A £70m black hole and worse on the horizon. Falling numbers of higher paying international students, rising costs, static home tuition fees and declining overall applications.
The financial news from universities in Wales is dire as institutions across the UK face a reckoning. The recent brutal cuts proposed at Cardiff University may be the most extreme with proposals to shed 400 academic jobs and close whole schools including nursing, but other institutions have also made cuts with more expected.
So how did we get to this point, are those running higher education to blame for their woes and what does the future look like for universities in Wales - are mergers on the cards and could any go bust? Opinions differ. You can get more story updates straight to your inbox by subscribing to our newsletters here
Some commentators believe those running universities have themselves partly to blame, despite global and national inflationary pressure beyond their control and flat lining home tuition fees. For decades the UK university funding model has depended on the larger fees paid by a stream of international students.
Now this income is drying up and it’s not just down to changes to Visa rules meaning international students can no longer bring dependents with them. They are also attracted away by rivals in an increasingly competitive global university market with all eyes on league table rankings.
Nick Hillman, director of Higher Education Policy Institute (Hepi), who sits on the boards of Manchester and Buckingham universities, believes that if universities in Wales and elsewhere continue as they have then some will go bust. Unpopular as his view may be to some he says “that’s why Cardiff is right to be raising these problems”.
To some extent he believes the deficits at Cardiff and elsewhere are “beyond their control” and that the Welsh Government should change tack and step in with more cash to curb the cuts. He agrees with Universities Wales, that our institutions are a national asset bringing in money and future prosperity for economic and social good.
But Hillman says universities can still cut cash and thorny issues like the university USS pension scheme should be looked at again. That’s a row universities may not want to re-open after a bruising strike led to proposed pension devaluing being ditched, but the head of Hepi believes “fear of unions” has led those running universities to delay much needed reform, quite apart from pensions.
“Academics have benefits of autonomy at work that other professions don’t have and it is still a very nice profession. I am not lessening how difficult it is to be an academic, but they have incredibly generous pension schemes that will need to be looked at again and that issue has not gone away.”
With money so tight “something has to give”, he warns: “If you are a world class university is it right your student/staff ratio gets worse but pensions aren’t tackled?
“Students want more contact, not less. It’s no accident that universities with good student staff ratios do better in league tables and at the end you need to protect quality.”
For Cardiff’s part its Vice Chancellor Professor Wendy Larner has made clear she wants a “smaller”, more elite institution so does Hillman feel the Welsh Government should step in to prevent cuts on the scale suggested?.
Universities are neither businesses nor public bodies, he points out. They are charities and should be protected as such, he says, adding that: “Wales needs a world class university and has got one in Cardiff and that needs investment.
"Some things beyond their control have knocked universities and most have large scale deficits, even if not as large as Cardiff’s.
“Swansea, Cardiff, Aberystwyth - where does it leave Wales if you have cuts at every university? Policy makers have a responsibility as well.”
Many will have noticed the shiny new buildings erected at the same time universities claim they’ve run out of cash. On this Hillman feels they had little choice, even if he understands the impression.
“There is an element that Cardiff is the flagship university in Wales and the only one in the Russell Group and there’s an element of having to keep up with the Jones’s. A lot of universities spent a lot on their estates and universities are under pressure to reduce their carbon footprint and new buildings are more energy efficient.
“In my view there is not a single thing universities in Wales should do. They all have to play to their strengths and review courses as Cardiff has. There is no easy way to do it."
But he warns that does not mean throwing the baby out with the bathwater. This particularly at a time when the proportion of 18 year-olds from Wales applying to university here, or elsewhere, has plunged to 32% - the lowest rate in the UK.
“If you want economic growth and skilled employment you don’t want to constantly get those skills from other countries. If I was the minister in Wales I would want to see the Welsh university system continue rather than becoming boutique," advises the head of Hepi., who is also a former history teacher and special adviser to the Conservatives for three years to 2013.
