Universities in the UK will raise tuition fees in line with inflation, but only if they meet “tough new quality thresholds”, the government announced on Monday. Education Secretary Bridget Phillipson said the change is aimed at stabilising university finances while ensuring “value for money” for students.

From the next academic year, all institutions will receive a fee increase for two years. Thereafter, annual rises will depend on meeting “tough new quality thresholds” that include strong teaching, student outcomes, and pastoral support. Legislation will be introduced to link future fee caps automatically to inflation for compliant institutions.

“Universities charge significant fees for their courses. If they are going to charge the maximum, it is right that they deliver the world-class education students expect,” Phillipson told MPs. She said the reforms will set “higher standards across our universities and colleges and a renewed focus on the skills our economy needs.”

Tuition fees in England rose for the first time in eight years this September to £9,535. However, the Office for Students (OfS) has warned that 43% of universities could face financial deficits without additional support. To ease student hardship, maintenance loans will also rise automatically each year, with larger increases for low-income households.

Phillipson cautioned that “we will not allow institutions who don’t take quality seriously to make their students pay more,” adding that underperforming universities could face regulatory or financial penalties.

The government will also tighten rules on franchising, where universities outsource teaching to partner institutions, to prevent misuse of public funds.

“Today’s white paper offers a much-needed reset for our university system. It makes clear that universities are a huge national asset, rightly admired around the world. We need them to be in great shape if we want national renewal,” said Vivienne Stern, chief executive of Universities UK.

The fee plan forms part of a wider post-16 education and skills white paper. It introduces new vocational qualifications called “V-levels” to replace about 900 existing technical courses, including BTecs. The government said the change will simplify the qualification system and strengthen pathways to employment.

Peter Urwin, professor of applied economics at the University of Westminster, warned the reforms could disrupt further education. “The government rightly suggests that the further education sector is central to social mobility. However, further disruption is the last thing that is needed, and this initiative will do nothing to tackle the high number of young people not in education, employment or training,” he said.

The white paper also proposes a new “stepping stone” qualification for students who fail to secure passing grades in GCSE maths and English, to better prepare them for retakes.

The proposals signal a comprehensive shift in England’s higher and further education policy, linking financial incentives with teaching quality while expanding vocational training options.