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The UK 2004 Higher Education Act generated important debates about the relationships between higher education (HE), economic growth and social progress. The range of positions expressed in relation to the increase of annual tuition fees raises crucial questions about the public and private funding of higher education and its individual and social economic benefits. Such controversies have a strong resonance in France where discussion about HE underfunding has already emerged. This article seeks to inform these current debates by combining economic and historical perspectives within a quantitative approach. The analysis of new historical series on funding and development of UK universities since the 1920s and the comparison with similar data for France has put into evidence a long-term link between HE funding and economic fluctuations. In both countries, the expansion in university resources was not linear and may be related to the impact of long economic cycles on public funding. Moreover, in the UK case, private funding periodically increased in order to replace diminishing public funding, rather than taking the form of additional resources. In consequence, private funds did not provide an overall rise in the universities’ income. The considerable fluctuations of funding, combined with a more consistent growth of enrolment, led to a recurrent mismatch between resources for and access to higher education. This can explain the wide fluctuations of resources per student over the period and the current underfunding situation. Such historical trends question whether, in the future, increased fees will be a substitute for public spending. Or will variable fees be combined with even greater increases in public funding as part of a national project to support HE students from all social backgrounds and to boost expenditure per student?

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This paper looks at the current challenge facing higher education by exploring the historical relationship between higher education funding and long economic cycles in the UK, USA and France. It examines the consequence of the transformation of public‐private income in higher education that followed the 1970s downturn, questioning whether the rise of private resources acted as additional or substitutive resources for public spending. The paper suggests that there is a risk that the cost‐sharing strategy could be turned into a policy of public‐private substitution of funding and provision, leading to a transfer rather than an increase of resources with strong implications on quality and equity. However, the Kondratiev cycle suggests an alternative route by designating the impact of the 1970s economic downturn on education as unique. Previous economic crises were contemporary of accelerations of public funding towards education which in fact contributed to economic recovery. The current crisis could represent an opportunity to revive counter‐cyclical policy by looking not only at efficient public spending but also at developing fairer taxation. A revival of public funding complemented by an additional rather than substitutive diversification of income would rebalance the public‐private structure of funding and drive a sustainable higher education system capable of playing a key part in these counter‐cyclical transformations.