Cambridge v-c: crisis could lead to job cuts in ‘worst-case scenario’

The University of Cambridge, the UK’s wealthiest university, has said it may have to resort to redundancies as a “last resort” in a “worst-case scenario’ if the financial impact of the coronavirus cannot be mitigated.

In an email sent to staff on 21 May, seen by Times Higher Education, vice-chancellor Stephen Toope said that the university “can expect a significant financial detriment” because of the coronavirus pandemic.

The university would need to “contemplate some unpalatable options that would have seemed unthinkable only months ago”, he said. He outlined a number of cost-saving measures being considered by leaders of the institution, where the assets of the university and colleges were estimated as having a value of £11.8 billion in 2018.

This includes extending the current hiring and pay progression and promotion freezes, as well as the freeze on capital expenditures on new building projects. “We may have to consider creating a voluntary part-time working scheme. We may have to explore more efficient use of our estate, potentially reducing occupancy to allow for the external leasing of unused space. We may have to suggest delaying any sabbatical leave,” he said.

If the reduction of income continues, there may also be voluntary pay reductions. “The very last resort in a worst-case scenario is to contemplate potential generalised redundancies,” Professor Toope added.

Cambridge is not the first UK institution to contemplate redundancies because of the financial impact of Covid-19, but it is the richest. 

Professor Toope put Cambridge’s financial outlook down to a drop in the expected number of international students; physical restrictions on research capacity and a loss of research funding; a drop in the value of its endowment; the likely need for additional pension contributions as a result of the decrease in the market value of pension funds; as well as a drop in the normal cash flow to the university from Cambridge University Press and from Cambridge Assessment, and additional costs on current capital projects as a result of the disruption.

However, he did add that Cambridge’s liquidity position “is such that it does not require us to take desperate measures or make precipitous decisions”.

Professor Toope warned that even if the downturn was resolved swiftly, there would still be “a reduction in cash-flow of several hundreds of millions of pounds. An extended downturn, with long-lasting economic effects, would require significant changes within the academic university.”

He added that resuming on-site operations will be much more challenging than shutting them down.

Professor Toope said that the focus was on protecting staff and that changes to pay, hiring and redundancies were all “options we wish to avoid”.

“We are exploring all opportunities to develop new income streams”, at the same time as seeking government support, he said.

Significant operational cost-savings “will require a fundamental shift to the ways in which we currently work in order to ensure that we do things as efficiently and effectively as possible,” he said.

Steve Watson, vice-president of Cambridge’s University and College Union branch, said he and colleagues had been “shocked” to receive the email going into the bank holiday weekend.

“The tone and timing were upsetting, especially after the hard work staff have put in to ensure a smooth transition to online learning and that students are properly supported during this difficult time. One colleague described it as ‘a slap in the face’,” he said.

“There is also a lot of confusion about how this wealthy institution has got into such financial difficulty that it is contemplating job cuts. Staff know that the university has considerable reserves, it is primarily about the assumptions being made to predict a future deficit and those calculations and assumptions have not been shared with the UCU branch in Cambridge,” Dr Watson said.

A university spokesman said: “The University of Cambridge is not currently contemplating redundancies. We are doing everything in our power to support our staff and students during this public health crisis. The vice-chancellor shared with staff and students a range of scenarios in which the very worst-case would see a long-lasting global economic and health crisis that might severely affect the operation of the university and necessitate a range of unpalatable choices. These are planning scenarios, not predictions.”

anna.mckie@timeshighereducation.com