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COVID-19 financial implications for The University of Manchester

23 Apr 2020

A message from the President and Vice-Chancellor

Archway entrance to University of Manchester

As we all continue to adjust to lockdown and working from home, I want to give you an early and honest view of the current and likely future severe financial impacts of the pandemic on the University, and outline the actions that we are already taking to mitigate these, and the further actions that we will be considering in the near future.


Along with other universities, we are already facing significant loss of income in the current financial year, though we hope that these are largely manageable through the actions we are taking.  Many analyses in the UK and beyond indicate that there will be a major loss of international students, such  that UK universities are likely to lose at least half of their international students, and it is possible that 80% of all international students and 20% of all home/EU students will be lost. 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%.

We are already taking actions to mitigate such potential losses, but will probably need to make rapid and radical changes to our University and the way we operate.

This may persist into following years. In recognition of these challenges, I and all members of the Senior Leadership Team will take a voluntary 20% pay cut (to be reviewed periodically), ahead of likely wider measures to reduce pay costs across the University.


Our staff and students have been remarkable in how they have adapted to the changes imposed on us by the COVID-19 outbreak. It is unclear how long the lockdown will last, but the medium and longer-term financial impacts will persist well beyond this, mainly through loss of student fee income, but also income from residences, catering and other sources.

Much remains uncertain about the severity and duration of financial impacts on our University, on the UK and more widely, as a deep and sustained global recession is predicted. Similar challenges are faced by all universities, and as we have seen, charities, companies and other public bodies.

The current financial year

Our annual turnover is about £1.1 billion, 45% of which is student tuition fee income. Each year we must generate a modest cash surplus to maintain the fabric of the University and invest in key infrastructure.

Since the outbreak of COVID-19 we have seen significant loss of income, mainly from student residences, catering and cultural institutions and executive education, and we have incurred additional costs, most notably in providing additional IT equipment to allow online teaching and research. 

The immediate actions we have taken (see below) will offset losses in the current year (which ends on 31 July), and could even lead to an increase in our underlying surplus - though this would be tiny compared to the longer term threats. We still face real risks that some of our current students could withdraw and not pay fees for the current financial year.

The next financial year (2020-2021)

We expect a major reduction in international student recruitment (and retention) to the UK, and possibly a decrease in the recruitment of home and EU students, as they may be unable or unwilling to travel, face financial hardship or simply wish to defer until there is more certainty. 

It is impossible to assess the exact scale of this loss, which will not be known until autumn 2020 when student fees are paid. In line with many external estimates and surveys of students, we are modelling a reduction of between 50 and 80% in 2020/21 in international student recruitment and retention and a more modest loss of home/EU students (~20%). We do not know how long this downturn will last.

A reduction of 80% in all international and 20% in all home/EU students would mean a loss of at least 25% of our total annual income; this would be in excess of £270m.

There would be further losses from student residences, catering and other commercial activities, and loss of research income, especially from charities.

Immediate actions taken

To mitigate the financial impact this year we have already taken a number of measures: 

  • all travel has inevitably ceased, 
  • we have stopped any non-essential spend, 
  • frozen new appointments and vacancies for all except the most critical posts (eg to support online activities), 
  • paused the start of any new projects where it has been possible to do so, including all capital programmes where we are not under contract or where the project is not externally funded,
  • we are submitting a number of staff to be furloughed under the government scheme, but we do not yet know how many will be eligible.

We have been very actively involved in discussions with government to seek support for universities, most notably to make up the shortfall in research funding that all universities such as ours face. 

Further actions against likely loss of income

The immediate actions described above will need to continue, but will be wholly insufficient to mitigate the likely scale of future losses of income, so we will need to bring in additional measures as soon as we know about student recruitment, to ensure that the University remains financially sustainable. We are considering many other actions to secure income, but even with these we will need to cut our costs very significantly. 

Additional sources of income

This includes preventing the decline and potentially increasing home/EU UG and PGT students (noting that we may be limited by the government to no more than a 5% increase in home/EU undergraduates), optimising and developing new high quality  online learning programmes,  ensuring that the start of the year is attractive to students for example by deferring the start of the academic year, or having two start dates (September and January), face-to-face teaching of international students in their home country, executive education and short courses, and reviewing our programme offer to focus on areas in most demand.  We are also exploring the sale of assets.

Non-pay costs

We will continue to limit all non-essential non-pay costs, but with further potential savings on materials, scholarships, discounts and bursaries (noting our continued aim to protect disadvantaged students) if we have fewer students; reduced spend on IT and equipment, professional fees and subscriptions and energy use.

Pay costs

Pay represents well over 50% of our budget (over £600m p.a.). So, reducing pay costs must be a key part of meeting a major loss of income. We will maintain a freeze on all non-essential appointments and vacancies. We will need to restructure activities and ways of working, not least to further enhance online learning and ensure our students have the best possible experience of studying with us. We will also consider a range of means for reducing our pay costs such as deferring pay awards due to promotions, suspending annual increments and national pay awards; offering unpaid (part or full-time) voluntary leave or retirement; implementing a pay cut for a defined period across the University.  Job losses may also be required.


I am immensely proud of the way colleagues have adapted to new ways of working in this unprecedented situation. We will need to sustain some of these changes and introduce still more as we adapt for the future. Things won’t simply return to the way that they were before the COVID-19 pandemic. There will be many new challenges to face in the years ahead, as well as many opportunities. With our track record, reputation and commitment to excellence and social responsibility, I believe that we can emerge even stronger, but only if we are prepared to make some tough choices and demonstrate once again the agility and commitment that we have shown over the past four weeks. 

I will keep you updated on key developments.

Nancy Rothwell
President and Vice-Chancellor

WATCH: Video message on COVID-19 financial implications for The University of Manchester, from the President and Vice-Chancellor