Vice chancellors across the country have been warning for years about a growing crisis in university finances. Now, the dire warnings are becoming reality.
Coventry University last week announced plans to make £95m in funding cuts over the next two years after discovering a £85m black hole in its budget.
Sheffield Hallam University has invited its 1,700 academic staff members to apply for voluntary redundancy.
The University of Aberdeen is consulting on axing single honour degrees in modern languages [or ‘is planning to’, but the consultation is still open, they have only confirmed that they will keep offering joint honours] because the income from these courses do not cover the staffing costs.
In November, the University of Staffordshire announced redundancies that mean more than one in 20 staff will lose their jobs.
Universities have begun embarking on mass layoffs and cost-cutting programmes as frozen tuition fees, high inflation, lower international student numbers and hefty staff pensions hammer the finances of higher education institutions.
Nick Hillman, director of the Higher Education Policy Institute and a former government adviser, warns of potentially thousands of job losses across the country’s universities.
The outlook is the worst since the 1980s, he warns, when Margaret Thatcher had to intervene to save University College Cardiff from going bust. For the first time in history, an institution could go bankrupt, Hillman believes.
Vivienne Stern, chief executive of Universities UK (UUK), which represents the UK’s 142 universities, says: “I’m talking to universities every day of the week and I don’t think I have come across one that isn’t making cuts of some kind.
“Not all of them are job losses, but a lot of them are. It is happening all over the sector.”
Recent announcements follow Brighton University’s decision to cut more than 100 academic staff earlier this year, including 23 who were issued with forced redundancies.
Spokesmen for Coventry, Brighton, Staffordshire and Sheffield Hallam universities said they had to take steps to make their finances sustainable.
In addition to cutting staff and dropping courses, universities are also postponing investments. Class sizes are increasing across the board, with the average student to staff ratio swelling from 15.5 to 16.9 in the seven years to 2021-22, according to UUK. Some institutions are selling everything they can, from land to artwork.
“Everybody is running a scenario where expenditure exceeds income within probably the next three years,” says David Maguire, vice chancellor at the University of East Anglia.
Maguire took over at UEA in May 2023 after the university discovered a £30m hole in its budget that it feared would balloon to £45m within three years. Falling student numbers and higher staffing costs were to blame.
He cut staff headcount through several rounds of voluntary severance and redundancies. Investment was also reduced, including cutting back on recruitment of PhD students.
Now, the UEA expects to be back in the black in two years.
Maguire warns that the whole sector will have to undergo a similar radical overhaul to survive.
“I firmly believe that the business model for universities is unsustainable in its current form, it has to change,” he says. Some universities could soon switch to online-only teaching models for some courses, he believes.
The first issue is tuition fees. These have been frozen at £9,250 since 2017. However, inflation has soared since then and pushed up wages. This makes the cost of delivering some courses loss-making in many instances.
Universities now have to cover a funding shortfall of £2,500 per English undergraduate student. By 2030, this will have doubled to £5,000.
