Cost-cutting Newcastle posts £5 million underlying deficit

Falling international student numbers have contributed to cost-cutting Newcastle University becoming the latest leading UK institution to record an underlying deficit last year.

Newcastle has come under fire in recent days over its plans to make savings worth £20 million by cutting about 300 full-time-equivalent positions.

Now Newcastle’s financial accounts for 2023-24 have revealed an underlying deficit of £5.2 million – compared with a surplus of £3.8 million in 2022-23.

“Despite income growth, continued and challenging cost inflation and selected investment has resulted in a small underlying deficit in line with our budget expectation,” the document says.

It means seven of the 23 members of the Russell Group to have released statements so far have recorded underlying deficits for 2023-24.

Newcastle recorded a net cash inflow from operating activities of just £3.5 million, a fall of 91 per cent from £43.3 million in 2022-23.

Chris Day, Newcastle’s vice-chancellor, says in the accounts that it is clear that the financial challenges facing UK higher education in 2024-25 are set to continue.

“The 2024-25 international recruitment cycle was challenging for the whole sector, and we were not immune,” he writes.

“Although we saw an increase in the numbers of international students who accepted their offers, this did not translate into increased registrations. The resulting reduction in student numbers leaves a shortfall against our 2024-25 budget.”

Day says that the increase in employer national insurance contributions announced in the Labour government’s first budget will add an additional £7 million to Newcastle’s annual salary bill.

But he adds that the new administration had “signalled a welcome change in tone” from the previous 14 years – with positive rhetoric around the role of universities in the economy.

Critics have said that the vice-chancellor’s plans to reduce the proportion of research that Newcastle supports from its own resources is a “terrible look”. Members of Newcastle’s University and College Union branch were already balloting for industrial action.

The accounts show that Newcastle paid a total of £5.7 million in severance to 278 members of staff last year. This was an increase from the £600,000 paid in 2022-23 to 133 employees.

At the same time, the number of staff members with a full-time-equivalent basic salary over £100,000 rose from 212 in 2022-23 to 246.

Day’s basic salary increased from £341,000 to £354,7000 over this time. Alongside pension contributions, his total pay package for the year was £407,000 – above the average for Russell Group institutions.

patrick.jack@timeshighereducation.com