Written by Rob Hawkes and Scott Ferguson
Universities in the UK are in crisis. Job cuts in the sector are reaching ‘cataclysmic’ levels, with an estimated 10,000 already lost and many more at risk. Just days before Christmas, Coventry University confirmed shocking plans to make nearly 100 redundancies while transferring remaining staff to a subsidiary company on poorer terms and conditions. Such cuts harm the faculty and staff leaving the higher-education system as well as the diminished departments and institutions that remain. Downsizing higher education in the name of corporate efficiency squanders the collective expertise and experience in which immense public resources have been invested. This manufactured crisis, however, is far from inevitable. The time has come to revitalise higher education funding in the UK by extending what Cornell legal scholars Robert Hockett and Saule Omarova call ‘the finance franchise’ to universities.
Mischaracterised by university leaders as financial ‘saving’, austerity is in truth vandalism. It ravages decades of training, accrued and accredited knowledge, and publicly funded research. It abandons generations of students as the campuses and scholarly communities we invite them to join become, in multiple senses, impoverished. The fact that the asphyxiation of the British higher education does not instantly count as a national scandal underlines the extent to which the austerity mindset continues to constrain our political imagination: even when the collapse of higher education is perceived as a problem, policymakers, academics, and the communities they serve are left with little recourse. One can only despair at the lack of viable alternatives.
The immediate cause of the present catastrophe is a broken funding model. This model is based principally on tuition fees, financed by publicly provisioned student loans. Such fees rank among the highest in the world. The system is fundamentally unjust because it individualises the responsibility to fund higher education rather than treating it as a collective treasure. It also places the stability and supposed viability of courses of study, departments, institutions, and entire academic disciplines at the whim of a government-manufactured market. The Labour Party previously committed to eliminating tuition fees for universities. Keir Starmer’s Labour, however, dropped its pledge to scrap fees in England before the 2024 general election and, since entering government, has opted to increase fees for the first time since 2017.
While student-based financing of higher education is the proximate cause of the present predicament, the roots of the crisis penetrate deep into the collective psyche. At its core, the current disaster stems from a deceptive Thatcherite conceit: ‘There is no such thing as public money; there is only taxpayers’ money.’ Such thinking is fantastical. It is also false. The private money paradigm essentially wishes away the British pound’s institutional foundations in the public sphere–namely, in Parliament, the Bank of England, and the Royal Mint. Instead, it imagines that the pound rises up from private individuals, as in the misleading myth that money originates in barter between otherwise unrelated agents. Thus beneath this twisted logic lies another Thatcherite pretense: There is no such thing as society; there are only individuals and their families.
Those who oppose the current system of fees and loans regularly argue that the university system is a public good. We agree wholeheartedly. Yet in adopting the private money paradigm, the very same defenders of public education presuppose that the only alternative to the existing university loans system is one in which higher education is funded by the taxpayer. The trope of taxpayer money is the lynchpin in Thatcher’s private money paradigm. It upholds the backwards idea not only that fiscal outlays merely recycle private pounds, but also that the public good is somehow a burdensome drain on scarce public resources. The result pits communities against one another in a struggle over limited finances and frequently does so along conspicuously classed, gendered, and racialised lines.
The reality–call it the public money paradigm–is just the reverse. Society exists. Contra libertine reveries, community is in fact inescapable. Money is a public good. The monetary system is a function of government, which can grant money-creation privileges to private banks and financial institutions. State capacity to finance public institutions is inexhaustible. In the words of John Maynard Keynes, ‘Anything we can actually do, we can afford.’ Taxation controls the distribution of wealth. At bottom, however, state spending never rests on private profit. This means that an impoverished public good such as the present higher-education system reflects an impoverished public imagination. Far from necessary medicine for economic ills, austerity answers injury with violence, attacking our capacity to provision and to hope.
Now is the moment to think boldly and creatively about the financing of British universities. If higher education genuinely matters, then the state possesses all the monetary power needed to support it. The question is not if, but how.
Practically speaking, Britain has any number of options at its disposal. The most conventional approach is, of course, for Parliament to provide funds by way of legislative appropriation. In addition to stemming recent and proposed cuts, such legislation would expand higher-ed provisioning where it is needed. Labour could also renew its pledge to eliminate tuition fees and shift the burden of payment from private to public.
A second, more daring option is a public franchise model, elsewhere dubbed the uni currency project. According to this model, Parliament extends public money creation powers—Hockett and Omarova’s ‘finance franchise’—directly to the British university system. In this scenario, British universities would function much like banks, creating credit as needed in response to shifting needs and demands. As with private banks, university liquidity would be backstopped by the Bank of England, only in this case, universities would not generate money as private loans in order to turn a profit. Instead, universities would structure uni credit in the form of public grants payable to academic facilities and units charged with fulfilling specific academic missions and projects.
In addition to eliminating tuition fees and repudiating austerity, a uni public franchise model for higher ed would go a long way to democratise university finance. First, putting budget decisions in the hands of universities stands to make such institutions more responsive to local circumstances. Second, the university finance franchise occasions opportunities to involve faculty, staff, students, and community stakeholders in establishing budgeting priorities. Third, liberating finance from hard monetary constraints promotes free thinking and debate across universities, in part, by widening job security and benefits to include all workers on public campuses and ending casualisation once and for all. The aim of the public franchise model is not to license willy-nilly cronyism or court moral hazard. It is to develop a new system of democratic accountability designed to cultivate talent, innovation, and problem-solving for the public good.
A key challenge for transforming higher-ed finance is revising how we account for the university in crisis. When a student takes up study at a university, our current system accounts for their participation as if it were a cost or a liability rather than a benefit or an asset. We ask who should bear this cost rather than reckoning with the collective social benefits of education. We decide that the individual who studies must pay, in the future, via an interest-bearing loan. Likewise, university leadership counts the academic experts they employ as burdensome costs that, when faced with budgetary obstacles, must be efficiently trimmed. Rather than genuinely ameliorate extant problems, this type of accounting merely facilitates the managed decline of the education sector.
The public-money paradigm, by contrast, enables us to account for the present situation differently. Indeed, we can tell another story, if we wish. Even now, undergraduate courses are provisioned and financed by a government-owned public body, which transfers funds directly to universities when students join their academic communities. This enables a process that educators and educatees the world over recognise as enriching. As all involved in higher education well know, students gain far more than mere subject knowledge or transferrable skills. Moreover, these gains do not end on graduation day. According to Judith Butler, ‘[A]s we leave the university,’ we take our ‘critical practices with us onto the street, into those spaces of work and love, and into our public lives.’ A university, in other words, does not exclusively benefit students. It is a locus of civic uplift and transformation. That we ever came to understand the gifts of higher education as unaffordable liabilities is absurd.
At this hour of profound crisis, no options should be off the table, including the extension of the finance franchise to universities. In view of the cataclysmic failures of the present system and the dearth of alternative proposals, it is time to unleash the public credit that has always been at the heart of higher education and to recognise its potential to arrest the current crisis and to advance the public purpose.
Unless we change course, British universities will no longer function as the community anchors they are today, nor will they continue to foster the attitudes of open-ended inquiry for which they are rightly championed or pioneer the solutions we desperately need to local, national, and global challenges.
Unless we are open to new approaches to university finance, we will remain trapped by the austere logics that are destroying our cherished institutions.
Unless we are willing to act imaginatively and fearlessly to save our universities now, we will soon find that there is nothing left to save.
* Every UK news outlet to which the authors sent this essay declined to publish it.