SOAS University of London will have to implement “painful” measures, including job cuts, as it battles “viability problems” caused by its already precarious financial position being worsened by the coronavirus crisis.
In an email to staff on 6 May, seen by Times Higher Education, Graham Upton, in his second week as SOAS’ interim director, said that previous “recurrent deficits have posed a severe threat to our long-term financial sustainability”.
He added: “We have to change our basic operating model, if we are to achieve the financially sustainable position which is required of us as an institution in UK higher education. This is our financial and regulatory reality. More recently, the impact of Covid-19 has put our finances under even greater pressure.”
The pandemic has meant that the institution is looking at potential reductions of between 50 per cent and 20 per cent in international tuition fee income, and falls in the range of 25 per cent, 15 per cent and 10 per cent in domestic/European Union student fee income, he warned.
This would lead to a possible loss of income of between £8 million and £16 million, Professor Upton said. “I am sure I don’t need to tell anyone that the position is not good,” he added.
SOAS’s cash position has been eroded and prevented strategic investment, the email said. “The School is structurally unprofitable, having run deficit budgets for the past three years with a fourth in prospect, and this has brought us to a very difficult position with regards to cash flow,” Professor Upton said.
In April, the university announced it had sold its Russell Square Terraces, including the Grade 2-listed Faber Building, to raise cash.
While this provided a short-term solution, “it will not solve our longer-term viability problems”, Professor Upton said. “Costs savings on the scale which are needed to secure a sustainable future for SOAS will inevitably involve difficult and painful processes, but in my view, it is clear that we have no choice.”
He warned that “a reduction in staff is inevitable” and this may involve redundancies.
As part of the restructuring plan, some academic programmes could be cut, as the university will “need to identify which programmes and modules are academically and financially sustainable” and “the academic portfolio needs to be reorganised around existing major recruiting programmes”, the email said.
Mergers of departments will be also considered, possibly moving from 11 departments into two or three colleges, it added.
As next year’s budget must be signed off before the start of the financial year in August, changes that impact on the coming academic year will be decided at the Board of Trustees meetings in June and July.
“I am aware of the anxiety and stress which continued uncertainty can cause both among staff and students,” Professor Upton wrote. “If we act quickly and develop a coherent and robust plan for restructure and change, I am confident that we will be able to secure the future of SOAS as a vibrant academic community into the longer term.”
The email noted the recent support measures announced by the government and said that while some short-term changes in cash flow “will be of value”, there is no prospect of additional direct financial support that would help the university.
Last year, Baroness Amos, who has since stepped down as SOAS director, warned that without action the institution would “exhaust [its] cash reserves” within two years then continue to “haemorrhage cash”.
Tom Armstrong, president of the University and College Union SOAS branch, said: “We’ve had falling student recruitment, an expensive estate in London – hence the selling off of the Russell Square buildings last week. We’ve suffered since the tuition fee regime lifted the number cap, as bigger London institutions were able to hoover up some students who would have chosen SOAS. It has produced an existential crisis.
“Now with Covid-19 and the struggle to recruit students, financial shortfalls will increase and the situation will be much worse. While other institutions such as Imperial, King’s and UCL may bounce back it is not clear whether SOAS will be able to. People are very worried for their future.”
He added: "UCU should be included in discussions on the way forward to survive the present crisis.”
A SOAS spokesman said: “The importance of SOAS continuing to play its distinctive role in UK and world HE is vital.”
He added that the institution “has already taken steps to reduce its deficit position, but the impact of Covid-19 has put finances in the HE sector under even greater pressure than before. We have taken short-term action to reduce costs, for example, pausing capital spend, line by line scrutiny of non-pay budgets, and reducing the use of building space in Bloomsbury outside our core estate.
“We have also engaged with prospective students through virtual open days and other SOAS events, to reassure them of our continued commitment to offering a high-quality student experience.”
The spokesman continued: “Additional proposals for change are being developed now to be implemented by September 2020.”
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Print headline: SOAS faces ‘viability problems’, director warns