Creative universities ‘facing liquidity issues’

A total of 17 higher education providers specialising in creative courses will be struggling with their cash flow by 2025/26, the sector regulator has warned.

A report published by the Office for Students reveals that financial issues faced by many universities are worse than previously thought.

Overall, it predicts that by 2025/26, 190 of all 270 higher education providers in the UK will be in deficit. This figure includes 30 ‘specialist creative providers’.

Meanwhile, 108 of all providers will be facing “low liquidity” – where they do not have enough cash to cover 30 days of expenditure. This figure includes 17 specialist creative providers.

The OfS said one of the reasons for the worsening outlook is that while acceptances of UK undergraduate students through UCAS increased slightly by 1.3 per cent in 2024, the sector had anticipated a 5.8 per cent increase.

Specialist creative providers had forecast a 27.1% rise, but the OfS report reveals that they experienced a fall of three per cent from 11,820 applications in 2023 to 11,420 in 2024.

“Our analysis of recruitment trends suggested that providers’ financial forecasts were based on predictions of student recruitment that were too optimistic,” the report states.

‘Bold action’ required

It adds that many providers must take “increasingly bold action” to address financial challenges.

“Where necessary, providers will need to prepare for, and deliver in practice, the transformation needed to address the challenges they face,” the report states.

“In some cases, this is likely to include looking externally for solutions to secure their financial future, including working with other organisations to reduce costs or identifying potential merger partners or other structural changes.

“We recognise that transformation – for the sector and individual providers – is not easy. We see this essential work as a shared priority to ensure a financially resilient sector for students and in the national interest.”

In recent years a raft of universities have announced job cuts affecting arts courses – not all them specialist providers focusing solely on creative courses.

Many universities have been struggling to cope with falling student levels and rising costs coupled with frozen tuition fees since 2017/18.

Earlier this month the government announced that tuition fees will rise for the first time in eight years by £285 to £9,535 a year in 2025.