Pay-off spend up by two-thirds as universities shed 13,000 jobs

Universities in the UK spent more than £300 million on severance pay last year, cutting more than 13,000 roles, with experts warning that there is more pain to come. 

After another year of cost-cutting and widespread redundancies, Times Higher Education analysed all the 2024-25 financial accounts of Universities UK members that have so far been published.

Of the 90 accounts made public thus far, the sector spent £303.3 million on compensation for loss of office. This was up from £177.9 million among the same institutions the year before, a 71 per cent increase and almost triple the £110.1 million in 2022-23.

Roughly 13,300 people received severance pay from this sample of the sector alone – well above the 10,000 predicted by experts. This is in addition to 9,290 and 6,960 in the two previous years – almost 30,000 in total.

With dozens of universities still to publish their accounts, including many of the institutions that have suffered the most financially and experienced the deepest cuts, the final figures are likely to be much higher.

Gregor Gall, affiliate research associate at the University of Glasgow, said the numbers reflected the overall crisis in funding and revenue for the sector, as well as the willingness of senior managers to quickly dispense with staff by incurring significant additional expenditure.

“Whether this somewhat knee-jerk short-term reaction will help resolve the longer-term issues is open to a considerable amount of questioning.

“This is all the more the case where some institutions seem to be shedding staff merely to help replenish reserves rather than tackle the strategic financial issues facing the sector overall.” 

Queen’s University Belfast paid out £25.4 million through its voluntary severance scheme for about 300 staff – the largest by far among the accounts already released.

QUB’s accounts said its proactive actions were aimed at reducing the university’s recurrent cost base while retaining key skills to drive strategic and operational priorities. A spokesperson added that “every exit was voluntary, and significant support was offered to all colleagues who departed the university under the scheme, almost half of whom had long service of over 24 years’ service and therefore qualified for a higher level of severance”.

The next highest payouts were The Open University’s £17.5 million (to 664 employees) and the University of Sussex’s £15.4 million (to 314 employees).

Sussex’s vice-chancellor Sasha Roseneil said its voluntary leavers scheme was “part of a wider programme of measures to align expenditure and income to support the university’s long-term financial sustainability”, adding that the “costs are recognised in full in a single financial year, while the savings are realised over future years”.

And a spokesperson for The Open University said that “as the largest university in the UK, with over 9,000 staff, it is not surprising that we have pay figures which reflect the size of our staff base and are in excess of those at smaller universities”.

They added that “like the rest of the higher education sector, we have not been immune to financial pressures” and it had been necessary to “reduce our operating costs as we adjust to meet the changing needs of our students”, an approach that had “seen us achieve an operating surplus in the last financial year, our first for three years”.

Many of the larger payouts came from members of the Russell Group, including the University of Birmingham (£12.4 million), Durham University (£11.9 million), the University of Sheffield (£10.9 million), Newcastle University (£10.1 million) and the University of Exeter (£10 million).

The 19 members of the research-intensive mission group with data available were responsible for £124.7 million (41 per cent) of the sector total – which was more than double the £54.5 million (31 per cent) the year before and almost treble the amount in 2022-23.

Gall, who is also visiting professor of industrial relations at the University of Leeds, said this was probably a “legacy of buying in top researchers on enhanced salaries” in the run-up to the Research Excellence Framework and its predecessor, the Research Assessment Exercise.

“In terms of cutting costs, even if they are the more expensive to relinquish, the perceived subsequent cost savings are greater,” he added.

Phil McNaull, former finance director at the University of Edinburgh, said the data shows that the funding model no longer works, adding that efforts to reduce costs aim to produce a more sustainable sector.

Although so many jobs have already been lost, McNaull said there were still cuts to be made. Some vice-chancellors predict a further 10,000 job losses this year.

“There will be continual cutting but you can’t cut your way to sustainability. You have to make sure you have sustainable revenue generation to be sustainable long term,” said McNaull.

“Cutting costs is a way to remain in surplus but the real challenge is does that revenue that remains have a cost base that will make it sustainable?”

patrick.jack@timeshighereducation.com