University finances in ‘broadly good order’ – OfS

New financial analysis projects a decline in 2020-21 followed by a slow recovery from 2021-22 onwards

University finances remain in “broadly good order”, according to new Office for Students (OfS) analysis.

The financial sustainability of higher education providers in England report analyses forecast data from universities and other higher education providers and finds that, overall, finances remain “sound, with generally reasonable financial resilience, despite the many operational and financial challenges arising from the coronavirus pandemic”.

Short-term, the sector’s financial stability is “reasonable at an aggregate level”, according to the report. Continued income growth, backed by strong recruitment of both domestic and international students, is projected in the medium or longer term.

A “manageable” decline in financial performance is projected in 2020-21, followed by a slow recovery from 2021-22 onwards

The analysis does, however, note that universities currently face several potential financial challenges: including new variants of Covid-19, the UK’s post-pandemic economic recovery, and the “difficult debate” around pension scheme contributions. It also points out that its calculations are based on there being no cuts to the overall level of teaching funding, whether through tuition fees or government grant.

The key findings

  • Overall sector income is projected to increase from £34,666 million in 2018-19 to £40,730 million in 2023-24. During the pandemic, loss of income from activities such as catering and conferences was largely offset by increased income from course fees and research funding.
  • Providers project a significant growth in aggregate student numbers by 12.3 per cent between 2020-21 and 2024-25. Students from the UK are projected to increase by 12.3 per cent, and non-EU international students by 29.5 per cent. Recruitment from within the EU is expected to decline by 34.8 per cent in the same period.
  • Providers have found efficiencies and reduced expenditure in response to the financial risks of the pandemic. They have also been able to access various support from the government, and short-term loan facilities with their bankers, such as overdrafts or revolving credit facilities, to support cashflow. Many of these facilities remain undrawn but are in place as contingency support if needed in the future.


“This data shows continued evidence that the higher education sector as a whole is well placed to recover from the pandemic,” said Nolan Smith, director of resources and finance at the OfS.

“Thanks to a range of actions universities and other higher education providers have taken, they entered the pandemic in good financial shape. Strong student recruitment is one of a range of factors which help them to forecast a strong recovery in the longer term.

“It is important to recognise that, while this is a positive set of projections, a number of factors may continue to effect the financial performance of universities in the coming years. The pandemic – and the potential for future disruption – continues to cause significant uncertainty given that many income streams for universities require fully open campuses. A number of other economic factors could pose opportunities and challenges as the country recovers from the financial impact of the pandemic. And the prospect of increased pension contributions could pose significant financial challenges for some higher education providers.

“We are clear in our analysis that – while there are variations in financial performance between universities – virtually all universities and other higher education providers are managing the financial risks they face well. That means we think the likelihood of multiple providers exiting the sector due to financial failure is low at this time. We will continue to work with the small number of providers facing increased financial risks.”


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