Financial Struggles: 75% of England Universities Projected to Be in Debt Next Year
England’s universities are facing a financial crisis, with nearly three out of four expected to be in debt next year, according to the latest forecasts from the higher education regulator, the Office for Students (OfS). The sector is projected to face a significant drop in income of £3.4 billion for the year 2025-26. To counter this, universities will need to take bold and transformative actions, such as considering mergers or cost-sharing initiatives.
Sir David Behan, the Chair of the OfS, emphasized the need for universities to collaborate more effectively. He highlighted the importance of not duplicating courses offered at nearby institutions, stating that it is counterproductive for universities in the same city or region to compete in terms of course offerings.
The government’s decision to increase tuition fees for domestic undergraduates by £285 to £9,535 next year is expected to add £371 million to university revenues. However, higher national insurance payments will deduct £430 million from their finances. Despite these changes, Jo Grady, the general secretary of the University and College Union, expressed concerns that the tuition fee increase alone will not be sufficient to address the financial challenges universities are facing.
Susan Lapworth, the Chief Executive of the OfS, emphasized that the report on the financial sustainability of universities highlights the significant challenges that institutions are currently grappling with. The competitive recruitment market for UK students, along with a sharp reduction in visa applications for international students, further compounds the financial pressures universities are facing.
Bridget Phillipson, the education secretary, defended the government’s decision to raise tuition fees and implement reforms, stating that tough decisions were necessary to ensure the financial stability of universities. The Home Office’s data showing a decline in study visas issued this year, along with projections of lower UK undergraduate numbers, further underscore the financial challenges ahead.
The OfS’s report indicates that research-intensive universities, such as those in the Russell Group, have continued to grow while smaller institutions or those reliant on teaching income have faced greater financial strain. The regulator’s modelling suggests that 72% of higher education providers could be in deficit by 2025-26, with 40% having less than 30 days’ worth of cash on hand.
Nick Hillman, the director of the Higher Education Policy Institute, warned that the financial woes facing universities are more severe than previously anticipated. He highlighted the urgent need for action to address the financial vulnerabilities of institutions to ensure the long-term sustainability of the higher education sector.
Vivienne Stern, the chief executive of Universities UK, echoed concerns about the financial challenges facing universities across the UK. She emphasized the crucial role of universities in driving economic growth and improving public services, underscoring the need for immediate action to address the financial strains on institutions nationwide.
