Many universities face a “very bleak” future as student demand for higher education could fall after 2030 due to a shrinking 18-year-old population, a report has warned.

Student demand will depend entirely on demography in the future if the higher education participation rate in England does not improve in the years to come, according to the Higher Education Policy Institute (Hepi) think tank.

Bahram Bekhradnia, Hepi president and report author, has called for some form of student number controls to ensure “universities do not go to the wall because of the predatory” behaviour of other institutions.

Between 2030 and 2035, student demand could fall by around 7%, and then by a further 12% between 2035 and 2040, the report has suggested.

The paper said: “If there is no improvement in participation then demand will reduce after 2030, implying a very bleak outlook for many universities, which will be exacerbated if some mechanism is not introduced to limit the ability of others to recruit students at their expense.”

University leaders have warned of significant financial concerns as a result of frozen tuition fees paid by domestic students and a drop in overseas students.

The previous government raised the cap on university tuition fees in England to £9,000 a year in 2012, but it has been fixed at £9,250 since 2017.

The Hepi report has suggested that prestigious universities have been “lowering their entry requirements” and widening the pool of students eligible for entry to ensure they are financially viable.

It said their actions have reduced the number of students available to be admitted to other universities and it has contributed to the “increasing numbers of universities whose financial viability is in question”.

The report said there is an “urgent national interest argument” for controlling the number of students that can be recruited by individual universities to reduce the damage that is being done to the sector.

“The country needs all its universities to thrive, not just the most prestigious which cater for a minority of students,” it added.

The paper said the recent reversal of the steady increase in the desire of young people to participate in higher education is “largely unprecedented” in the past three decades.

It added there could be “serious consequences”  if the reasons for the drop in higher education participation are “not understood and addressed”.

Mr Bekhradnia said: “It may be because of the increasing hostile environment fomented by the last government and by some of the press. Or it may be a residual impact of Covid-19.

“Whatever the reasons, unless there is an increase in the desire of young people to go to university then the future looks very bleak for many institutions.

“It may already be too late for some, but universities are an essential part of the national infrastructure, and for the sake of the country and for the sector as a whole, we need a body to safeguard the national interest.”

He added: “Some form of student number controls is required in order to ensure that perfectly good universities do not go to the wall because of the predatory – if understandable – behaviour of others.”

A Universities UK (UUK) spokesperson said: “Demand for university remains strong, and downturns in home student numbers are partly a reflection of normalisation after a significant Covid uplift.

“Students recognise the long-term benefits of a university education, which repays both the graduate and the taxpayer in the long run.

“However, universities must also respond to student demand, and changing demographics can be a catalyst for developing the Lifelong Learning Entitlement, which could potentially play a powerful role in supporting mature students acquire the high level skills the country needs.”

A spokesperson for the Russell Group said: “High-tariff universities are typically more selective in making offers compared to other parts of the sector.

“Our experienced admissions teams ensure that all students have the capability to succeed on their chosen course and this is reflected in the consistently high outcomes for our graduates of all backgrounds.”

A Department for Education spokesperson said: “We will create a secure future for our world-leading universities as engines of growth and opportunity so they can deliver for students, local communities and the economy.

“We have inherited a challenging set of circumstances in higher education. The Education Secretary has taken the crucial first step of refocusing the role of the Office for Students on key areas such as monitoring financial sustainability, to ensure universities can secure their financial health in the longer term.

“We are also determined to widen access to higher education so that everyone who wants to attend university and meets the requirements can go.”