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More than a third of elite UK universities had to make further staff cuts last year, while spending on severance pay across the Russell Group rose by more than a fifth, according to a Financial Times analysis.
Ten out of 24 Universities The group said they are running voluntary severance schemes in 2024, offering compensation packages to employees in exchange for being let go voluntarily.
Redundancy payments have risen following a sharp decline in the number of lucrative foreign students. Analysis of annual financial statements showed that 22 Russell Group universities paid out £70m last academic year, a 29 per cent increase on the £54m spent in 2022-23. Two universities did not provide data.
The results show that higher education institutions are exposed to increasing financial pressures in this sector.
The reduction at Russell Group reflects cost cutting across the sector which has led to universities announcing course closures, travel and leisure bans as well as staff reductions.
Tim Bradshaw, chief executive of Russell Group, said the cuts were necessary to make organizations financially sustainable, but insisted the government must do more to help the sector whose research was integral to the UK's growth and innovation agenda.
“Alongside the steps taken by universities, we need the government to help secure a sustainable system for financing higher education,” he said.
Vivienne Stern, chief executive of Universities UK, the sector's main lobby group, said austerity was a sign of institutions getting their house in order, but it posed potential risks.
“The danger is that no one is looking at the overall consequences of this, and the risk of system-wide problems emerging,” she added.
Union spokesmen added that the repeated cuts had weakened employee morale. Joe Grady, general secretary of the Universities and College Union, which represents lecturers, noted that “year-on-year cycles of restructuring and redundancies” had failed to bring stability.
The Ministry of Education said it was making “difficult decisions” to stabilize universities at a time when public finances were constrained, adding that the Student Regulation Office was closely monitoring the financial sustainability of the sector.
He added: “While (academic) institutions are independent, we are committed to restoring universities as engines of opportunity, growth and ambition.”
Paul Cate, senior education consultant at PricewaterhouseCoopers, said consolidation in the sector threatens more expensive and less popular courses. like chemistry, While this leads to potential “cold spots” in the presentation.
Stern said the sharp decline in the number of international students – who typically pay around three times the UK's £9,250 annual fee – had shocked universities that had previously been encouraged to recruit internationally to make up for a decade-long tuition fee freeze.
Applications for UK student visas fell from 474,000 in 2023 to 408,000 in 2024, according to Home Office data, after a decision by the previous Conservative government to abolish the right of postgraduate students to bring family members.
The situation has been exacerbated by the currency crisis in Nigeria, a major growth market, and competition from other popular destinations, such as Australia and the United States, which have reopened in the wake of the Covid-19 pandemic.
a report OfS has estimated a £3.4 billion fall in net income across the sector by 2025-26, with nearly three-quarters of universities expected to experience a financial deficit.
A total of 4,900 employees from 21 members of the Russell Group received severance payments in 2023-24, an increase of more than a fifth on the previous year. Cardiff, Edinburgh and Glasgow did not provide details on the number of employees receiving compensation.
The group has spent more than £348 million at 2023-24 prices on redundancy programs since the start of the pandemic, when many international students were banned from travelling.
Nottingham and Newcastle recorded the biggest increases in payouts, paying out almost £14m and almost £6m to former employees, respectively – almost 10 times the previous year.
In Newcastle, staff reductions and a hiring freeze have been accompanied by a ban on overtime, outside hospitality and travel.
Newcastle said its rise in spending on severance pay was partly linked to the closure of an apartment building. Nottingham declined to comment.
The University of Exeter also significantly increased its severance pay to £8.8m last academic year, up from £1.3m in 2022-23, blaming frozen tuition fees and falling international student numbers.
A university spokesperson added: “At Exeter, we anticipated these challenges and acted proactively, taking coordinated action across our operations to ensure we maintain our strong financial position.”
