‘Existential crisis’: Welsh universities face £70 million deficit

Crisis-hit Cardiff University has recorded UK higher education’s biggest operating deficit yet for 2023-24, with the total shortfall across Welsh institutions forecast to reach £70 million.

Cardiff warned that the current higher education operating model was facing an “existential crisis” as it posted a £31.2 million deficit in its latest accounts, days after announcing plans to axe 400 jobs and close disciplines including modern languages and nursing.

This is a deterioration from a £12.7 million deficit posted in the 2022-23 accounts and the largest for this year recorded so far by Times Higher Education.

Cardiff’s accounts say that the entire sector is at a “fundamental turning point”, and that future UK and Welsh government policies could significantly affect its financial performance.

According to the document, the university faces challenges from rising costs and lower-than-expected growth in tuition fee revenue because of impacts to the international student market.

Its accounts show that it recorded a net cash inflow from operating activities of £1.8 million last year, down from £30.3 million in 2022-23.

The institution also warns that the current model of university education is “facing an existential crisis”.

Vice-chancellor Wendy Larner said the forthcoming uplift in tuition fees in Wales helped a little, but that review of the graduate visa route caused “uncertainty and much damage to international student recruitment”.

The Welsh government was facing mounting pressure to intervene in higher education finances, with a number of other institutions posting operating deficits.

Swansea University reported a £15 million deficit, compared with a £33 million surplus in 2022-23. Despite an increase in overseas tuition fees, Swansea suffered a decline in income of £31 million from a reduction in research income and a fall in home student numbers. It recorded a net cash outflow of £19 million.

Aberystwyth University posted an underlying operating deficit of £8.1 million last year, on top of a £2.5 million shortfall in 2022-23.

It said the institution had faced “particularly ferocious” competition for domestic students, while the lack of help around tuition fees over the past decade has left a “deep mark” on sector finances.

Other Welsh institutions recorded operating deficits, including University of Wales Trinity Saint David (£1.2 million) and the University of South Wales (£500,000).

Universities Wales said that it expected the aggregate underlying deficit across its members to hit £70 million, compared with a surplus of £17 million in 2022-23.

These figures do not include more recent pressures, including the increase in national insurance contributions, which is expected to cost institutions about £20 million a year, and poor international student recruitment this year potentially wiping £70 million or even £80 million off balance sheets.

“Welsh universities are facing some of the most pressing, difficult financial circumstances in recent memory,” said a Universities Wales spokeswoman.

“There is an ongoing and urgent requirement for government to support Wales’ universities so that they can continue to deliver the economic and social benefits that are felt in every part of the country.”

patrick.jack@timeshighereducation.com