University Financial Health and Implications in England: Wave 1

UK universities face serious financial challenges but we have little robust information on how this is affecting investment decisions, the maintenance and development of university services, and future planning. We interviewed the Chief Finance Officers or Directors of Finance of 74 of the 133 diverse HEIs in England.

85.1 per cent of institutions reported an operating deficit, broke even, or had a reduced operating surplus in the year of the survey. However, the origins of financial weakness differ markedly between types of university. In particular, the decline in foreign tuition fee income dominates discussions in High Research Intensity Universities. This issue is less significant elsewhere, where estate and staff costs are more critical. The decline in UK tuition fees is widely cited among specialist Arts and Music institutions as a major financial challenge.

Only a very small proportion of institutions in a deficit or reduced surplus position (4.9 per cent) increased borrowing over the past year. Approximately a quarter of institutions sought to sell assets or land, a proportion similar across TRAC groups. More than three-quarters of institutions aimed to develop additional revenue streams. The survey asked about the impact of the financial situation on several areas of current activity including courses, staff recruitment and retention, student services and support for research and commercialisation.

As part of the survey, respondents were asked whether they viewed the current financial situation as a ‘short-term challenge’ or a ‘systematic and longer-term issue’. Seventy-two of the seventy-four respondents indicated the latter. Explanations for this response shared a view that the current business model of the sector is unsustainable, with many respondents recognising the need for organisational and policy changes.

Ultimately, respondents were asked how effectively they believed governmental and regional stakeholders had supported the university. Sixty-two point two per cent of respondents regarded the support they had received as ‘not at all effective’ or ‘not effective’.

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