Several UK universities nearly ran out of cash last year, says report

Nearly a quarter of British universities had less than 70 days of cash to cover their costs at the end of 2024-25, according to a new analysis highlighting the intensifying difficulties facing the country’s higher education institutions.

A report prepared by the University of East London (UEL) based on the published accounts of 160 universities shows that 60 institutions scored badly on a range of financial sustainability metrics including liquidity, with 39 reporting less than two months’ net cash to cover costs.

A quarter had very concentrated sources of income, with staffing accounting for at least three-fifths of total costs, and high marginal cost ratios, meaning spending had grown more rapidly than income in recent years.

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Amanda Broderick, vice-chancellor and president at UEL, said: “In many cases, expansion in activity has been accompanied by increasing marginal costs rather than reductions in average cost.”

Without reform, she warned, “institutions will be unable to sustainably leverage or transform strategic performance outcomes over the medium to long term.”

London South Bank University ranked lowest with just seven days of cash to cover expenditures, while Arts University Bournemouth and Cranfield — which recently announced a merger with King’s College London — had only 20 days each.

Ian Koxvold, a partner with Cairneagle, an educational consultancy, cautioned that universities’ structures and operations varied widely, with differential levels of access to borrowing to support fluctuations in revenues during the year.

He said: “The shape and size of the sector will look very different in the future. There will be a less homogeneous provider base and probably fewer universities.”

Cranfield University said in a statement that it had met “regulatory requirements for university finances, and at no time have we been in breach of these”.

“Cranfield’s financial trajectory is positive, and the proposed merger with King’s College London is a strategic development,” it added.

London South Bank University said it had “access to total funds equivalent to 79 days of expenditure in the 2024-25 financial year”, adding that “planned sales of excess estate will improve this further in coming years.”

Mehjabeen Patrick, chief financial and operating officer at Arts University Bournemouth, said that cash flow was cyclical and the 20-day figure was “a point-in-time calculation based on the University’s year-end cash position”.

She added: “It would be more accurate to say that AUB’s liquidity position was tight and required careful management.”

Concerns about the financial health of the higher education sector follow a period of substantial expansion including significant borrowing for new infrastructure, leaving universities squeezed by rising interest rates and falling revenues from students.

The universities of Kent and Greenwich are merging to form London and South East University Group, following the combination of City, University of London and St George’s, University of London, to create City St George’s, University of London.

A report in May from the Office for Students, which regulates the sector, found that 43 per cent of universities were likely to have ended 2025-26 in deficit.

A separate survey of institutions released last week by Universities UK suggested four-fifths had already carried out redundancies and recruitment freezes and two-thirds were considering collaborative structures such as federations and alliances.

Universities blamed rises in their costs and falling revenues on increases in national insurance contributions, changes to international student recruitment including visa restrictions which have reduced demand, and inflation.