Sheffield Hallam bowed to Chinese pressure with just 73 students enrolled as UK universities face structural funding crisis
Documents reveal university closed research unit after state security threats despite trivial Chinese student numbers, exposing how funding model creates foreign interference vulnerabilities
Sheffield Hallam University enrolled 73 Chinese students in 2024/25. That same year, after Chinese state security officers threatened staff in Beijing, the university shuttered its internationally recognised forced labour research unit, dismissed the entire team, and returned research funding.
The numbers don't add up. Seventy-three students don't constitute a lucrative market worth sacrificing academic integrity to preserve. Yet internal documents obtained through legal requests reveal the university explicitly traded research independence for what it called "the business in China." The puzzle exposes something more troubling than institutional cowardice: two decades of frozen domestic tuition fees have created structural vulnerabilities that allow foreign states to intimidate British universities regardless of how many students they actually enrol.
This isn't about protecting revenue. It's about avoiding reputational damage in international student markets where universities compete desperately for survival.
Professor Murphy's research traced supply chains in solar panels, car parts, and cotton to identify potential Uyghur forced labour in Xinjiang. Parliaments across the English-speaking world cited her work. She'd taken a career break to help the US Department of Homeland Security implement its Uyghur Forced Labour Prevention Act. The research carried international weight - which made it dangerous.
China's response was systematic. Three National Security Service officers visited Sheffield Hallam's Beijing office in April 2024. They questioned staff for two hours and demanded the research stop. The tone was threatening. In subsequent visits, officers explained that blocked university websites and disabled email systems stemmed from the Uyghur research being online. Chinese students couldn't access enrolment systems or course information.
An internal email from July captured the calculation: "Attempting to retain the business in China and publication of the research are now untenable bedfellows." In September, Sheffield Hallam told security officers it wouldn't publish the final phase. Documents noted that "immediately relations improved and the threat to staff wellbeing appears to be removed."
A defamation lawsuit complicated matters. Smart Shirts Ltd, a Hong Kong supplier, claimed it was defamed in a December 2023 report. A preliminary High Court ruling found the report defamatory, though full trial proceedings where Sheffield Hallam can defend itself have not occurred. The university's insurers withdrew coverage for any defamation claims linked to its entire Social and Economic Research Institute. When Professor Murphy returned from her career break in early 2025, administrators told her she could "not continue with her research into supply chains and forced labour in China."
She initiated legal action under the Higher Education (Freedom of Speech) Act 2023. After obtaining documents showing internal deliberations about Chinese state pressure, she told the BBC the university had "negotiated directly with a foreign intelligence service to trade my academic freedom for access to the Chinese student market." Sheffield Hallam apologised and said she could resume work. The structural conditions that created the problem remain.
How universities became financially dependent
Two decades of funding policy created these vulnerabilities. Domestic undergraduate tuition fees have been frozen at £9,250 since 2017. In today's prices, that's £6,200 - the lowest per-student funding since the mid-1990s. Universities lose approximately £2,500 on each domestic student.
This isn't temporary. The Institute for Fiscal Studies calculated that if the freeze continues, overall resources per domestic student would be 25% lower by 2029 than in 2012. The Office for Students projects nearly half of all institutions will run deficits in 2024/25. Over 60 universities have rolled out redundancy programmes. Half have closed courses to reduce costs - a figure that doubled in one year.
International students became the solution. Chinese students alone pay £2.3 billion annually to UK universities. At University College London, they represent 40% of total fee income, up from 14% seven years earlier. Southampton: 38%. Sheffield: 37%. At taught postgraduate level, the dependency reaches extremes. Southampton derives 79% of its taught postgraduate income from Chinese students. Sheffield: 71%. Manchester: 67%.
Mark Corver, managing director of dataHE, calls this "super-dependency" placing universities in "new territory in terms of financial risk." He notes that such exposure "is hard to believe individual universities choose this path because they thought it was a good idea. These dependencies are yet another example of the distortion brought about by heavily suppressed funding levels for home students."
The House of Commons Public Accounts Committee warned in June 2022 about financial risks from over-optimistic assumptions about international student growth. The Office for Students flagged "overreliance on overseas fees" as a vulnerability. Yet the arithmetic offers no alternative. Universities cannot survive on domestic fees alone.
Legislative protection without economic foundation
The Higher Education (Freedom of Speech) Act 2023 was designed for exactly this situation. Passed in May 2023 after high-profile academic dismissals, it strengthens universities' duties to protect freedom of speech and academic freedom. The Office for Students can levy fines. Professor Arif Ahmed, formerly of Cambridge, serves as Director for Freedom of Speech and Academic Freedom to monitor compliance.
The Act's core provisions came into force in August 2025 after Labour paused implementation for review. Critical enforcement mechanisms remain missing. The complaints scheme allowing academics to seek redress won't be operational until decade's end. The statutory tort provision allowing direct lawsuits was scrapped as creating disproportionate costs for struggling institutions.
Professor Murphy's case demonstrates the gap between legislative intent and practical utility. Her solicitors cited the Act in pre-action letters, arguing that insurance concerns and vague safety worries don't give universities carte blanche to restrict freedoms. The legal threat worked - Sheffield Hallam apologised. But this required an academic willing to initiate costly legal action, navigate complex information requests, and fight her employer. Most won't or can't.
