Coventry set to cut nearly £100 million as sector crisis bites

Coventry University has warned that it must make nearly £100 million in cuts over the next two years and has criticised the impact of government immigration policy on overseas student recruitment, while Sheffield Hallam University will open a voluntary severance scheme to all 1,700 of its academic staff, as a funding crisis in English higher education begins to bite.

Coventry warned in its latest financial statements that lower than expected student numbers has contributed to a situation in which it will be about £85 million “adverse to budget” this year.

Meanwhile, Sheffield Hallam emailed staff on 12 December to tell them about a voluntary severance offer to all academic staff intended to address “financial challenges” being faced by the university and others across the sector, the Sheffield Tribune was the first to report.

An ongoing freeze in England’s tuition fee cap – which has remained at £9,250 since 2017 despite a period of high inflation – has brought real-terms cuts for universities’ teaching funding. Meanwhile, there are early signs of a fall in the international student recruitment on which universities have relied to cross-subsidise their falling domestic teaching funding, as government tightening of immigration policy hits – a combination that is causing great alarm among many sector leaders.

Coventry’s reduction in income from lower student numbers is expected to result in a “significant deficit in the 2023-24 financial year”, its financial statements say.

That means £40 million of savings will be required in 2023-24 and £55 million in 2024-25, the university says.

Details of savings plans “remain under discussion” but are “broadly expected to include contractor fees for digital services projects, software purchases and other digital services operating costs along with staff cost savings coming from a mix of vacancy turnover, targeted redundancies and activity closures in management layers, research, and further restraint/freeze on recruitment”, it continues.

The “sale of non-teaching buildings is already being considered as part of future estates strategy, and so consideration has been given to bringing forward plans that are already in train to sell university owned buildings”, it adds.

A Coventry spokesperson highlighted issues of high inflation contributing to a deficit last year, with “funding issues that are affecting most universities in the Midlands and England” exacerbating current problems.

“Many universities have been relying on the higher fees paid by international students who value quality UK education, but the UK government is making it harder to recruit international students and we are competing against the likes of Australia and Canada who are more welcoming,” the spokesperson added. 

“Coventry University Group has been sector-leading in diversifying income away from tuition fees, transforming into a global education group that also delivers teacher training, apprenticeships, exec education and CPD to various industries and government bodies with partnerships around the world. We now need to go further and faster with this transformation, while continuing to maintain and improve services to students and our business and research partners. 

“There will be some difficult decisions but we have significant reserves and assets which give us space to make the changes needed to build a financially sustainable future while continuing to improve services to our students and business and research partners.”

A Sheffield Hallam spokesperson said: “Sheffield Hallam is one of the largest and most popular universities in the country, yet like many universities across the sector we are experiencing financial challenges due to a combination of increasing costs associated with inflation, rising pension costs, and a flat undergraduate fee.  

“These combined pressures mean that we must take steps to reduce our costs through careful financial management as part of a plan to remain financially stable in the future. One element of this is a voluntary severance scheme for academic staff which will run in January 2024. In line with normal practice, trade unions have been made fully aware of the details of the scheme.” 

James Fenwick, communications officer for the Sheffield Hallam University and College Union branch, said “extraordinary amounts of money” had been spent on new campus buildings as well on the university’s new London campus.

“There’s a wider context here as to why the university’s finances might be in such difficulties,” he said.

The voluntary severance scheme notice had caused “a lot of worry to all academic staff”, he added.

“We basically feel the university isn’t being entirely honest about its finances right now and the situation it is in, so we are pushing back quite strongly.”

john.morgan@timeshighereducation.com