Use £500m reserves to avoid uni job cuts, union says

Cardiff University should use its reserves of more than £500m to ease financial pressures amid concerns of 400 job losses, a union has said.

The institution has £506m in unrestricted reserves, which has increased by more than 50% in a year, according to figures seen by Newyddion S4C, which lecturers' union UCU said should be partially used.

But the university said the reserves was not cash that could be freely used and teaching and research costs were £31.2m more than income in the 2023-24 academic year.

One higher education expert has called for more taxpayer funding for universities and a rethink on how student loans are repaid.

The UCU representative at Cardiff University, Andy Williams, said the union was now planning to ballot members on strike action after the consultation to cut 400 jobs and end some courses was announced.

"There are very, very big cash reserves which could be drawn on to fund a more cautious and gradual recovery, which doesn't destroy lives like these cuts will," he said.

"We're suggesting dipping into them in a strategically informed and evidence-based way, in order to plan a longer recovery than the university seems to be insisting on.

He said: "We're bemused why they're pushing ahead with such brutal and callous cuts when there are other options on the table."

According to leaked accounts, the university's consolidated net assets increased by 26.1% between July 2023 and July 2024, to £855m.

The university confirmed a figure of £506m in "unrestricted reserves" quoted in the document was correct, but said it would be incorrect to assume that it equated to cash that was ready to be spent.

In a statement, the university said: "Accounting surpluses do not reflect the underlying financial position of running the university.

"Accounting surpluses are not the same as cash that can be spent to avoid the need to make change in the university.

"The university faces a structural deficit. This means the revenues we generate from teaching and research do not cover the costs of undertaking these activities.

"The costs of teaching and research activities were £31.2m more than the income we generated.

"This is not sustainable. Like all universities whilst the university does have reserves, this is not the same as money that the university can freely spend."

In an interview with BBC Wales on Tuesday, Cardiff University Vice-Chancellor Prof Wendy Larner said using those reserves would not solve the current situation facing the university.

"Reserves can only be spent once," she said.

"If we spend reserves on running costs, we just delay the inevitable problem."

Speaking on BBC Radio 4 on Friday morning, Prof Larner added Cardiff, like other higher education institutions in the UK, were facing "really severe financial headwinds".

"We are working with our unions," she said. "None of us want to be in this position.

"My job is to secure a successful academic future for this university, and really unfortunately, that means making some really hard decisions."

Although Cardiff, like many other universities, may hold significant financial reserves, that is unlikely to mean it us sitting on large amounts of cash ready to be spent immediately, according to Nicholas Barr, professor of public economics at London School of Economics.

Instead, the "sensible thing" for universities to do would be to have invested much of their reserves "in buildings, or investment", he said.

"I'm not saying that there isn't some possibility for using some of the reserves, but I think the argument that there's a pot of £500m that can just be used to plug the gap - I'm sure it's a lot more complicated than that," said Prof Barr.

"Universities have only limited ability to draw income from their capital assets.

"My view is, if they're not investing their capital assets for the long term, if they're just sitting on pots of money… then they're not using their assets very well."

But the long-term reality, he said, was that higher education needed more taxpayer funding and a rethink of student loans if current funding gaps were to be addressed.

"It's a mistake to pay for all university teaching costs through tuition fees," he said. "The first thing that needs to happen is to restore some taxpayer support for teaching.

"Now, there's no public money at the moment, but one way to adjust the system is to bring back some teaching grants, and make loans less leaky."

Prof Barr says that could include lowering the income threshold by which graduates have to start repaying their student loans, but take a smaller percentage of their pay cheques while doing so.

"That way loans could be affordable for students, but more of the loan would be repaid, and that could be used in part to pay for more direct teaching support for universities."

The UK government has been approached for comment.