Universities in Wales 'not at risk of short-term collapse'
Universities in Wales 'not at risk of short-term collapse'
But there is a list of longer-term issues, experts have warned
No Welsh university is at risk of collapse in the short-term but the sector faces real challenges in the medium-term. The head of Medr, a public body which oversees post-16 education, has said if universities cannot generate more money they will have to consider scaling back or stopping activities.
Simon Pirotte, chief executive of Medr, told the Senedd's education committee: "There are massive challenges facing the whole of the tertiary sector at the moment." He said higher education establishments, schools, further education colleges, apprenticeship providers, and adult community providers are "all facing financial pressures".
Medr has assessed financial statements of Wales' universities and does not believe "any institution in Wales is at risk of failure in the immediate short term". However referencing data published by Medr last week he said universities faced a £61m operating deficit in 2023-24 compared with a £21m surplus in 2022-23. For our free daily briefing on the biggest issues facing the nation, sign up to the Wales Matters newsletter here.
Asked by Conservative MS Natasha Asghar whether the deficit could grow he said: "'Yes' is the simple answer but what we don't know yet is the final impact of the kind of measures that organisations are taking at the moment.
"The future is really challenging… that's why institutions are addressing the issues now – because they have to otherwise that situation would get worse."
Plaid Cymru MS Cefin Campbell asked how close some universities are to going into administration. 'How close are we to some sort of meltdown?' he asked.
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"We're not saying there's an institution that is in danger of falling over in the short term but there are medium- to longer-term challenges….This is not easy – the reason that they're taking the actions that they are doing now is to prevent that falling over further down the line," Mr Pirotte said.
"Almost 100 institutions across the UK have announced restructuring measures," he said. "So these are challenging times but it's also essential that institutions cure their financial sustainability and continue to provide those best experiences for learners and I think it's fair to say that this requires some difficult decisions."
He said: "You have to identify additional sources of income and if that isn't possible you have to consider scaling back or stopping certain activities. And this is the situation facing most institutions in Wales and indeed across the UK."
He said more than half of costs in the sector are associated with staffing and said a 2.5% annual pay settlement for higher education has added £22m to the bill while the increase in the employer national insurance costs put on another £20m.
'Employer contributions for teachers' pension schemes, which particularly affects four of our institutions across Wales, is estimated to cost £6m a year," he said. He also cited inflationary pressures, energy costs, increasing cybersecurity risks, a downturn in the number of international students, and the loss of EU structural funds.
Mr Pirotte estimated increases in tuition fees to £9,535 a year will generate an additional income of about £36m but warned it will not be enough to plug the gap.
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