The University of London’s School of Oriental and African studies is in danger of exhausting its cash reserves within two financial periods if there is no turnaround in its situation, the school’s director has told trustees.
Once the cash reserves are used up, the school could continue to “haemorrhage cash”, leaving it in debt to the tune of £18.5m (Dh86m) if action was not taken. The school posted a £1.2 million deficit in its 2017-18 accounts.
The school’s undergraduate student intake has fallen by 37 per cent, partly due to a planned scaling down to increase the quality of student, resulting in more reliance on the university's cash reserves.
However, the university said the warning was merely to illustrate what may happen if no changes were made, and it had taken action to increase income and cut costs. The warning came in the form of a report for trustees of the school penned by SOAS director Baroness Amos, who counted lower numbers of young people attending university and competition between universities as part of the cash flow issues.
In the 2016−17 academic year, there were 56,400 fewer entrants to higher education institutions in the UK in 2007−08, according to UCAS data.
“Should no further action be taken to improve our cash flow we are projected to exhaust our cash reserves during 2020-21, ending the year £1.9 million overdrawn, and are expected to continue to haemorrhage cash in the years thereafter,” wrote Baroness Amos in her report.
Specialist institutions like SOAS, which bills itself as a leading place of study for Africa, Asia and the Middle East, particularly suffer from lower numbers of students applying.
“The declining population of 18-year-olds, declining real value of regulated fees, uncertainty surrounding future regulated fee level, uncertainty surrounding Brexit and pressure of staff costs as a consequence of increasing employer pension contributions are creating challenging conditions for the university sector,” said a SOAS spokeswoman.
The university said it was taking action to raise intake levels in the year to come and create value for students, including offering foundation courses, new online programmes and rolling alumni services, external engagement and senior staff support into one public affairs service.
Some of these changes are already having an impact in creating a sustainable future for the university, it says. SOAS has risen by five places on quality of intake in the 2020 Complete University Guide.
SOAS isn't the only London University having to reconsider its finances. In January Times Higher Education found that one in five London universities lost money in the past academic year, either posting operating deficits or smaller surpluses.