Coventry ‘on path to recovery’ despite £59 million deficit

UK universities have said they are confident their cost saving plans are working despite continuing to post large deficits. 

Coventry University has become the latest to reveal a shortfall in its annual accounts, posting a second successive deficit of close to £60 million, in part owing to reduced income from international tuition fees.

The institution has been battling for the past two years to make almost £100 million in cuts, and said this plan had always included two years of planned deficits before recording a break-even position in 2025-26.

The group’s accounts for 2024-25 show a pre-tax deficit of £59.3 million, which is unchanged from last year. The university itself posted a deficit of £66.6 million, which was higher than the £55.7 million posted in 2023-24.

Coventry said this was largely caused by a significant jump in recruitment agency fees after an increase in student numbers in May. The costs of this recruitment were accrued this year, but the university said most of the associated income will be accounted for in 2025-26. Its deferred income, largely from the May intake, has increased by £34.2 million to £81.5 million.

Total income from tuition fees and education contracts dropped from £334.8 million to £303.8 million year-on-year. Coventry recorded a net cash outflow of £8 million, which was up from £40.1 million last year. Costs reduced by £38.9 million, of which 37 per cent came from cutting staff costs.

John Latham, vice-chancellor and chief executive of Coventry, said there was a high level of confidence in the group’s substantial cash reserves and strong assets, and that management have been “open and honest” about the challenges facing the sector.

“The required deficits are never easy, but inevitable as the scale of reforms we have implemented are now having a positive impact on our finances. After the first quarter of this financial year, we are ahead of where we planned to be. Student numbers are bouncing back and we now have a structure which will allow us to pursue sustainable growth.

“Everyone in higher education knows we operate in an uncertain sector with many challenges outside of our control. We are certain that we have the correct strategy and are on the right path.”

Elsewhere, Newcastle University has recorded an underlying deficit of £2.8 million, which followed a £9.5 million loss in 2023-24.

Its accounts said it was forced to make a number of cost-saving measures after it suffered a 21 per cent fall in postgraduate student numbers and 11 per cent at undergraduate level.

“The continued and increased risk to international student recruitment in future years has also required action to reduce our recurring future cost base, to ensure ongoing financial sustainability,” said the Russell Group member.

The University of Bradford also introduced “austerity measures” to mitigate a large drop-off in overseas tuition income, particularly from Nigeria and Pakistan, falling by 32 per cent to £40 million.

Its 2024-25 accounts revealed a pre-tax deficit of £13.1 million and a net cash outflow of £10.4 million – an increase on the £9.3 million recorded last year.

But following restructuring, Bradford said its savings plan is “firmly on track”, targeting recurrent cost savings of £16 million by the end of 2026-27.

“We remain focused on maintaining agility in a constantly evolving environment, maximising value for money, and reinforcing the long-term resilience of our balance sheet.”

patrick.jack@timeshighereducation.com