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More than a third of Britain’s elite universities were forced to make further staff cuts last year, while spending on severance packages across the Russell Group rose by more than a fifth, according to an analysis by the Financial Times.
Ten of 24 universities The group said it had voluntary redundancy plans in place in 2024, offering compensation to staff in exchange for voluntary departure.
Severance pay increased after a sharp decline in the number of lucrative foreign students. Analysis of annual financial statements showed that in total 22 Russell Group universities paid £70m last academic year, an increase of 29% on the £54m spent in 2022- 2023. Two universities did not provide data.
The results demonstrate the exposure of top higher education institutions to the sector’s growing financial pressures.
Russell Group’s withdrawal reflects cost-cutting across the sector, which has led to universities announcing course closures, travel and entertainment bans, and staff reductions.
Russell Group chief executive Tim Bradshaw said the cuts were necessary to make institutions financially viable, but insisted the government should do more to help a sector whose research is an integral part of the education agenda. growth and innovation in the UK.
“Alongside the measures taken by universities, we need the government to help ensure a sustainable system of funding for higher education,” he said.
Vivienne Stern, chief executive of Universities UK, the sector’s main lobby group, said the belt-tightening was a sign that institutions were putting their houses in order, but it presented potential risks.
“The danger is that no one takes into account the overall consequences of this situation, nor the risk of developing system-wide problems,” she added.
Repeated budget cuts have undermined staff morale, union spokespeople added. Jo Grady, general secretary of the Universities and Colleges Union, which represents professors, noted that “annual cycles of restructuring and layoffs” had failed to provide stability.
The Department for Education said it was making “difficult decisions” to stabilize universities at a time when public finances were tight, adding that the Office for Students regulator was closely monitoring the financial viability of the sector.
“Even if (academic) establishments are autonomous, we are committed to restoring universities as engines of opportunity, growth and aspiration,” he adds.
Paul Kett, senior education advisor at PwC, said consolidation in the sector threatened more expensive and less popular courses, like chemistry, whilst leading to potential “cold spots” in the supply.
Stern said the sharp decline in international students – who typically pay around three times the UK’s annual fees of £9,250 – had blindsided universities previously encouraged to recruit from abroad to make up for a decade of frozen tuition fees. schooling.
UK study visa applications fell from 474,000 in 2023 to 408,000 in 2024, according to Home Office data, following a decision by the previous Conservative government to scrap the right to postgraduate students to bring family members.
The situation has been exacerbated by a currency crisis in Nigeria, a key growth market, and competition from other popular destinations, such as Australia and the United States, which reopened after the Covid-19 pandemic .
A report of the OfS has estimated a £3.4 billion fall in net income across the sector by 2025-26, with almost three-quarters of universities expected to be in financial deficit.
A total of 4,900 employees across the 21 members of the Russell Group received severance packages in 2023-24, an increase of more than a fifth on the previous year. Cardiff, Edinburgh and Glasgow did not give details of the number of staff receiving compensation.
The group has spent more than £348 million in 2023-24 on redundancy programs since the start of the pandemic, when many international students were prevented from traveling.
Nottingham and Newcastle saw the biggest rise in payments, paying out almost £14m and almost £6m respectively to former employees – almost 10 times the previous year.
In Newcastle, staff cuts and recruitment freezes have been accompanied by bans on overtime, outside hospitality and travel.
Newcastle said its higher spending on severance pay was partly linked to the closure of an accommodation block. Nottingham declined to comment.
Exeter also significantly increased its severance pay to £8.8m in the final academic year, up from £1.3m in 2022-23, blaming the tuition fee freeze and falling numbers of international students.
“At Exeter, we anticipated these challenges and acted proactively, taking concerted action across our operations to ensure our strong financial position remains,” a university spokesperson added.