Professor Paul Boyle, Vice Chancellor of Swansea University and chair of Universities Wales, also stresses the economic and social benefit of universities. While he’s adamant none are in such dire straits they’ll go bust he says in the short term Welsh Universities need an undisclosed cash injection from the Welsh Government.
Speaking in his role as chair of Universities Wales he says he’s not talking about the whole £70m deficit being covered by Cardiff Bay, but conversations are being had with the minister. In the longer run he’d like a “conversation” on how to secure a more sustainable financial footing for Welsh universities, although he wouldn’t be drawn on what solutions might be.
He is also worried about the latest UCAS admission figures showing that only 32% of 18 year-olds from Wales applied to university this year. Widening participation would be good for the Welsh economy as well as individuals.
“The Welsh Government does need to think of our universities as assets. This is not a problem universities can solve on their own - how will we fund those local assets.
“We need a conversation about what kind of workforce we need and the value of education.”
That conversation is starting to happen but Vikki Howells, Wales’ minister for further and higher education, has made clear she feels universities have been given enough from an already tight budget. Asked again if more money would be considered Ms Howells would only say that said additional funding had already gone to institutions through recently increased tuition fees, providing up to £21.9m in additional income to universities next year.
In 2024-25 the Welsh Government has also provided an additional £10m to the sector, bringing total grant funding to over £200m in the current financial year. And as far as she was concerned no university in Wales is in danger of going bust.
Asked what value universities bring to Wales Ms Howells added: “Higher education is vital to realising our social and economic ambitions for Wales. Universities are central to securing the wellbeing of future generations through educating the next generations of scientists, health care professionals, teachers, creatives, and entrepreneurs.
“Universities also deliver research and innovation that will tackle the challenges of the coming decades, such as AI, an ageing population, and climate change.”
She said “nothing” in her conversations with universities or Medr, the new body responsible for funding and regulating the tertiary education and research sector in Wales, has suggested that any are at risk of going bust but are making “difficult decisions in order to avoid this.
“Medr is responsible for monitoring the HE sector, and we understand there is appropriate liquidity to manage ongoing risks whilst universities are taking the action they deem necessary to remain financially sustainable.”
None of that action involves suggestions any might merge, she stressed. But as Cardiff University faces a ballot for industrial action by members of the UCU against proposed cuts there she added: “I expect institutions to adhere to the principles of social partnership and work in the spirit of partnership and creative collaboration with the trade unions.”
Whatever emerges from the current crisis and “conversations” universities will need to do things differently. What that looks like will be different for each institution.
Cardiff, as Wales’ only Russell Group institution has laid out its plan for taking fewer lower tariff domestic students and a bid to climb up global rankings. Others may seek to lure the plunging numbers of Welsh 18 year-olds applying to university.
The competition is not just international degree courses but apprenticeships and jobs which may seem a better option if tuition fees rise again. With a review of higher education funding already underway across the border the Welsh Government will likely soon follow.
Below are the deficits and cuts outlined by universities in Wales in their annual reports July 2023-24 published in early February 2025. Not all have provided their exact deficit figure. Most warn of more financial pressure in the year ahead.
Aberystwyth University
£8.1m deficit in the year ending July 2024. The university has shed 101 jobs since opening a voluntary severance scheme last year.
The university launched a “transformation programme” last year including a voluntary severance programme and offers to staff to cut their hours or working weeks, taking career breaks or flexible retirement to help reduce spending.
The university has said it wants to mitigate against compulsory redundancy with its cost cutting programme and currently has no plans to close any of its schools or departments.
A spokesperson said Aberystwyth had a surplus of £29.9m in the year to July, but this dwindled to an £8.1m deficit when USS pension payments and one-off payments were taken into account.
The university’s annual report says: “Reductions in income and increases to costs resulted in a deficit operating position for the academic year. Savings plans were put in place to mitigate these factors and realised significant sums, but these were not sufficient to meet the budget target.”
