University of Manchester: coronavirus could lose provider £270m next year

The university’s vice-chancellor is taking a 20% pay cut, but warned redundancies might be on the way

The University of Manchester has told staff it could lose more than £270 million next year, as it models the likely impact coronavirus could have on international student recruitment.

In a message to staff, the university’s president and vice-chancellor Prof Dame Nancy Rothwell said that annual turnover for the higher education provider (HEP) stood at about £1.1 billion, but warned that 45% of that figure came from student tuition fee income.

She warned that if enrolment figures were to fall by 80% for international students and 20% for domestic/EU students, the university would lose more than £270m in revenue.

The university chief said she was preparing for a reduction in annual income of between 15% and 25%.

In a video message that accompanied the announcement, Dame Nancy said she wanted to give colleagues “an honest update on where we think we are and where we might be”.

Although the University of Manchester generates “a modest cash surplus” every year, the HEP has already “seen a significant loss of income” from student residences, catering, research and other activities and still faces the “real risks that some of our current students could withdraw and not pay fees for the current financial year,” the university chief continued.

In a bid to stave off a financial crisis, Dame Nancy said the university had halted all travel, non-essential spending, new appointments and projects, and had even submitted a number of staff to the government’s furlough scheme. The vice-chancellor said she was drawing up plans for the academic year, including two start dates in September and January.

There is no denying that universities are facing new challenges in light of the crisis, but instead of short-sighted cuts we need the sector to pull together and make the case for vital funding to safeguard the future of our universities
– Martyn Moss, UCU

While the university would look for additional sources of income, Dame Nancy told staff “reducing pay costs must be a key part of meeting a major loss of income”. She warned that pay cuts might be imposed and job losses required.

Dame Nancy also announced that she and other senior leaders would take a 20% pay cut “to be reviewed periodically, ahead of likely wider measures to reduce pay costs across the university”.

The University of Manchester vice-chancellor is not the first senior leader to decide to cut their pay during the coronavirus crisis. The vice-chancellors of Bristol and Edinburgh, Hugh Brady and Peter Mathieson, also recently announced they would take a 20% pay cut during the crisis. King’s College London president Ed Byrne announced yesterday he would take a 30% pay cut.

“We will maintain a freeze on all non-essential appointments and vacancies. We will need to restructure activities and ways of working, not least to further enhance online learning and ensure our students have the best possible experience of studying with us.

“We will also consider a range of means for reducing our pay costs such as deferring pay awards due to promotions, suspending annual increments and national pay awards; offering unpaid (part or full-time) voluntary leave or retirement; implementing a pay cut for a defined period across the university,” the note to staff explained.

Dame Nancy added that she was “immensely proud” of her colleagues and said the university’s “track record, reputation and commitment to excellence and social responsibility” would see it emerge from this crisis “even stronger”.

The announcement has not been met well by union representatives – one of whom described Dame Nancy’s announcement as “drastic”.

University and College Union (UCU) regional official Martyn Moss said: “We are disappointed the University of Manchester has acted with such haste to threaten these drastic measures, especially when staff have adapted so impressively to the current crisis to support students and the university.

“There is no denying that universities are facing new challenges in light of the crisis, but instead of short-sighted cuts we need the sector to pull together and make the case for vital funding to safeguard the future of our universities.

“We want all universities to work with us to secure the funding needed to ensure they are firing on all cylinders and can help lead the recovery from this crisis. We want to work with the University of Manchester to deal with the issues it faces locally and to protect jobs and its academic capacity.”

The union urged the University of Manchester to work with them to secure vital government support during the coronavirus crisis.


Related news: Distance learning: Durham University plans shake-up despite union objections

Read more: Coronavirus: Universities face £2.5bn funding ‘black hole’, warns new report

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