University closures could “become common” if funding is not improved for the higher education sector, a former vice chancellor has warned.

The budgets of English universities are under “intense pressure” and “painful choices” are already being made, according to a report published by the Higher Education Policy Institute (Hepi) think tank.

The report – authored by Professor Sir Chris Husbands, former vice-chancellor at Sheffield Hallam University – highlights the challenges facing universities as a result of frozen tuition fees for home students, visa restrictions on international students and “structural flaws” in research funding.

In the paper, published ahead of the General Election, Sir Chris, who stepped down as vice chancellor of Sheffield Hallam in December, sets out four possible scenarios for the future of English higher education and looks at what they could mean for students and universities.

In the first scenario  – which considers what happens on the current funding trajectory – Sir Chris warns that “university retrenchment, institutional mergers and failures become common”.

If the next government does not make undergraduate tuition or maintenance funding better, does not tackle flaws in research funding, and visa restrictions on international students remain then the number of institutions could fall and the sector may become “adept” in managing market exits, the report said.

The report, sponsored by the Policy Institute at King’s College London (KCL), suggests that an alternative scenario – where the sector is fully funded for high participation, research and innovation – would allow institutions to plan long-term investments in their communities and regions.

In the paper, Sir Chris said: “Scenarios 1 and 2 are, of course, extremes. Scenario 1 paints a picture of the higher education sector in England if government does not confront policy choices for universities and sees the sector spending the next decade responding to the consequences.

“Scenario 2 paints a picture of a financially secure sector. If it appears politically and economically unlikely, it is not too far from the policy positions of the main sector representative bodies looking for sustainable student fees, investment in the full costs of research and flexibilities in the international student market.”

He added: “The shape of higher education in 2024 is a consequence of previous interactions between universities and policy. It could – and will – change.

“Whoever wins the election on July 4 will need to think hard about the higher education the country needs and is willing to support.”

In a foreword to the report, Professor Shitij Kapur, vice-chancellor and president of KCL, said the “funding crisis” facing the higher education sector needs urgent attention by the next government.

He said: “UK universities are held in high esteem all over the world – envied for their excellence and widely emulated.

“But despite their stellar reputation, they are currently experiencing some of the greatest funding challenges and most strident questioning of their role that they have ever faced.”