Universities are taking the Act seriously, says Smita Jamdar, head of education at Shakespeare Martineau law firm: "I have never seen as much activity in the sector to get on top of a legal change." Yet the University of Sussex case - a £585,000 fine after three-and-a-half years investigating professor Kathleen Stock's treatment - shows how slowly enforcement operates.
The fundamental problem: legal duties cannot override economic imperatives. When universities face deficits and depend on international students for survival, how does a regulator compel them to maintain research that threatens recruitment? The Office for Students can fine institutions for breaching free speech duties, but imposing financial penalties on failing universities creates an obvious contradiction. The Act establishes that universities must protect controversial research. It provides no mechanism for them to afford doing so.
Why Sheffield Hallam isn't alone
Sheffield Hallam's vulnerability didn't stem from protecting existing revenue. With only 73 Chinese students, direct financial loss was negligible. The threat was reputational contagion.
Being publicly known as the institution where China blocked website access, where National Security Service officers interrogated staff, where research offended Beijing - this creates damage across international student markets. University recruitment operates through complex networks of agents, student forums, social media, and word-of-mouth spanning Asia and beyond. Institutions compete frantically for international students because so many face deficits without them. Being marked as "unwelcoming" to students from any major source country creates competitive disadvantage everywhere.
The pressure mechanism is subtle but effective: universities fear not Chinese student loss but being identified as difficult or controversial in markets where they desperately need recruitment from all sources to remain solvent.
Broader patterns add context. Thirty Confucius Institutes operate on university campuses, though government stopped direct funding in September 2024. UK-China Transparency found that Confucius Institute staff were recruited based on ability to enforce "CCP discipline" in the UK. Civitas identified £122-156 million in Chinese funding to UK universities between 2017 and 2022, with £19-30 million from US-sanctioned sources.
In 2022, over 1,000 scientists and postgraduate students were barred from UK work on national security grounds, part of a crackdown on research collaborations with China. The Intelligence and Security Committee branded China as targeting the UK "in its efforts to build global support for its core interest." Former Foreign Secretary David Lammy warned his Chinese counterpart that the UK wouldn't tolerate attempts to suppress academic freedoms after learning of the Sheffield Hallam case.
Baroness Helena Kennedy, patron of the centre bearing her name at Sheffield Hallam, stated that UK universities are "vulnerable" to pressure from China because "bringing in Chinese students is one of the ways of dealing with the financial crises that universities are facing." Jo Grady, general secretary of the University and College Union, called it "incredibly worrying that Sheffield Hallam appears to have attempted to silence its own professor on behalf of a foreign government."
The structural vulnerability persists because the underlying funding crisis does.
How other countries bridge the gap
International comparisons reveal what's missing: alternative funding or explicit government backing when universities face economic retaliation for security decisions.
Canada banned research collaborations with over 100 Chinese, Russian, and Iranian institutions connected to military or intelligence agencies in 2024. A Public Inquiry into Foreign Interference found China had undermined public confidence in Canadian democracy and targeted diaspora groups including students. Canada created a National Counter Foreign Interference Office and passed legislation establishing a foreign agent registry. Crucially, Canadian universities aren't systematically losing money on domestic students whilst depending on international fees for survival.
Australia established its University Foreign Interference Taskforce in 2019, developing guidelines to help institutions assess and manage risks. The Australian Research Council strengthened research security processes in July 2024. ASIO, Australia's security intelligence organisation, has disclosed awareness of espionage attempts targeting the research sector. Unlike the UK, Australia approaches research security as a government-university partnership with clear institutional support.
The Netherlands proposed legislation to security-screen every foreign researcher. The United States requires federal research funding applicants to comply with strict disclosure guidelines on foreign partners. These frameworks share a common element: they don't ask universities to simultaneously be financially self-sufficient through international recruitment AND immune to pressure from major source countries.
The UK imported the security concerns whilst maintaining the funding crisis. This makes effective protection nearly impossible. Universities must recruit internationally to avoid insolvency, creating dependency and vulnerability, inviting pressure, which legislation attempts to prevent through duties and penalties on already stressed institutions. The circularity is inherent to the model.
The unresolved tension
The Freedom of Speech Act may create perverse incentives. If institutions face fines for failing to defend academic freedom, the safest strategy is not hiring researchers in sensitive areas. Professor Murphy noted that other universities aren't hiring for positions in her field. The Act protects academic freedom retroactively through complaints and enforcement. It does nothing to encourage universities to take on research that will predictably attract foreign pressure.
Sheffield Hallam apologised. Professor Murphy resumed work. The structural conditions remain unchanged. Universities still lose £2,500 per domestic student. Chinese fees still represent £2.3 billion annually. The Freedom of Speech Act's enforcement won't be operational for years. The contradiction persists: universities told to be self-sufficient through international recruitment whilst maintaining independence from source countries that could retaliate.
Questions remain unresolved. Would increased domestic funding make universities more resistant to pressure? Could targeted government insurance for research-related retaliation work better than legal duties? Is Sheffield Hallam an outlier, or are similar pressures operating invisibly across the sector?
Legal protections for academic freedom remain aspirational without addressing the funding crisis that creates dependency. The question isn't whether individual institutions can be compelled to protect controversial research. It's whether the UK will fund universities adequately enough that they can afford to. Until that's answered, universities will navigate impossible trade-offs between survival and independence - with predictable results when those imperatives conflict.
