York posts £24 million deficit amid ‘unsustainable funding model’

The University of York has reported a deficit of £24 million after a 16 per cent drop in its international student numbers, while also blaming the impact of England’s “unsustainable funding model”, in another alarm over UK sector finances.

York went from a £14 million surplus in 2021-22 to a £24 million deficit in 2022-23, once movement in provision for the Universities Superannuation Scheme pension fund was excluded, according to its recently published financial statements.

Its operating deficit stood at £14 million, compared with a £15 million surplus the previous year.

That sheds further light on the situation at York, after the Financial Times reported on an internal memo showing the university was lowering admission requirements for some international students in light of “financial challenges”.

The university’s financial statements show that international student numbers decreased from 6,145 to 5,185 in 2022-23, a 15.6 per cent drop. International student fee income dropped from £102 million to £97 million. Home student numbers also fell slightly, from 16,090 to 15,955.

“International student numbers decreased in the year following high recruitment after the Covid pandemic and reflecting changed geopolitical circumstances,” the financial statements say.

“Growth in international student numbers remains a key strategic priority to ensure the financial sustainability of the university,” they add.

The financial statements do not break down international recruitment by country, but separate data show York, a member of the Russell Group of research-intensive universities, has recruited heavily from China. In 2021-22, York had 3,320 students from China, accounting for 56 per cent of its total international student numbers, according to Higher Education Statistics Agency data.

Across English universities, sector leaders are warning that the ongoing freeze in the tuition fee cap, held at £9,250 since 2017, has forced institutions to become ever more reliant on greater cross-subsidy from increased international recruitment. But now, after bumper growth in international student recruitment since the pandemic, there are growing headwinds against that recruitment – including the UK government’s moves to tighten student visa policy to help meet the goal of cutting net migration.

“The university – and the sector as a whole – has faced levels of inflation not seen in decades, uncertainty in global markets, and an unsustainable HE funding model, all of which have added pressure to our financial planning,” York’s financial statements say. “Despite the external environment, we remain a strong institution.”

The report also notes that “the domestic tuition fee has remained fixed, despite inflationary pressures”.

Financial pressures have led the university to “actively seek to address its cost base through cost containment and cost management measures, alongside a reset of capital and infrastructure plans in line with available resources”.

“The university continues to be heavily reliant on international student recruitment and this remains a key focus of the university’s strategy,” the financial statements continue. “Student numbers have been reviewed and revised to moderate planned growth, alongside a flexed cost base.”

A York spokesperson said: “The increased student numbers in 2021-22, which exceeded trends because of the impacts of Covid, have now returned to pre-Covid growth levels.

“The fundamental issue for the sector is that universities now lose £1 billion each year on teaching domestic students and £5 billion on undertaking research as well as having to absorb wider cost of living inflationary pressures.

“As a result, many universities are carefully managing their finances and York has moved quickly to put in place a series of measures to address deficits, including reducing the cost of our estate, so that we are in a good position to remain resilient and deliver our strategy.”

john.morgan@timeshighereducation.com