In his introduction to the report Aberystwyth’s Vice-Chancellor Professor Jon Timmis said international students “are becoming less keen to study in the UK” which creates “an even more competitive battle for domestic students”.
Swansea University
£15m deficit in the year to July 2024, excluding pension adjustments, compared to a £33m surplus the previous year. A total of 342 staff have left, or are due to leave, since a voluntary exit scheme opened in 2023 - that scheme closed to academic staff last month, but remains open to other staff.
The report warns that a review of the curriculum and modules are underway as part of savings plans: “Whilst the university has no plans to remove individual programmes a comprehensive review of the curriculum is underway including looking at the number of modules, and also at assessment and feedback.”
University of South Wales
USW’s annual report shows income has increased by 4.2% to £242.9m in the year ending July 2024, but the university has warned it expects to fall into deficit in the year ending July 2025. The university has seen 100 academic and non-academic leave through a voluntary severance scheme initiated as part of plans to curb costs.
A University of South Wales spokesperson said: “It is an incredibly challenging financial climate for the whole HE sector and like many institutions we are facing a deficit budget this year. We are predicting a shortfall of circa £20m in 2024/25 if no action is taken.
“However, we are not expecting to make up this deficit in a single year and instead have a planned programme of transformation, which we are already working to deliver, that will take us closer to achieving the aims of our USW 2030 Strategy whilst also providing a sustainable financial position.”
Cardiff Metropolitan University
£3.038m deficit to year ending July 2024.
The university’s recently published financial report also cites a fall in numbers of international students, rising costs and largely static home tuition fees. Cardiff Met, like others, opened a voluntary severance scheme last year.
In his introduction to the report John Taylor, chair of the board of governors, said Cardiff Met saw “a notable drop in international student recruitment”, faced reductions in public funding, increased operating costs, and the adverse impact of inflation on the value of tuition fees.”
Bangor University
In October 2024 Bangor opened a voluntary severance scheme among other cost-saving initiatives, including cutting non-pay costs, “streamlining” its estate, and managing all vacant posts. It has recently decided to reopen the voluntary severance scheme “in light of additional pressures, such as changes to national insurance”.
Its latest finance report is not yet published.
Wrexham University
£1.3m operating surplus in year ending July 2024.
Bucking the gloomy trend Wrexham University, hailed as one of the most socially inclusive universities in Britain, reported a surplus in the year to July 2024 and is predicting to break even this year. But its chair of governors Dr Leigh Griffin warned against complacency” in his introduction to the just published financial report to July 2024.
There are no voluntary redundancy or compulsory severance schemes in place at Wrexham and no plans to shut departments or for other cuts. While domestic and international student numbers were down this was “offset by better than planned numbers against degree apprenticeships”.
Dr Griffin said: “2023/24 was another year where Wrexham University balanced its books, and generated an operating surplus. Together with the fact that we are not in debt to any third party makes us, I believe, rare amongst universities, a majority of whom are facing significant financial challenges.
“This is, however, not to be complacent, as there is an ill wind affecting higher education across the UK, with tuition fee levels not increased for over a decade and politicised debate questioning the purpose of higher education.”
University of Wales Trinity Saint David
Also bucking the trend with a surplus of £382,000 in year ending July 2024. But its financial report for the year warns: "The University of Wales Trinity Saint David is not immune to the risks and pressures in the sector but has a student and estate profile that provides additional risks.
"When managed appropriately with mitigating activities, they also provide the university with opportunities to navigate the current landscape.The year to 31 July 2023 showed a significant deficit. The actions taken by the University in the year to 31 July 2024 have resulted in a correction of this financial position."
Cardiff University
£31.2m deficit. Fears this would be £65m if action not taken.
The university has announced proposed widespread cuts including losing 400 academic full time equivalent posts and shutting degree programmes and academic schools.
Cardiff University's proposed cuts are:
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