Cardiff and Essex post deficits after big spend on severance pay

Several large universities have posted some of the biggest deficits seen so far this year, in part because of the millions of pounds they spent on severance pay.

Cardiff University, which is undergoing a “massive” restructuring amid financial issues, recorded an underlying operating deficit of £33.4 million in 2024-25 – a worsening of its position from last year’s £31.2 million.

This is one of the largest deficits seen in the accounts of Universities UK members published so far. It can be partly explained by tuition fee income falling by £10.3 million and the £24.3 million spent on voluntary severance and redundancy schemes.

With the Welsh sector facing an “existential crisis”, Cardiff is the first of the nation’s universities to post its accounts for 2024-25.

The university posted a net cash outflow from operating activities of £12.4 million, which was also one of the worst so far. It has become the sixth member of the Russell Group to record a deficit in 2024-25.

In its accounts, Cardiff blamed high inflation, constrained public funding, increased utility and pay costs following Russia’s invasion of Ukraine, along with a reduction in overseas student numbers owing to stricter visa rules and global economic uncertainty.

A university spokesperson said that a deficit had been forecast and would have been “significantly higher” had it not taken action.

“The sector as a whole is facing ongoing financial challenges with many institutions reporting deficit budgets. A deficit budget is not unique to Cardiff and does not mean that Cardiff is in financial difficulty,” they added. 

The university is taking proactive steps to “build a sustainable future”, the spokesperson said, and retained a strong balance sheet with assets worth £821 million. 

Elsewhere, the University of Essex’s accounts reveal an overall financial deficit of £22.1 million. As a result of a significant drop in student numbers, the institution suffered a fall in tuition fee and education contract income of £26 million.

It also incurred costs of £10.8 million from a voluntary severance scheme which affected 249 members of staff. The university has recently announced further plans to cut 400 jobs and close its campus in Southend in response to its financial troubles.  

“The sector continues to face considerable challenges, particularly in light of an increasingly competitive student recruitment market, a decline in international student numbers driven by changes in government policy affecting global mobility, ongoing inflationary pressures, and continued real-terms reductions in the value of annual home undergraduate tuition fees,” its accounts say.

Meanwhile, there were also smaller deficits recorded at the University of Aberdeen (£4.3 million), Robert Gordon University (£2.9 million) and Sheffield Hallam University (£2.3 million).

Some universities are increasing their spend on advertising to address the continued downturn in overseas student numbers.

Robert Gordon University said it was diversifying into new markets, “including through the use of social media campaigns and in-country student recruitment managers”.

Aberdeen said it spent £1.6 million more on overseas agents’ fees and course advertising as part of a campaign to attract more international students.

patrick.jack@timeshighereducation.com