Summary of key financial results
The University achieved a strong financial performance in the year, delivering an operating surplus of £107 million (after the effect of specific pension accounting adjustments). The 22/23 surplus was down £13m from the previous year and reflects our decision to invest in additional support for our students and staff following the cost of living challenges during the year.
The University does not make a profit; all surpluses are reinvested to fulfil our core goals.
In 22/23 our income grew by 10.5% to £1.3bn due to:
- an uplift to our research funding following the results of the Research Excellence Framework 2021;
- increased international tuition fees;
- the recognition of a £50m grant for the Paterson Building refurbishment;
- higher interest income on our deposits.
The prior year expenditure included a one-off, non-cash charge of £220m in relation to the USS pension scheme. Excluding the impact of this charge, total expenditure increased by 12.8% to £1.2bn in 22/23. General price inflation and the impact of the cost of living account for much of this increase.
Where our money comes from
Tuition fees represent 49% (£660m) of the University’s total annual income (£1.3bn): 42% UK and 58% international student fees. UK undergraduate fees remain at £9,250, so are declining in real terms as inflation increases the costs of teaching delivery.
Our other main source of income is research-related, which has been impacted by an increase across all areas of the research project portfolio in 22/23. Most of the increase in government funding is attributable to Research England funding as the University benefitted from excellent REF 2021 outcomes.
Capital income is grant income for the purchase of research equipment and, on occasions, towards a building. This year this includes £50m for the new Paterson Building.
Other income includes other grant income and donation and investment income.
Where we spend our money
The largest proportion of our income is spent on our staff (£624m annually or £52m per month), who support the delivery of our core goals. Our staff costs have grown significantly over recent years due primarily to inflationary pay awards, automatic pay increments and increased pension costs. In addition, in 22/23 the University paid out £11m in one-off cost of living payments to all its staff.
The University also invested £13m in new posts to support increased student recruitment and strategic change programmes. The increased research activity also increased staff costs, but this was offset by significant staff vacancies across the University. This has meant that staff costs are now 49.4% of income vs 50.6% in 21/22.
Other operating expenditure (OOE) across research, teaching and general administration of the University has increased by £86m due to the impact of inflationary pressure as well as spend on student cost-of–living payments (£9m), major strategic projects, residences and other expenses such as the cyber incident.
The University spent £92m on pensions in the year and pays £17m per annum in loan interest.
Key activity spend
Excluding the one-off prior-year pension scheme adjustment, expenditure is up by £140m (13%) due to investment, general high inflation, and cost of living support.
The University’s largest areas of spending by activity are in our academic teaching departments (£497m), research (£211m) and running our estate of buildings (£191m).
Cost of living support
As the cost of living crisis in the UK persisted, we provided a sector-leading £18 million package of support for our students and staff, committed to the Real Living Wage and provided an additional hardship fund for students.
Of the total £18m cost of living support, more than 40,000 students claimed £7.4m in total.
Investing in the student experience
In the year in review, we invested £12m in the Fallowfield Campus Redevelopment Project, which will replace existing bedspaces with up to 3,300 new state-of-the-art bedspaces, increasing the number of beds by up to 950. A further £11m was spent on the Dalton Ellis and Oak House residences.
Other key investments include:
- £30m for student bursaries and tuition fee discounts;
- £5.4m for the Student Experience Programme to improve the route from application to graduation;
- £2.8m in the Humanities Size & Shape project which will launch 27 new academic programmes and a commitment to cross-cultural learning.
University reserves and resources we can spend
Cash and short-term investments is the only resource the University can spend. We need to keep £280m of cash to fund our next 3 months operating costs (largely staff costs). At the end of July 2023, the University had £443m in cash and short-term investment.
Over the next 10 years, we need to spend approximately £2.3bn on residences, building maintenance, IT infrastructure and on our journey to zero carbon. Our current projections show that we only have funding available of c. £740m, which is dependent upon the University being able to deliver sufficient annual surpluses. We cannot currently afford to fund the remainder which is therefore a huge challenge for the University
