Welsh university deficits to shrink by 2028 following job cuts

Welsh universities recorded a collective underlying deficit of £79 million in 2024-25, with five institutions operating at a loss amid increased competition for students and volatile international markets. 

Medr, which oversees tertiary education in Wales, published its latest analysis of the financial health of the sector on 26 March, warning that universities are operating in “an exceptionally challenging financial environment”. 

The aggregated deficit has increased by £25 million since 2023-24. Medr said much of the sector is operating “planned, time-limited managed deficits” while undertaking restructuring to reduce costs. 

Several Welsh universities have cut staff members in response to the financial downturn. 

However, the regulator suggested the outlook is set to improve, with a lower sector-wide deficit of £11.1 million forecast for 2027-28 and nearly all institutions expecting to be turning a profit by the following year. 

“The trajectory reflects transitional restructuring costs rather than ongoing structural losses,” the report says. 

Income is also forecast to increase slightly over the next year, primarily driven by inflationary increases in tuition fees.

The regulator said overall student numbers are expected to remain level, with the number of domestic undergraduates and international postgraduate students expected to decline.

It added that the slight decline in the number of Welsh students staying in Wales to study in recent years has added to pressures, while the declining demographic of UK 18-year-olds from 2030 onwards is expected to further impact universities. 

Plaid Cymru, the frontrunner in the upcoming Welsh elections, has pledged to keep more local students in Wales for higher education if it forms a government in May. 

Sector cash balances also declined by £81 million in 2024-45, with further reductions expected in future. Cash is not held evenly throughout the sector, with three institutions holding about 81 per cent of the sector total, Medr said. 

The regulator added that lower underlying cash generation reflects “the decision by a number of institutions to operate time-limited managed deficits to allow time for strategic restructuring of cost bases and the consultation period required”. 

Cardiff University recorded the largest underlying deficit for 2024-25 at £36 million, followed by Swansea University at £31 million. The University of Wales Trinity St David, the University of South Wales and Wrexham University all reported small operating surpluses. 

helen.packer@timeshighereducation.com