The Cardiff University Student Union on Park Place(Image: Google)

Cardiff University reopens voluntary severance scheme in face of £30m deficit

26 Oct 2024, 12:43 by Sion Barry · Wales Online

Cardiff University, which is grappling to close a £30m deficit, is reopening a voluntary severance scheme it only recently closed, Along with most universities in Wales, and others in the UK, Cardiff has been impacted by a fall in high tuition paying postgraduate students.

Domestic students, despite a modest rise from September of £250 in annual tuition fees to £9,250, are mainly loss-making for universities.

The decision of the former Tory UK Government to end visas for family members of overseas postgraduates from January this year, has hit numbers. The Labour administration has no plans to reverse the policy. Figures on student enrolments for the new 2024/25 academic year, as well as numbers opting not to return for years two and three, are currently being finalised and should be revealed next month. However, they are expected to be mainly stark.

Universities will also be looking nervously to Rachel Reeves’ budget next week and an expected rise in employer National Insurance contributions. That will add to the financial challenges they are facing.

There is also speculation that a number of Welsh universities are now exploring the potential for shared services as part of cost-saving measures. However, if any new entities are established to oversee shared services, if they don’t secure charitable status afforded to the universities themselves, there would be VAT implications - which would offset some of the gains.

Cardiff University is also looking to rationalise its substantial property estate, including closing some offices and bringing teams together in other buildings. The university is also looking to sell some properties.

The Russell Group university, which employs more than 3,000 with around 32,000 students, closed a voluntary severance round in September, but has now confirmed it will be reopened next month. It wouldn’t comment when asked how many staff took voluntary severance up until the closure of the scheme. It said the exact number will be reported to the university council and insisted that no “targets had been set.”

A spokesman for the university said: “The University’s vice-chancellor (Wendy Larner) confirmed in her all staff meetings this week that our existing voluntary severance scheme (VSS) (which closed in September) will be reopened to staff in November. This is not a new scheme. It forms part of a package of on-going measures designed to reduce the University’s deficit.”

For voluntary schemes there is always the issue of losing staff most valuable to universities, including academics with strong track records in securing research council funding.

Some leading universities have been dropping grade requirements in a bid to support student numbers. However, this has an impact on non Russell Group universities where these students with lesser grades would otherwise have gone.

In an update to staff last week Ms Larner, who said compulsory redundancies cannot be ruled out, said that eating into reserves isn’t a viable long-term solution.

She said: “Despite a small but welcome increase in tuition fees in Wales (£250), very little has changed over the last 12 months. Public finances remain tight, and other spending areas, understandably, remain a higher priority for our politicians. Cardiff is one of many universities adopting measures to mitigate financial pressures. We are facing a £30m operating deficit for the 2023/24 financial year (financial accounts for which are yet to be signed off) .

“Had we not taken action mid-year, that deficit would have been far worse. While we are not in immediate financial difficulty -our reserves will cushion us in the short term -we cannot continue to use these reserves to cover operating costs. In short, we need to return to the point where our costs are lower than our income, and we are trying to do so within a broken funding system.”