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More than three of the UK's universities were forced to cut staff last year, while redundancy spending at the Russell Group increased by more than five, according to a Financial Times analysis.
Ten out of 24 universities The group said they were running voluntary redundancy schemes in 2024, offering workers compensation packages in exchange for voluntary redundancies.
The unemployment rate has increased after a sharp decline in high-income immigrants. An analysis of annual financial statements showed that collectively the 22 Russell Group universities paid out £70mn in the last academic year, a 29 per cent increase on the £54mn spent in 2022-23. Two universities did not provide data.
The results show the exposure of higher education institutions to the growing financial pressure of the sector.
The layoffs among the Russell Group reflect cost-cutting measures across the sector that have prompted universities to announce academic closures and bans on travel and recreation and layoffs.
Russell Group chief executive Tim Bradshaw said the cuts were needed to make institutions more financially sustainable but stressed the government needed to do more to help the research sector form part of the UK's growth and new agenda.
“Along with the steps taken by the universities, we want the government to help ensure a sustainable system of financing higher education,” he said.
Vivienne Stern, chief executive of Universities UK, the leading advocacy group, said the belt-tightening was a sign of institutions putting their houses in order but taking on potential risks.
“The danger is that no one is looking at all the consequences of this, and the risk that you develop systemic problems,” he added.
Repeated layoffs have dampened worker morale, added a union spokesman. Jo Grady, general secretary of the Universities and Colleges Union, which represents lecturers, noted that “annual cycles of restructuring and redundancies” have failed to bring stability.
The Department of Education said it was taking “difficult decisions” to stabilize universities at a time when public finances were under pressure, adding that the director of the Office of Students was monitoring the financial stability of the department.
“While (educational institutions) are independent, we intend to restore universities as engines of opportunity, growth and ambition,” he added.
Paul Kett, PwC's senior consultant in education, said consolidation in the sector threatens expensive and unpopular courses, like chemistry, while leading to potential “cold spots” in supply.
Stern said the sharp decline in international students – who pay three times the UK annual fee of £9,250 – had blindsided universities previously encouraged to recruit abroad to cover tuition fees for a decade.
Applications for UK study visas fell from 474,000 in 2023 to 408,000 in 2024, according to Home Office data, following the previous Conservative government's decision to remove the right of graduate students to bring family members.
This situation is exacerbated by the financial crisis in Nigeria, a key growth market, and competition from other popular destinations, such as Australia and the US, which reopened after the Covid-19 pandemic.
Report from the OfS predicts a £3.4bn drop in net income across the sector by 2025-26, with around three quarters of universities estimated to be in financial trouble.
A total of 4,900 employees from 21 members of the Russell Group are receiving severance payments in 2023-24, up more than a fifth from last year. Cardiff, Edinburgh and Glasgow did not provide details of the number of workers receiving the payments.
The party has spent more than £348mn in 2023-24 prices on redundancy programs since the start of the pandemic, when many international students were prevented from travelling.
Nottingham and Newcastle had the biggest increases in wages, paying almost £14mn and almost £6mn to former staff, respectively – almost 10 times the previous year.
In Newcastle, layoffs and job cuts are accompanied by overtime cuts, outsourcing and walkouts.
Newcastle said its higher outage costs were partly due to the closure of accommodation. Nottingham declined to comment.
Exeter also significantly increased its tuition fees to £8.8mn last academic year, up from £1.3mn in 2022-23, blaming frozen tuition fees and falling international student numbers.
“At Exeter we recognized these challenges and acted quickly, taking concerted action across our operations to ensure we maintain our strong financial position,” added a university spokesperson.