Depreciation costs have increased at top UK universities.

Open the editor’s digest for free

FT editor Rula Khalaf picks her favorite stories in this weekly newsletter.

According to analysis by the Financial Times, more than a third of leading UK universities were forced to make further staff cuts last year, while redundancy costs at Russell Group rose to more than a fifth.

Ten of the 24 Universities The group said it would take voluntary layoffs by 2024 through voluntary layoff schemes and compensation packages for workers.

After a sharp drop in lucrative overseas students, the pay for workers has increased. An analysis of annual accounts shows that a total of 22 Russell Group universities paid out £70mn in the last academic year, a 29 per cent increase on the £54mn in 2022-23. Two universities did not provide data.

The findings show that higher education institutions are exposed to increasing financial pressures on the sector.

The redundancies amid the Russell Group mirror cost the sector, with universities announcing course closures and travel and leisure bans, as well as staff cuts.

Russell Group chief executive Tim Bradshaw said the cuts were needed to make the institutions financially sustainable, but stressed the government needed to do more to help the research sector link to the UK’s growth and innovation agenda.

“Besides the measures that universities are taking, we want the government to help us to have a sustainable system for funding higher education,” he said.

Vivian Stern, chief executive of the main sector lobby group Universities UK, said belt-tightening was a sign of institutions putting their houses in order, but it also posed potential risks.

“The danger is that no one is looking at the overall effect of this and the risk of systemic problems,” she added.

The union spokesperson added that the repeated layoffs had undermined the morale of the workers. Joe Grady, general secretary of the University and College Union, which represents teachers, said “year-on-year cycles of reform and reform” had failed to bring stability.

The Department for Education has said it is taking “strong decisions” to stabilize universities at a time when public finances are under pressure, while the Office of the Regulator for Students is closely monitoring the sector’s financial sustainability.

“Although (academic) institutions operate independently, we are committed to renewing universities as opportunities, growth and aspirations,” he added.

PwC’s senior education consultant Paul Keith said consolidation in the sector would put more expensive and less popular courses at risk. As in chemistry, When it leads to “cold spots” in supply.

Stern said the sharp drop in international students – who typically pay three times the UK’s annual £9,250 fees – for nearly a decade – has blinded universities to international recruitment to offset tuition fees for a long time.

UK Study Visa Applications It has fallen from 474,000 in 2023 to 408,000 in 2024, according to Home Office data, following the previous Conservative government’s decision to end the right for postgraduate students to bring family members.

The situation has been exacerbated by the currency crisis in Nigeria, a key growth market, and competition from other popular destinations such as Australia and the US that have reopened following the Covid-19 pandemic.

Report It is estimated that there will be a £3.4bn reduction in sector net income from the OSS by 2025-26, with almost three-quarters of universities facing a financial deficit.

A total of 4,900 staff from 21 Russell Group companies received severance payments in 2023-24, a fifth more than last year. Cardiff, Edinburgh and Glasgow did not provide details on the number of workers receiving the payment.

The group has spent more than £348mn in 2023-24 prices since the start of the pandemic, when many international students were banned from travelling.

Nottingham and Newcastle had the highest payouts, paying £14mn and almost £6mn respectively to former staff – almost 10 times the previous year.

There were staff cuts and employment restrictions in Newcastle, restrictions on overtime, outsourcing and travel.

Newcastle said the higher redundancy costs were partly related to accommodation closures. Nottingham declined to comment.

Exeter has also increased its exit fees to £8.8mn in 2022-23 from £1.3mn last academic year, blaming frozen tuition fees and falling numbers of international students.

A spokesperson for the university added: “At Exeter, we foresee these challenges and have proactively taken concerted action to maintain our strong financial position in our operations.