Some leading UK universities have reported operating deficits for last year, as financial accounts reveal that?few are ¡°immune from the financial challenges¡± and falling international student numbers.

The?¡°volatile¡± valuation of the Universities Superannuation Scheme (USS) pension fund is massively skewing the final financial positions of most of the sector?¨C with only about one in 10 of the 64 accounts analysed by?Times ÖйúAƬ?so far reporting a deficit for 2023-24.

However, around a fifth have?an operating deficit?when those changes are excluded?¨C with the largest of those so far at King¡¯s College London.

?reveal an ¡°extraordinary¡± surplus of ?326.7 million as a result of the USS ¨C but this falls to an operating deficit of ?19 million once its impact and donations worth ?24 million are excluded.

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¡°Our operating deficit reflects the acceleration of our spending on strategic investments, and our day-to-day operations showed a financial performance consistent with our plans,¡± the statements say.

The King¡¯s vice-chancellor Shitij Kapur?reiterated his warnings about the scale of the challenge facing the sector?by?writing that ¡°the period of rapid and sustained growth in international students may be at an end¡±.

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¡°There are undoubted pressures within UK ÖйúAƬ, and King¡¯s will not be immune from these,¡± he adds.

King¡¯s increased its tuition fee income by ?23 million year-on-year, but this was still ?40 million below its target ¨C with new admissions the full-time equivalent of 1,400 below plan.

The accounts said that universities operate in a much less certain international world ¨C one in which ¡°ill-considered and inflammatory statements on migration¡± can create an unwelcoming environment for students.

¡°If there was a fundamental reversal in the trend of international student recruitment, King¡¯s would be severely financially compromised.¡±

The institution plans to implement ¡°significant changes¡± in its student recruitment activities, supplementing its activities in existing mature recruitment markets such as China, and building capacity in others.

The university¡¯s operating deficit fell from a surplus of ?144.9 million the year before, while its net cash inflow from operations fell from ?60.4 million to ?23.9 million.

The University of Nottingham ¨C?another member of the Russell Group?in difficulty ¨C highlights the ¡°significant pressures¡± across the sector driven primarily by a high inflationary environment.

Nottingham¡¯s adjusted financial position, before pension provisions and interest costs, was a deficit of ?17 million, which included one-off restructuring costs of ?12.1 million.

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Nottingham says it has grown its income by increasing its proportion of international postgraduate students, but that its costs had been impacted by cumulative years of high inflation that has far exceeded income growth.

¡°We at Nottingham are not immune from the financial challenges and this has been compounded by A-level grade deflation and the university focus on recruiting the most talented students in a more challenging and competitive student recruitment environment, which has resulted in lower student numbers than were anticipated,¡± the?

It reported a surplus for the year of ?220.7 million and a cash inflow from operating activities of ?4.9 million.

Nottingham recently named Jane Norman as its new vice-chancellor after Shearer West departed last month for the University of Leeds. Earlier this year it emerged that Nottingham had begun allowing international students to?enrol with lower entry grades than would usually be permitted, in what was seen as a sign of financial pressures.

The Open University, the UK¡¯s largest distance learning university, reported a second successive year with an operating deficit, of ?10.3 million, after a 4 per cent fall in taught students.

¡°Like many universities, we are feeling the impact of a crumbling ÖйúAƬ funding model, the damage done to the UK economy by lockdown and a changing consumer market,¡±?

With many other institutions now focused on flexibility and support for working students, she says the institution¡¯s ¡°proposition is no longer the differentiator it once was¡±.

However,?with an improvement on its ?25 million operating deficit last year, the OU says its plan to return to surplus was working.

The University of East Anglia,?which has faced years of financial problems, also improved its underlying financial position ¨C from a deficit of ?18.2 million in 2022-23 ¨C but still remains in difficulty.

It reported an improvement, to an operating deficit of ?7.6 million,??was a result of a change in the mix between home and international students and from a voluntary redundancy scheme?that reduced staff numbers.

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Elsewhere, ¡°significant drops in the sector¡¯s international income¡± was also an issue at the University of Huddersfield,??for the year before other gains, and at the University of Bolton, which is being renamed as the University of Greater Manchester. Reporting a ?3.1 million deficit, it warned of further ¡°tough times ahead¡±.

patrick.jack@timeshighereducation.com