Financial pressure is mounting across the UK higher education sector as a growing number of universities report deficits in their latest annual accounts, highlighting deep structural challenges that institutions say are unlikely to ease quickly.
Several smaller and specialist institutions have also slipped into the red. Bournemouth University posted a £7.9 million deficit, while Birkbeck, University of London reported a £7 million shortfall. The University of the West of Scotland recorded a £5.5 million deficit and Edge Hill University ended the year £2.8 million down. Losses were also reported among arts institutions, including Trinity Laban at £1.6 million and the Northern School of Contemporary Dance at £50,000.
Heriot Watt University said it improved its financial position through what it described as “disciplined financial management,” but it remains in an underlying operating deficit of £7.9 million. The university warned that pressures extend beyond recruitment, citing global economic uncertainty, geopolitical tensions, cyber security threats, climate risks and challenges linked to the spread of generative artificial intelligence.
The University of Hull narrowed its deficit from £17.2 million to £12.9 million in 2024 to 25, despite what it called a difficult year shaped by volatile student recruitment markets and the continued real terms erosion of home undergraduate tuition fees.
Other institutions saw their financial positions deteriorate more sharply. The University of Bedfordshire reported a consolidated deficit of £17.2 million, describing it as “carefully managed” with “long-term sustainability firmly in view.” Income fell sharply from £150.4 million to £105.7 million, largely due to a steep decline in international tuition fee revenue.
In Northern Ireland, the University of Ulster recorded an operating deficit before other gains and losses of £20.2 million, worsening from £5 million the previous year. The university attributed the result to rising costs that outpaced income growth and the absence of inflation linked increases in teaching grants.
The financial strain has reached research intensive institutions as well. The University of Sheffield became the latest member of the Russell Group to post a deficit, reporting an underlying operating shortfall of £11.5 million. That marked a reversal from a £6.2 million surplus the year before. Sheffield said its income dropped by £56 million, driven mainly by a 22 percent fall in international tuition fee income. The university described the shift as a “rebasing” of the market caused by policy changes, stronger global competition and evolving student preferences. Its earnings before interest, taxes, depreciation and amortisation fell to 6 percent of revenue, well below its 11 percent target. Sheffield also spent £10.9 million on compensation for loss of office affecting more than 600 staff as part of cost reduction efforts.
One of the starkest turnarounds came at De Montfort University. The institution moved from a £12.6 million surplus in 2023 to 24 to a £22.6 million deficit in the latest year. DMU pointed to rising costs and the declining real terms value of tuition fees as key factors. “Like most English universities, we are facing unprecedented financial challenges,” the university said in its 2024 to 25 accounts. It added that “a major fall in international students has disrupted both home and overseas recruitment patterns across the sector, and some higher tariff institutions have over recruited home students to make up their shortfalls.” DMU said it is responding by expanding transnational education overseas and cutting costs, including £4 million spent on a voluntary severance scheme.
Together, the results show at least a dozen UK institutions now operating in deficit, with many leaders pointing to reduced international enrolment and fiercer competition for domestic students as central causes. With more universities already warning of sizeable gaps for 2024 to 25, the latest accounts underline the scale of the financial challenge facing UK higher education and the difficult choices likely ahead.
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