| Practice area: | Education and Labour Markets |
|---|---|
| Client: | N/A |
| Published: | 25 June, 2025 |
| Keywords: | economics of education higher education 2025 Public Policy |
In recent years, financial pressures have mounted across the entirety of the UK higher education (HE) sector and left many institutions in an exceptionally vulnerable position. In England alone, 43% of institutions are expected to face a financial deficit for 2024-25, prompting the House of Commons Education Select Committee to announce an inquiry into university finances and insolvency plans. Wide-ranging cost-cutting measures and redundancies are taking place across the sector, and the first institution (to our knowledge) has recently received emergency (bailout) funding from their regulator.
With the recent release of the full HESA Finance data for 2023-24, we now have an updated picture of the scale of the financial challenges facing higher education providers (HEPs). We analysed HEPs’ financial data between 2018-19 and 2023-24 to better understand the current financial circumstances of the sector.
While other recent analyses focused on England only or covered other types of financial variables, this piece includes providers across all of the UK and focusses on the following three core financial indicators: net cash inflow from operating activities after finance costs (NCIF); net current assets (NCA) i.e. ‘real’ reserves; and liquidity days.
All three indicators show a decline in providers’ financial stability. In terms of financial deficits (NCIF), 40% of HEPs included in the analysis (47 of 118 HEPs analysed) posted a negative NCIF in 2023-24. Further, the average surplus across the institutions analysed (in terms of NCIF as a percentage of income) declined from 6.1% in 2018-19 to just 0.5% in 2023-24. Considering financial assets/resilience (NCA), 55% of HEPs (65 of 118) saw a reduction in their NCA (as a proportion of their income) in 2023-24 as compared to 2018-19. Lastly, in terms of liquidity days, 20% of HEPs (24 out of 118) had less than 30 days of liquidity in 2023-24, including 17 providers that posted zero liquidity days. Given future challenges to the sector, such as potential further restrictions on international students, the analysis suggests that the financial pressures on UK HE providers are expected to remain significant.
The full note, which provides a detailed analysis of each indicator by university ‘cluster’, can be found here. In addition, a short blog on the topic that we wrote for the Higher Education Policy Institute (HEPI) is published here.