Financial challenges in the higher education sector

OT  heard from experts on the key issues facing the university sector and checked in with optometry schools

A group of university students in gowns throw their caps in the air
Pexels/Emily Ranquist

Universities across the UK have been facing financial difficulties, with a number of higher education institutions (HEIs) announcing redundancies and cuts in 2024.

To garner the potential threat of these challenges to optometry departments and courses, OT contacted universities across the country to ask the question and, fortunately, it would seem from the responses that these are largely secure.

A report from Times Higher Education (THE) in late April noted that the number of UK universities cutting jobs had passed 50, according to a list compiled by the Queen Mary University of London branch of the University and College Union.

Challenges have been attributed to the freeze on university tuition fees in England for domestic undergraduate students since 2017-18, along with high inflation.

This has marked a real-terms decline in domestic fee income of more than one third, media reports suggest, while inflation has reduced university resources by a fifth in the past three years.

Falling numbers of international students has also been noted as a potential factor in the mixing-pot of turmoil facing universities.

Problems facing HEIs in the UK are long-lasting, with John Rushforth, executive secretary of the Committee of University Chairs telling THE that: “Part of what this is about is ultimately protecting jobs in the longer-term because it is about ensuring universities are sustainable and are still there in 10, 15, 20 years’ time.”

PwC published a report in early 2024, commissioned by Universities UK, analysing the financial sustainability of the higher education sector in the UK.

The report highlighted that the sector “has been facing increasing financial pressures, given that the fee cap for domestic students has been frozen since 2012... despite increasing inflationary cost pressures.”

At the same time, a Freedom of Information request of the Student Loans Company by the BBC found that the highest outstanding student debt in the UK is more than £230,000. The Student Loans Company said graduates in England leave university with average debts of £44,940 and that the most extreme cases are not representative of most graduate experiences.

The National Student Money Survey 2023 found the average student’s monthly living costs have increased by 17% since 2022 and that 18% of survey respondents had used a foodbank in the past academic year – up from 10% in 2022.

Optometry schools

OT approached universities in the UK offering optometry courses to confirm whether cuts or redundancies had been outlined at the time of writing, and if so, whether they might affect the optometry schools.

The University of Central Lancashire (UCLAN) opened a university-wide voluntary redundancy scheme on 8 April 2024, seeking expressions of interest from its academic and professional services employees.

In a press release announcing the scheme, the university shared that it had “not been immune to declines in international student recruitment following Government changes to visa requirements and the UK tuition fee being frozen for a decade, with rampant inflation eroding its real value.”

The university is reviewing its costs for the 2024–25 academic year in order to ensure expenditure is in line with income and “be fit for the future.”

The review requires the university to reduce the number of employees by 5% – UCLAN currently spends 60% of its income on its workforce of 3300 people.

Professor Graham Baldwin, vice-chancellor of UCLAN, said: “Whilst it is important that we reduce our costs and our staff base over the coming months, it is also important to remember that we remain a strong performing university, delivering quality teaching to thousands of students.

“The higher education sector is facing unprecedented financial challenges, and we need to proactively respond in order to be more agile and able to deal with the pace of change impacting the sector today and into the future,” Baldwin added. He continued: “We know this is a concerning time for our staff and we have support systems in place during this difficult time. As ever our continued priority is our students and giving them a great university experience.”

The University of Huddersfield made headlines in April as it confirmed cuts, including reducing its workforce by 12% and closing several courses.

The press office at the university confirmed to OT that optometry courses are not affected and shared a statement from the university that highlighted a “financial crisis in the university sector.”

“Since 2012, UK undergraduate tuition fees have increased by only 2.8%, from £9000 to £9250, despite inflation surging by over 50%,” the university statement read, continuing: “We are now among the 40% of universities facing budget deficits in 2023–24, further exacerbated by a 44% sector-wide decline in international student enrolments in January 2024 due to changes in government immigration policy. Rising costs, particularly in pension contributions, further strain our budget.”

Restructuring and voluntary schemes had previously been initiated, but the university said it must now “implement a transformational change programme.”

The university contributes approximately £300 million annually to the local economy.

The commitment to educational excellence remains “unwavering,” the university said in its statement, suggesting the strategies would be essential to continue providing “world-class education and research, and to play a significant role in regional employment and economic growth.”

A Cardiff University spokesperson acknowledged the financial difficulties in the sector.

In a statement, the spokesperson shared: “Our staffing profile is constantly evolving to adapt to university needs and external factors. Given the significant financial challenges facing Welsh universities and the UK sector, redundancies can never be completely ruled out, however our focus currently is on our future strategy.”

