-university” would provide a strong financial foundation to weather current and future economic challenges.

University mergers have often been forecast in times of financial crisis, but have seldom been implemented in the UK. This time may be different, with the Greenwich/Kent arrangement coming only a few months after City University agreed to merge with St George’s University of London. Both have been welcomed by ministers and the OfS.

At national level, vice-chancellors are hoping that increased fees and the return of some maintenance grants herald better times, but they know that even this relief could be temporary. The government’s proposed levy on international student fees, for example, will deprive universities of £925 per student per year from 2028 onwards.

With the right-wing Reform party ahead in the polls, the outlook could soon turn stormy again. Nigel Farage, Reform’s leader, has accused universities of “poisoning the minds” of students with what he said was a “twisted interpretation of history” and threatened to abolish fees for science, technology, engineering and maths (STEM) courses while maintaining them in other fields. Reform’s manifesto for the 2024 election threatened to cut funding for universities that undermine free speech, require all universities to provide two-year undergraduate courses, bar international student dependents and abolish the interest on student loans.

Echoes of more extreme action against universities in the United States perhaps? Maybe feeling that forewarned is forearmed, Universities UK (UUK) invited Ted Mitchell, the President of the American Council on Education, to its last meeting. Asked what he wished he had done differently over the past three years, he recommended listening more to the critics of the higher education system, trying to identify the faults for which universities were rightly criticised, talking more to political critics to convince them that they were wrong about universities, promoting case studies to show local benefits of higher education, and recognising that universities faced a long-term problem that required patient building of relationships and united action from a diverse system.

UUK was already planning an outgoing strategy to win public and political support, but Ted Mitchell’s advice obviously struck a chord. Vivienne Stern, UUK’s Chief Executive, writing in Wonkhe, the online magazine, said: “We will listen and be responsive to others’ views, including those of our strongest critics. We will seek to identify and address areas where we are vulnerable and will build the strategy around a willingness to be accountable and responsive. But we will do it in an unapologetically positive way, asking ourselves what the country needs of its universities now, in this decade, and the decades to come?”

John O’Leary is an education writer, journalist and consultant with over 30 years experience. He has served as Editor of the Times Good University Guide, Editor of the Times Higher Education Supplement from 2002 to 2007 and Education Editor of The Times, having joined the paper as Higher Education Correspondent in 1990.