The University of South Wales (USW) is bracing for a projected £20m financial deficit in the current financial year, in a challenging financial climate for the higher education sector.
The financial difficulties facing USW are reflective of broader challenges within the UK and Welsh higher education sectors. The university attributes this shortfall to a decline in international student numbers, which previously helped offset the costs associated with domestic students. Domestic tuition fees have been capped at £9,250 per academic year for several years, only recently raised by the Welsh Government to align with the rest of the UK.
Compounding the issue is the fall in higher fee-paying international students, attributed to stricter visa regulations implemented earlier this year. The new rules have notably affected student numbers from Nigeria, with a 68% drop in UK student visas granted to Nigerians in the first half of the year. Notably, USW had the highest number of Nigerian students among Welsh universities, totalling 2,065.
To address the deficit, USW has not ruled out redundancies and will be relying on its financial reserves. The university has implemented a voluntary redundancy programme earlier this year, which saw 100 staff members depart. While the university has not disclosed its current reserve position, the latest audited accounts for 2022-23 reported total net assets of £273.6m and cash and cash equivalents of just over £59m.
A university spokesperson commented on the situation, stating, “It is an incredibly challenging financial climate for the whole higher education sector, and like many institutions, we are facing a deficit budget this year. We are predicting a shortfall of £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 2030 strategy whilst also providing a sustainable financial position. USW’s strong reserve position means that we are able to take time to consider our options and operationalise this plan effectively. It is likely that this will include some redundancies, however we are unable to provide any further details at this stage.”
A spokesperson for the University and College Union (UCU) in Wales expressed their position, “We are continuing to work with universities in Wales very closely. However, any compulsory redundancies would be unacceptable.”
At the end of July 2023, USW employed nearly 2,200 staff, with staff costs amounting to £124.8m, which represented 53% of the university’s total income of £233m. The university is also in the process of constructing a new multi-million-pound computing, engineering, and technologies building at its Treforest campus.
The University of South Wales is navigating a difficult financial landscape with a strategic approach aimed at long-term sustainability. While the outlook includes potential redundancies, the university’s robust reserves offer some flexibility in addressing these financial challenges over a number of years.