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Undergraduate tuition fees will be worth just ?6,700 a year compared with their value in 2012, when ?9,000 tuition fees were introduced, new analysis suggests.

This is about two-thirds of the sticker price of the uplifted ?9,535 fee that comes in this autumn.

Although?the first tuition fee rise in eight years will take effect?across UK universities in September, statistical analysis by the Russell Group ?on 16 July shows that the real-terms value of the annual tuition fee has now fallen about 26 per cent since 2017 ¨C the year when tuition fees last rose from ?9,000 to ?9,250.

That fall in value has been particularly steep since 2022-23, as inflation grew and fees remained static, with the real-terms value of fees dropping from about ?7,500 a year, explains the study.

In addition, the value of the Strategic Priorities Grant (SPG), which supports student success and high-cost teaching in priority subjects, has also decreased sharply in real terms,?according to?the report, which explains how the fund¡¯s increase from ?1.29 billion to ?1.35 billion between 2018-19 and 2025-26 masks a real-terms decrease of 19 per cent when accounting for inflation.

Research funding has also faced similar financial pressures, with a 15 per cent real-terms decrease in quality-related research funding, says the report.

With falling cost recovery on research grants, down from 78 per cent in 2011-12 to 69 per cent in 2022-23, universities have increased their investment in research significantly, says the report, stating that institutions¡¯ own spend on research increased from ?3.9 billion in 2016-17 to ?6.2 billion in 2023-24.

At the same time, universities are also under more financial strain following reduced numbers of international students at many institutions, explains the report. Coming interventions are?set to?exacerbate?the financial pain, with the proposed 6 per cent international fee levy set to cost?Russell Group?universities ?315 million, more than half the sector total and more than they spend annually on outreach (?250 million).

Reiterating the Russell Group¡¯s call for improved university funding, Hollie Chandler, the group¡¯s director of policy, said the upcoming rise in tuition fees for the coming academic year was a ¡°welcome move but these figures demonstrate the size of the challenge we still face¡±.

¡°The rise does not make up for close to a decade of frozen fees, a period that has also seen high inflation, rising operational costs and decreases in government funding,¡± said Chandler.

Explaining how the ¡°funding gap¡± was?inhibiting universities¡¯ potential to address government priorities for research, economic growth and social mobility, Chandler said it was vital for the shortfall to be addressed.

¡°Universities are doing all they can to mitigate financial pressures but without action from government, difficult decisions around course provision and research investment are becoming unavoidable,¡± she said.

¡°We want to work in partnership with government to develop a sustainable funding plan and stable policy environment. Increasing per-student funding through the SPG and raising tuition fees by inflation each year to prevent further erosion ¨C along with greater maintenance support for students ¨C would be a fair and reasonable step, and a statement of positive intent as government considers long-term reform for the sector,¡± added Chandler.

jack.grove@timeshighereducation.com