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A combination of demographic decline and predatory recruitment practices puts the entire English higher education sector at risk, argues a new research report from the Higher Education Policy Institute (HEPI).

The report shows that the young population, from whom 80% of undergraduate students are recruited, will decline rapidly after 2030 – and within 10 years the income universities earn from this source will, overall, decline by nearly 20%.

Nick Hillman, director of HEPI, said: “The coming demographic drop is among the biggest of the many pressures facing higher education institutions.

“Every single university manager and governor needs to think about what their institution will look like and whether it can even survive in the coming 2030s.”

However, the report – Demographic Decline and Predatory Recruitment: The twin threats to English higher education into the 2040s (HEPI Report 201) by Bahram Bekhradnia – says this decline will not be evenly felt, with less prestigious universities facing greater problems.

A declining fee value problem

This is because over the past decade, the real value of the student fee has reduced by between 25% and 30%. In response, the most prestigious universities (those designated ‘higher-tariff’ by UCAS, the Universities and Colleges Admissions Service) have been recruiting students whose school achievement is lower – in some cases much lower – than they would previously have considered.

In doing so they have increased their own intake but reduced the pool of students who might otherwise have attended other universities, the report says.

While the 18-year-old population was increasing, as it will continue to do for four more years, some of the non-higher-tariff universities have maintained their numbers, although many have not.

However, when the demographic decline sets in after 2030 and if the higher-tariff universities continue their recent recruitment practices, the rest of the sector will face real problems, the report says.

Bekhradnia, president of HEPI and author of the report, said: “This analysis tells a very serious story which needs to be taken seriously by policymakers and by those who govern and run universities.

“HEPI’s engagement with many governing bodies around the country suggests this reality is not being taken into account as future plans are made.”

Rising costs and falling revenue

The warning comes in the same week that Universities UK survey data reveal that universities are already taking significant cost-cutting measures and looking at more ways they can respond to declining revenue, caused by the long-term falling value of tuition fee revenue in real terms, rising costs and the impact of tighter rules on international student recruitment.

Staffing has become one of the most common areas of cost saving, with 79% of universities pursuing voluntary redundancies and 79% implementing hiring freezes or pauses to recruitment over the last three years, the survey found.

Student-facing funding cuts increased from last year’s survey, with 27% slashing student bursaries and scholarships, up from 15% in 2025 and 13% cutting hardship funding, up from 9% in 2025.

Almost a third of institutions, 31%, reported making cuts to academic research activity in the last three years, up from 14% in 2024.

Just under half of universities reported having reduced their course offering through consolidation (46%) or course closures (44%) over the past three years.

Operational cutbacks remain common across the sector, with over half (54%) cutting back on repairs and maintenance. Also, 13% of institutions have closed campuses in the past three years and 29% would consider doing so in the future.

However, population decline was not listed as a key cause, suggesting that when it occurs it will pile on new financial pressure.

In the UUK survey, almost all respondents report being impacted by government policy changes, cost inflation and wider financial pressures.

The most cited negative impacts on institutional finances were increases to employer national insurance contributions (79% of institutions), changes to international student recruitment (67%) and pay and non-pay cost inflation (65%).

Course closures and staff redundancies

On Wednesday, the University of Sussex announced 200 job cuts, as part of a plan to save £35 million (US$47 million) annually, the BBC reported, with the university’s vice-chancellor, Professor Sasha Roseneil, explaining that “very difficult decisions” were needed to “address the financial sustainability crisis affecting UK higher education”.

Last Friday the University and College Union protested against plans by the University of Nottingham to axe more than 700 staff and close 42 courses.

Commenting on the survey findings, Universities UK Chief Executive Vivienne Sterne said: “Course closures, staff redundancies and reduced research, which ultimately hit students, local economies and national prospects for growth cannot continue to be the only solution to the sector’s financial challenges.

“If the government is serious about driving growth and ensuring that the opportunities that universities create for people all over the UK remain in place, we need smart investment into higher education.”

Most universities are already looking at ways to save costs by working collaboratively, with 81% considering digital transformation, 71% open to shared procurement options and 65% considering collaborative structures such as federations and alliances, the survey found.

Currently, only a small minority have already pursued large-scale structural change such as mergers or acquisitions with another university – but the survey shows that two in five institutions are open to or actively considering mergers or acquisitions with other universities in the future.

Demographic pressure deepens crisis

The HEPI report on demographic decline makes especially grim reading for less prestigious universities already facing drastic financial pressures.

The report offers three scenarios in relation to the impact of population decline, in all of which the non-higher-tariff universities suffer significant losses and in two – those considered most likely – they will lose over 25% of their undergraduate student income.

That would be unsustainable and “perfectly good universities – institutions that are doing an excellent job and adding real value for the students they recruit and the regions they serve – may fail,” the report says. As a resul,t “a critical part of the national infrastructure will be damaged”.

The report concludes that policymakers have a choice – to allow such an outcome by letting the market alone determine the future shape of higher education or to impose a limited curb on the extent to which higher-tariff universities are able to expand their student intake – mirroring student number controls implemented in the 1990s.

Bekhradnia said: “The numbers are not negotiable. The forthcoming decline in the young population will almost certainly mean a decline in student numbers and therefore in income and in certain scenarios the decline in income of the non-high-tariff universities could be in the order of 29%.

“That is not sustainable and would lead to the failure of multiple universities.”

He said the higher-tariff universities cannot be blamed for seeking to protect their income, but policymakers will need to decide whether the consequences described in this report will be acceptable.

“The alternative is some form of student number controls imposed on individual institutions.’

Research universities defend choice

Responding to the report, Libby Hackett, chief executive of the Russell Group of leading research universities, pushed back against the suggestion of returning to student number controls.

“It’s vital to preserve student choice and access to high-quality courses. Blunt recruitment caps would harm student aspiration,” she said.

“We remain confident our admissions processes effectively identify students with the potential to succeed on our competitive courses. With excellent teaching and support, these students get great results with life-changing impact.”

She said 80% of Russell Group graduates work in highly skilled jobs within 15 months of graduation, primarily in high-growth sectors.

“Changing recruitment patterns reflect students making informed choices about where they believe they will get the best outcomes. “

She said the HEPI report underlines the deep-rooted financial pressures facing the sector.

“The long-term solution, however, is not to introduce draconian measures and central planning but rather to focus public funding on supporting high-quality, high-value provision across the sector wherever it exists. This will support better graduate outcomes and enable universities to continue contributing to the UK’s workforce, growth and global reputation”.

Key findings

The key findings of the report are:

• Unless the proportion of the young population opting to go to higher education increases – which there is no sign of at present – if anything the reverse – then the population decline from 2030 will mean a reduction by the late 2030s of nearly 20% in the number of students and therefore in the principal income source of the majority of universities.

• In recent years, and in order to maintain their income, higher-tariff universities have increased their recruitment of students with the equivalent of three A-Levels at grade B and lower. These now represent nearly 30% of all students recruited to higher-tariff institutions – double the 15% of such students recruited in 2016. Put another way, the percentage of all students with the equivalent of three Bs and lower at A-level now attending higher-tariff institutions has risen from 22% in 2016 to 30%, an increase of more than one third.

• This recruitment has been at the expense of non-higher-tariff universities, which collectively have struggled to recruit despite the young population increase.

• If recent experience seems likely, higher-tariff institutions seek to maintain their income by recruiting increasing numbers of lower-achieving students, then non-higher-tariff institutions will, on average, lose up to 29% of their income from home undergraduates.