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More than a third of Britain’s elite universities were forced to cut further staff last year, while severance costs at the Russell Group rose by more than a fifth, according to analysis by the Financial Times.
Ten out of 24 universities the group said it had implemented voluntary severance programs in 2024, offering staff compensation packages in exchange for voluntary redundancy.
Redundancy payments have risen after a sharp drop in the number of lucrative foreign students. An analysis of annual financial statements showed that a total of 22 Russell Group universities paid £70m last academic year, a 29 per cent increase on the £54m spent in 2022-23. Two universities did not provide data.
The findings show the exposure of top higher education institutions to the growing financial pressures of the sector.
The cuts at the Russell Group reflect cost-cutting across the sector which has resulted in universities announcing course closures and travel and entertainment bans, as well as staff cuts.
Russell Group chief executive Tim Bradshaw said the cuts were needed to keep institutions financially viable, but insisted the government should do more to help the sector, whose research is an integral part of Britain’s growth and innovation agenda.
“With the steps being taken by universities, we need the government’s help in ensuring a sustainable higher education funding system,” he said.
Vivienne Stern, chief executive of Universities UK, the main sector lobby group, said the belt-tightening was a sign that institutions were getting their houses in order, but it presented potential risks.
“The danger is that no one is looking at the overall consequences of this and the risk of system-wide problems developing,” she added.
Repeated cuts have undermined staff morale, union spokesmen added. Jo Grady, general secretary of the Universities and Colleges Union, which represents lecturers, noted that “year after year of cycles of restructuring and redundancies” had failed to ensure stability.
The Ministry of Education said it was making “difficult decisions” to stabilize universities at a time when public finances are tight, adding that the regulator Office for Students was closely monitoring the financial viability of the sector.
“While [academic] the institutions are autonomous, we are committed to the renewal of the university as a driver of opportunities, growth and aspirations”, it added.
Paul Kett, PwC’s senior adviser on education, said consolidation in the sector threatens to make courses more expensive and less popular, such as chemistry, while leading to potential “cold spots” in supply.
Stern said the sharp decline in international students — who typically pay around three times the £9,250 annual UK tuition fees — had blindsided universities that had previously been encouraged to recruit international students to make up for a decade-long fee freeze.
The number of UK study visa applications fell from 474,000 in 2023 to 408,000 in 2024, according to Home Office figures, following the previous Conservative government’s decision to end the right of postgraduates to bring family members.
The situation has been exacerbated by the currency crisis in Nigeria, a key growth market, and competition from other popular destinations, such as Australia and the US, which have reopened after the Covid-19 pandemic.
report from the OfS estimated a sector-wide drop in net income of £3.4bn by 2025-26, with almost three-quarters of universities predicted to be in financial deficit.
A total of 4,900 employees from 21 Russell Group members received severance payments in 2023-2024, which is more than a fifth more than the previous year. Cardiff, Edinburgh and Glasgow did not give details of the number of staff receiving the payments.
The group spent more than £348m at 2023-24 prices. on layoff programs since the start of the pandemic, when many international students were unable to travel.
Nottingham and Newcastle had the biggest increases in payouts, paying out almost £14m and almost £6m respectively to ex-staff — almost 10 times the previous year.
In Newcastle, staff cuts and hiring freezes were accompanied by bans on overtime, outside hospitality and travel.
Newcastle said its higher severance spending was partly related to the closure of the block of flats. Nottingham declined to comment.
Exeter also significantly increased its severance payments to £8.8m in the last academic year, up from £1.3m in 2022-23, blaming frozen tuition fees and dwindling numbers of international students.
“At Exeter we have anticipated these challenges and acted proactively, taking concerted action across our operations to ensure we maintain our strong financial position,” added a university spokesperson.
