Vice-chancellor warns of possible pay cuts and job losses in wake of pandemic

This article is more than 4 months old

This article is more than 4 months old

The vice-chancellor of the University of Manchester has said the institution faces losses in excess of £270m next year if students cancel their studies because of the coronavirus pandemic.

Prof Dame Nancy Rothwell told staff that job losses and pay cuts might be required, along with “rapid and radical changes to our university and the way we operate”.

Her stark assessment came after a report from the University and College Union (UCU) forecast that the sector could lose about £2.5bn next year in tuition fees alone, along with the loss of 30,000 university jobs if Covid-19 continues unchecked. Earlier this week,Imperial College London warned of widespread cuts to mitigate the damaging impact of the pandemic on the institution.

Rothwell said the University of Manchester was preparing for a reduction of up to 80% in international students, and a 20% decrease in those from the UK and the EU, because “they may be unable or unwilling to travel, face financial hardship or simply wish to defer until there is more certainty”.

In a message to all staff, she wrote: “For our university, this could amount to a loss of over £270m in one year. Thus, we are preparing for a reduction in our total annual income of between 15% and 25%. This may persist into following years.”

The drop in student numbers would also significantly reduce revenue from the university’s halls of residence, with further losses expected in catering, other commercial activities, and research income, she added.

“We will need to cut our costs very significantly,” said Rothwell.

In an attempt to mitigate its losses, the university was looking into allowing students to defer the start of the new academic year, or to let them begin in either September or January. It might also sell some of its assets.

The university has already incurred additional costs since the Covid-19 outbreak, particularly due to the additional IT infrastructure need to provide online lecturing and research.

Rothwell said she wanted to give staff an “early and honest view of the current and likely future severe financial impacts of the pandemic”, which has led other universities to predict huge losses.

The vice-chancellor added that she and the rest of the senior leadership team will take a voluntary 20% pay cut, ahead of likely wider measures to reduce pay costs.

Quick guide UK government support for workers and businesses during the coronavirus crisis Show Hide Income subsidies Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees. Loan guarantees for business Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies. Business rates Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms. Cash grants Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000. Benefits Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits. Sick pay Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills. Other Local authorities to get a £500m hardship fund to provide people with council tax payment relief. Mortgage and rental holidays available for up to three months.

The UCU, which represents lecturers, said it recognised that the sector could face huge potential financial problems, but urged the university to halt plans to cut jobs and pay.

Martyn Moss, UCU regional official for the north-west of England, said: “We are disappointed the University of Manchester has acted with such haste to threaten these drastic measures, especially when staff have adapted so impressively to the current crisis to support students and the university.

“There is no denying that universities are facing new challenges in light of the crisis, but instead of short-sighted cuts, we need the sector to pull together and make the case for vital funding to safeguard the future of our universities.”