The UK university sector is grappling with mounting financial pressures, and Sir Philip Augar, the author of the 2018 Augar Review, has cautioned that institutions must take decisive action to trim costs and restructure if they hope to justify their appeals for increased government funding. As universities contend with higher inflation, frozen tuition fees, and a decline in international student applications, Augar emphasised the need for continued financial discipline within the sector.
Augar’s comments come as A-level and BTec results are set to be released, with expectations of a slight decrease in university applications. This could leave some institutions struggling to fill places with domestic students, who pay £9,250 annually in tuition fees. The sector is also facing significant financial strains due to a sharp drop in international students, who typically pay between £20,000 and £30,000 in fees. This decline has prompted over 50 universities to announce course closures, job cuts, and voluntary redundancy programmes.
According to Augar’s estimates, approximately half of the UK’s 140 universities are facing deficits, with a small number of institutions at risk of breaching financial covenants and potentially requiring rescue measures. While acknowledging that higher inflation and a decade-long freeze in tuition fees have contributed to the current situation, Augar also pointed to the 2012 decision to triple fees from £3,000 to £9,000 as a factor that led to some excessive spending within the sector.
Education Secretary Bridget Phillipson has ruled out bailouts for universities facing bankruptcy. However, Augar, a former investment banker, argued that allowing any individual institution to fail would be neither fair nor wise. He suggested that the regulator and the Department for Education may need to intervene, possibly by encouraging mergers or deploying “turnaround teams” to collaborate with existing management to streamline operations.
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