Glasgow Caledonian University said that there have been no compulsory redundancies at the university, and there are no plans to make compulsory redundancies.

The university confirmed that it programmes advertised on UCAS for recruitment in September 2024 would be going ahead as planned.

The University of Highlands and Islands did not have a comment on the topic.

It is important to note that the funding system for undergraduate degrees operates differently in Scotland, whereby there are no fees for home-domiciled students with fee grants paid by the public purse, though there is a cap on student numbers. The Higher Education Policy Institute has noted that in Scotland, government funding has fallen by £2,325 per student in real terms between 2014/15 and 2021/22.

A spokesperson at Aston University said that there are no plans to make cuts to the optometry degree courses or staff, while City, University of London also confirmed that there have been no redundancies in relation to the optometry courses.

The University of Plymouth and University of West of England confirmed no cuts to optometry degree courses, and the University of Hertfordshire also confirmed no plans for redundancies in the optometry team.

The press office at Teeside University shared that the university is not making any redundancies, and therefore there is no impact to the optometry programme, while the optometry courses at Anglia Ruskin University are also not affected.

Ulster University also has no planned cuts to the optometry department in staff or student places.

A spokesperson for the university shared: “We are currently planning to develop a new optometry clinical and teaching space at Ulster University Coleraine. Planning is complete with building set to begin mid- to late-2024 to enhance the range of clinical, research and learning services offered.”

Higher education sector in crisis – how did we get here?

Rose Stephenson, director of policy and advocacy at the Higher Education Policy Institute, an independent think tank focused on the higher education sector, outlined the challenges facing universities in England to OT. 

There are three main income streams for higher education, Stephenson explained: tuition fees, research, and international students.

Undergraduate tuition fees have been fixed since 2017, with Stephenson sharing: “They are now worth considerably less than £6000 – so a good third of that funding has been cut out from that income stream in real-term cash.”

Research is also underfunded, she said, telling OT: “Research is funded at about 80%, although many institutions would say that they’re funding it more heavily themselves than that.”

“Those two income streams – teaching home students and research – are both loss making activities for universities,” Stephenson said of the current system.

The third stream of funding comes through international students – who were found to have brought an economic benefit of £41.9 billion in 2021/22

The higher education sector has been successful in growing the market and diversifying, Stephenson said. However, international students are counted in immigration figures and following the introduction of a policy in January 2024 preventing postgraduate taught students from bringing dependents there has been a reduction in applications.  

There were concerns the graduate visa, allowing students to stay in the UK for two years following graduation, could be heavily restricted, but the Government confirmed on 23 May it would focus on “cracking down on rogue recruitment agents” and tougher compliance standards for higher education institutions. The graduate visa route will remain under review, the Government said.

“The impact of the dependents policy, the uncertainty around the graduate route visa, and the negative rhetoric from the Government about the higher education sector and international students has been really damaging to the sector’s ability to recruit international students – they just don’t feel welcome,” Stephenson said.

Reflecting on the challenges facing the higher education system, Stephenson summarised: “It is a big problem, and it needs addressing, but addressing it is really tricky.”

Is the situation reaching a crisis point?

Stephenson acknowledged that this is the discourse the think tank has been hearing: “The reasons for that are the funding from tuition fees has been frozen for so long, and over the last couple of years we’ve had incredibly high inflation, so costs went up hugely, which is a shock to that financial system.”

“At the same time, issues around international students meant that universities couldn’t keep plugging that gap by increasing their international student population,” she added.

“You can’t keep doing the same for less, so you have to then do less, and that is where we have seen redundancies – quite significant redundancies in a large number of institutions – as they try and balance their books. There is a very real risk that a university will go bust,” Stephenson said.

With a general election confirmed for 4 July, where might these issues fit into the political agenda?

Stephenson commented: “I think political parties won’t want to talk about this in the debates because there isn’t an easy answer, and there is not a politically successful answer to this.”

“I wonder if the focus will be on research, because of its links with growth and productivity,” she suggested.

“I can’t see that any political party is going to put tuition fees up – it is just such as toxic political choice that I can’t see it happening,” Stephenson continued.

The issues are also unlikely to be at the top of the minds of electorates when it comes to the general election.

“People can’t get a doctor’s appointment, or dentist appointment, schools are falling down, they can’t pay the mortgage – higher education isn’t high on the agenda for people,” Stephenson acknowledged.

However, with higher education institutions under threat, “something has got to give. I think it’s now that we’re at that crisis point that something might have to change.”

The information in this article was correct at the time of publishing.