EXCLUSIVE: University of York predicts £100m income losses in wake of COVID-19 crisis


A leaked internal communication saw the Vice-Chancellor lay out the "stark" financial forecasts

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By Patrick Hook-Willers

In an internal communication leaked exclusively to Nouse, the “stark” financial impacts of the COVID-19 crisis on the University of York have been laid out, predicting “what is likely to be a significant and quite possibly severe loss of income.”

The Vice-Chancellor, Charlie Jeffrey, detailed that the University has made predictions about the financial impacts to the University in talks last week with the University’s Senior Leadership Group and the University Council, which is the University’s governing body.

The projections show that the University of York is likely to see a shortfall of income in the current 2019/20 year of £17.8m, with a further £84.8m shortfall expected for the 2020/21 financial year. This total shortfall of income stands at a huge £102.6m, a 20% shortfall of the income that the University had anticipated for the 2020/21 financial year prior to the COVID-19 crisis.

According to WonkHE, a highly reputable Higher Education focused online site, “the ‘optimistic’ estimate for the University of York is for an 11% shortfall of income in 2020/21, and the ‘pessimistic’ estimate at 28%.”
Vice-Chancellor Jeffrey wrote that his “message is that we [the University of York] are not facing just a short-term crisis, but one whose challenges will extend through the next academic year and beyond, and may well bring lasting change to the university sector”, despite new government measures revealed on Monday morning (Monday 04 May) intended to stabilise university finances.

Specifically for the University of York, “all sources of income are vulnerable to the impact of COVID-19”, including student fees, government grants for teaching, research grants and contracts, donations, borrowing, and income generated through commercial activities held in University facilities. It was stated that the University “cannot yet predict these impacts with certainty”, with “the greatest uncertainties – and the biggest financial implications – concerning fee income from international students.”

As part of the current assessments, which will be continually reviewed by the University, there is strong indication that the University “will manage to recruit only 30% of the international student population [the University] had expected for 2020/21.”

The Vice-Chancellor also made it clear that these current figures “do not include any provision at this stage for the consequences of Brexit, possible increases to USS pension contributions, or the possible impacts of the Augar review on undergraduate fee income”, which may raise concerns that there may be further devastating income reductions or expenditure increases to come as the tumultuous political sphere begins to settle in the wake of the events of the last six months and the near future.

In order to mitigate these worrying projections, the University has already put into place a calculated approach of cost-saving measures during the UK’s lockdown period, which include:

  • A reduction in some university operations including temporary building closures and reduced maintenance
  • A pause on non-contracted or non-critical capital expenditure programmes for development of our estate
  • A freeze on non-business critical recruitment
  • A programme of non-essential spending reductions
  • Savings from the halting of all domestic and international travel

It is currently anticipated that by the end of the next financial year, these moves will generate savings of £48.3m for the University, however this leaves a remaining shortfall of £54.3m, financial implications that could have significant consequences for the new college developments on Heslington East Campus, about which the University has been contacted.

Vice-Chancellor Jeffrey states that “we must now urgently focus on protecting the immediate and long term future of the University by developing strategies to maximise income and control costs”, plans which include the development of new strategies surrounding the delivery of teaching in the 2020/21 academic year. The University is said to be “engaging creatively with applicants and offer-holders to underline that we will offer a high quality and supportive experience through what is likely to be a mix of on campus and online education” in order to provide both current and incoming students with security and protect fees income as best as possible.

This is the start of a long and difficult process however, with further cutbacks and greater uncertainty for members of the University community strongly alluded to. Jeffrey writes that “we cannot, at this stage, rule out difficult decisions on staffing costs. We will, though, as I have stressed, do what we can to protect jobs wherever possible, with the wellbeing of our staff and students at the forefront of our thinking.”

The Vice-Chancellor reassured recipients that the University remains in a healthy financial position in relation to many other UK universities facing the same crisis, saying that “I and the University Executive Board believe we must be open and transparent . . . about the situation we find ourselves in so we can all work together to address these challenges with the mutual trust and respect that is a hallmark of this University.”

There was however a clear tone of resilience within the upper levels of management, with a parting message of reassurance to recipients about the tough times which lay ahead. “We are an excellent university," writes Jeffrey, "I have every confidence in our ability to tackle these and any future challenges ahead of us. The collective commitment we have shown in the last weeks in responding to the lockdown has been extraordinary. We now need to focus that collective commitment on the challenges of the next years. Each one of us will have a part to play.”

Nouse contacted the University for comment on whether there were additional contingency plans in place to protect the future of the University should the 'pessimistic outcome' of 28% income shortfall be exceeded, to which it responded:

“We have taken immediate action where we can to help mitigate the financial impact of the COVID-19 pandemic.

“We are keeping the measures we have put in place under constant review and we will adjust our financial forecasting in response to new information on student recruitment or new Government policies.

“Our key priorities are the wellbeing of our students and staff and to protect jobs wherever possible.”

This will remain a fast-evolving situation for the foreseeable future and the current measures are to remain under constant review as a result. A long process of damage limitation and financial stabilisation lies ahead.