Vice-chancellors across the country have been warning of a growing crisis in university finances for years. Now the dire warnings are becoming reality.
Coventry University last week announced plans to cut funding by £95 million over the next two years after discovering an £85 million black hole in its budget.
< p>Sheffield Hallam University has invited 1,700 of its teachers to apply for voluntary redundancy.
The University of Aberdeen is consulting on the abolition of individual Honors degrees in Modern Languages [or “plans to do so”, but the consultation is still open, they have only confirmed that they will continue to offer joint Honors degrees] as the income from these courses does not cover the costs of staff.
In November, Staffordshire University announced staff cuts, meaning more than one in 20 staff would lose their jobs.
Universities began mass layoffs and cost cutting. program cuts as tuition freezes, high inflation, declining international student numbers and high staff pensions hurt higher education institutions' finances.
Nick Hillman, director of the Higher Education Policy Institute and a former government adviser, warns of the potential loss of thousands of jobs at the country's universities.
The outlook is the worst since the 1980s, he warns, when Margaret Thatcher had to step in to save University College Cardiff from bankruptcy. According to Hillman, for the first time in history, an institution could go bankrupt.
Vivienne Stern, chief executive of Universities UK (UUK), which represents 142 universities in the UK, says: “I talk to universities every day of the week and I don’t think that I’ve come across at least one university that hasn’t cut costs. sort of.
“Not all of them involve job losses, but many of them do. This is happening across the entire sector.”
The recent announcements follow the University of Brighton's decision to cut more than 100 teachers earlier this year, including 23 who were forced to leave.
Representatives from the universities of Coventry, Brighton, Staffordshire and Sheffield Hallam said they needed to take measures to make their finances sustainable.
In addition to cutting staff and discontinuing courses, universities are also deferring investment. Class sizes are increasing across the board, with the average student-teacher ratio rising 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 art.
“Everyone is in a scenario where expenses will exceed income, probably within the next three years,” says David Maguire, vice-chancellor of the University East Anglia.
Maguire took over as UEA in May 2023 after the university discovered a £30 million budget hole that it feared would grow to £45 million within three years. This was blamed on declining student numbers and rising personnel costs.
He reduced staff through several rounds of voluntary layoffs and downsizing. Investment has also been cut, including cuts to postgraduate student intake.
UEA now expects to return to profit within two years.
Maguire warns the entire sector will have to undergo a similar radical overhaul to survive.< /p>
“I firmly believe that the university business model as it stands is unsustainable and needs to change,” he says. In his opinion, some universities may soon switch to online models for teaching some courses.
The first issue is the cost of education. They have been frozen at £9,250 since 2017. However, since then, inflation has risen sharply and driven up wages. In many cases, this makes the cost of running some courses unprofitable.
Universities now have to cover a funding gap of £2,500 per undergraduate English language student. By 2030 this amount will double to £5,000.
At the same time that funds have fallen in real terms, demands on universities have increased. Jenny Higham, vice-chancellor of St George's University and head of funding policy at UUK, says students need more mental health support, more career support and more financial support in the face of rising rents.
There are more universities in relies heavily on higher tuition fees from international students to supplement budgets. International students are not subject to the same tuition restrictions, allowing universities to earn more.
In 2016, tuition fees for international students accounted for 13% of university revenues. That figure has since jumped to 19%.
Hillman says, “The business model of universities is that they lose money on absolutely everything except international students.”
However, now that revenue stream is at risk. Changes to immigration rules mean that from January international students will no longer be able to bring dependents with them on their visa unless they are participating in a postgraduate research programme.
This is already putting people off applying. Enrollment of Nigerian students in January 2024, who are likely to bring dependents with them, fell by 40% compared to last year, according to analysis by QS Quacquarelli Symonds, a higher education network.
The government is also reviewing the graduate program, which currently means international students can work in the UK for two years after completing their studies, or three years for postgraduate students. The threat is “toxic” for foreign applicants, Stern says.
She says, “I'm worried there's going to be a whole bunch of chickens coming home in January and February.”
To make matters worse, many universities are chained to inflated retirement accounts. Universities that were under the control of local authorities before the dissolution of the polytechnic system must offer a teachers' pension scheme.
The Teachers' Pension Scheme is a non-contributory public service pension scheme that promises members a set level of income upon retirement. It has 722,000 active education members and contribution rates are set by the government.
The scheme's employer contribution rate will increase by five percentage points in April to almost 29%.
The Department for Education said it would provide additional funding to schools to cover the extra fees following the increase in April, but higher education institutions are autonomous and so will not receive the extra money.
The Department for Education said it would provide schools with additional funding to cover the additional fees. fees following increases in April.
p>Both the Tories and Labor parties have remained silent on the issue of university funding. Former universities minister Jo Johnson proposed allowing universities to increase tuition fees in line with inflation based on their performance rankings, but this was not supported by politicians.
Hillman says: “Neither Keir Starmer nor Rishi Sunak want this.” seriously propose higher fees this side of the general election.”
Maguire adds: “No one from outside the sector is going to deal with this, we have to do it ourselves. We must think the unthinkable.”
A government spokesman said tuition fees were frozen “to provide greater value for students and taxpayers.” The Labor Party did not respond to a request for comment.
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