The latest assessment from the Office for Students (OfS) of the financial sustainability of universities in England suggests that in all but a very few cases universities are not in any short term danger of collapse.
That’s cold comfort when you assess OfS’ list of medium to long term risks to financial sustainability: inflation, reliance on international student recruitment and/or optimistic projections of prospects for home student recruitment, rising cost of living for staff and students, and the need to invest in facilities and environmental policies. These challenges are not England-specific; across the UK universities are facing the prospect of continuing to achieve their missions under considerable cost pressures.
While particular pressures on cost of living and inflation are specific to the current moment, and mean that there is wider interest in, and concern about, university financial sustainability – particularly when it comes to negotiations over pay rises for university staff – the broad picture of there being financial risks over the horizon is actually fairly standard for a sector that is majority financed from public sources, whether directly from government in the form of grants and project funding, or from subsidised student tuition fees.
The scale of inflation varies but inflation is always a factor, which means that a university that is not increasing its income, however modestly, is at some point going to have to start cutting to balance its budget. History suggests that government appetite to review the funding settlement to universities is variable at best – it’s good when it happens but it’s not to be relied upon. That’s the case whatever the nature of the funding architecture.
